Canara Bank v. M/S. Shree Shakti Foam
Citation: NCDRC Order dated October 7, 2024
Court: National Consumer Disputes Redressal Commission (NCDRC)
Date: October 7, 2024
Overview:
M/S. Shree Shakti Foam, a company engaged in manufacturing, had a cash credit facility with Canara Bank, which included an insurance policy for stock-in-trade. After a fire incident, the company filed a claim, which was denied due to the policy’s lapse. The company alleged negligence by the bank for not renewing the policy.
Key Issues:
- Responsibility for Insurance Renewal: Whether the bank was liable for ensuring the renewal of the insurance policy.
- Contractual Obligations: Interpretation of the terms of the cash credit agreement regarding insurance coverage.
Judgment:
The NCDRC held that the primary responsibility for renewing the insurance policy rested with the complainant company, as per the cash credit agreement. The bank was not obligated to renew the policy unless explicitly agreed upon. Therefore, the bank could not be held liable for the lapse in coverage.
Implications:
This judgment underscores the importance of clearly defined responsibilities in financial agreements. It highlights that borrowers must be vigilant in adhering to their contractual obligations, including maintaining valid insurance coverage, to safeguard their interests.
