3D human shape reconstruction under severe occlusion due to human-object or human-human interaction is a challenging problem. While implicit function methods capture detailed clothed shapes, they require aligned shape priors and or are weak at inpainting occluded regions given an image input. Parametric models i.e. SMPL, instead offer whole body shapes, however, are often misaligned with images. In this work, we propose a novel pipeline composed of a probabilistic SMPL model and point cloud diffusion for pixel-aligned detailed 3D human reconstruction under occlusion. Multiple hypotheses generated by the probabilistic SMPL method are conditioned via continuous 3D shape representations. Point cloud diffusion refines the distribution of 3D points fitted to both the multi-hypothesis shape condition and pixel-aligned image features, offering detailed clothed shapes and inpainting occluded parts of human bodies. In the experiments using the CAPE, MultiHuman and Hi4D datasets, the proposed method outperforms various SOTA methods based on SMPL, implicit functions, point cloud diffusion, and their combined, under synthetic and real occlusions. Our code is publicly available at https://donghwankim0101.github.io/projects/mhcdiff.