Saraswati Paul had applied to the State Bank of India, Radhanagar Branch, for a loan for her grocery business. A loan of Rs 8.99 lakh was sanctioned on March 28, 2008. The terms of the loan stipulated that insurance coverage was necessary to cover risks to goods and property pertaining to the business.
On February 6, 2009, the bank debited Rs 2,892 from Saraswati’s account for payment of premium to obtain two Standard Fire and Perils Policies from New India Assurance Co. These policies were valid from February 9, 2009, to February 8, 2010.
On January 5, 2009, the truck carrying items related to her grocery business met with an accident, resulting in a loss of goods worth about 6 lakh. As the accident had occurred on January 5, 2009, prior to the issuance of the policies on February 9, 2009, the loss was not covered by the insurance company. Saraswati defaulted in repayment of the loan due to the loss incurred as a result of the accident.
