State Bank of India v. Second Respondent: Liability in Insurance Claim Case

The case of State Bank of India v. Second Respondent revolves around the liability in an insurance claim dispute. After a fire incident on the borrower’s premises, a consumer complaint was filed, leading to a series of judgments from the SCDRC and NCDRC. Despite the initial ruling directing the Bank to forward the claim to the insurer, the NCDRC later held the Bank liable for compensating the second respondent. However, a one-time settlement was reached between the Bank and the borrower, with no appeal filed by the latter. Stay tuned to learn more about the legal intricacies of this case!


  • A loan agreement was entered into between State Bank of India and the second respondent on 14 November 2005.
  • The agreement required all assets charged to the Bank to be insured by the borrower.
  • Following a fire on the borrower’s premises on 15 February 2007, the claim was filed but not accepted by the insurer.
  • The borrower then filed a consumer complaint before the SCDRC, which directed the Bank to forward the claim to the insurer.
  • NCDRC later made the Bank liable to pay the borrower’s claim with 9% interest per annum.
  • No compensation liability was imposed on the Bank.
  • The SCDRC’s order was not challenged by either the borrower or the Bank.

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  • The borrower agreed to a one-time settlement with the Bank.
  • No appeal was filed by the borrower against the order passed by the SCDRC.
  • The NCDRC found that the claim was submitted nearly six and a half years after the incident of the fire, deeming it time-barred.
  • The insurer argued that the claim submitted by the borrower was belated.
  • NCDRC directed the Bank to forward the claim to the insurer for processing.
  • The order of the 4 SCDRC was accepted by the borrower.
  • There has been a one-time settlement between the Bank and the borrower.
  • Mr. Seshatalpa Sai Bandaru, learned counsel for the borrower, disputed that the borrower had filed an affidavit withdrawing all claims.
  • The only direction given by the SCDRC was for the Bank to forward the insurance claim to the insurer.

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  • Bank closed the loan account upon receiving the compromise settlement amount, relieving it of liability.
  • Borrower did not challenge the order of the State Consumer Disputes Redressal Commission (SCDRC).
  • NCDRC cannot impose liability on the Bank when the borrower did not contest the SCDRC order.
  • NCDRC ruled that the insurer was not liable due to delay in the claim submission.
  • The main issue was regarding the liability of the insurer.
  • Bank’s communication to the borrower on Feb 10, 2017 led to the submission of an affidavit by the borrower on May 31, 2017.

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  • The appellants are allowed to withdraw the amount deposited before the Court along with any accrued interest.
  • The appeal is granted, setting aside the NCDRC judgment holding the Bank liable for compensating the second respondent in the insurance claim.
  • No costs are awarded in this case.


Case Number: C.A. No.-001234-001234 / 2020

Click here to read/download original judgement

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