In Brief
Canara Bank had extended a loan to Leatheroid Plastics and chose to effect insurance on the company's hypothecated assets as security. Following a fire at the company's premises, a claim revealed that the insurance policy did not cover plant, machinery, and accessories. The Supreme Court held that when a bank exercises the option to effect insurance, it has a duty to ensure comprehensive coverage of all hypothecated assets. The bank's failure to cover the entire set of assets constituted negligence and a deficiency of service under the Consumer Protection Act. Accordingly, the appeal was dismissed.
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