Case: State Bank of India and Anr Vs. New India Assurance Company Limited

3. On 14 November 2005, a loan agreement was entered into between the first appellant - State Bank of India (Bank) and the second respondent (Borrower). Under the terms of the agreement, all the assets which were charged to the Bank were to be insured by the borrower. In pursuance of the loan agreement, an insurance cover was obtained by the Bank on behalf of the borrower in pursuance of an arrangement which it had with the insurer. A fire took place on the premises of the borrower on 15 February 2007. The insurer not having accepted the claim, the second respondent filed a consumer complaint before the SCDRC. By an order dated 17 November 2014, the SCDRC allowed the complaint in the following terms:In the result, the complaint is allowed. The opposite party no.1 and 2 are directed to forward the claim of the complainant to the opposite party no.3 and the opposite party no.3 to process the claim in accordance with law. The opposite party no.3 shall pay a sum of Rs.50,000/- towards compensation together with costs of Rs.7,000/-. Time for compliance four weeksThus, by the above order of the SCDRC, the Bank was directed to forward the claim of the insured to the insurer. The insurer was, in turn, directed to process the claim in accordance with law. No liability to pay compensation was fastened on the Bank4. This order of the SCDRC was not challenged either by the borrower or by the Bank. The first appeal before the NCDRC was filed by the insurer who is the first respondent to the present proceedings. By an order dated 6 February 2019, the NCDRC allowed the appeal by making the Bank liable to pay the claim of the borrower, together with interest at the rate of 9% per annum. That has given rise to the present appeal.

Court's reasoning:
7. Having heard the learned counsel appearing on behalf of the contesting parties, it has emerged from the record that the order of the SCDRC was accepted by the borrower. The only direction of the SCDRC was for the Bank to forward the insurance claim to the insurer. As between the Bank and the borrower, there has been a one time settlement. The Bank had issued a communication on 10 February 2017 to the borrower in pursuance of which an affidavit was filed by the borrower on 31 May 20178. In this background, we see no reason or justification for the NCDRC, in an appeal by the insurer, to foist the liability on the Bank. The fundamental point is that the borrower not having challenged the order of the SCDRC, such a liability could not have been foisted on the Bank by the NCDRC. The only issue in controversy was the liability of the insurer. The NCDRC held that the insurer was not liable since the claim was submitted nearly six and a half years after the incident of fire.