In Brief
State Bank of India obtained insurance cover for a borrower's mortgaged assets under a 2005 loan agreement. A fire occurred in 2007, but the insurer rejected the claim. The State Consumer Commission ordered the bank to forward the claim to the insurer and directed the insurer to process it, without holding the bank liable. The borrower accepted this order and later settled with the bank with a 'No Dues' Certificate. The National Consumer Commission, in an appeal by the insurer, made the bank liable to pay the claim. The Supreme Court reversed this, holding that liability could not be imposed on the bank when the borrower did not challenge the lower order and had settled all claims. The insurer's claim was also time-barred, being filed 6.5 years after the fire.
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