State Bank of India & Anr. v. New India Assurance Company Limited
Background
SBI had arranged fire insurance on assets mortgaged to it by a borrower. A fire destroyed the borrower's premises in 2007, but the insurer rejected the claim. The State Consumer Commission directed only that the Bank forward the claim to the insurer for processing "in accordance with law," imposing no liability on the Bank itself. Neither the borrower nor the Bank appealed that order, but the insurer did, and the National Consumer Disputes Redressal Commission (NCDRC) unexpectedly made the Bank liable to pay the claim instead.
Decision Breakdown
The Supreme Court held it was legally impermissible for the NCDRC, in an appeal filed solely by the insurer, to foist liability onto the Bank when the borrower itself had accepted the original order and never appealed against the Bank. On the merits, the Court noted the NCDRC had itself found the insurance claim was submitted nearly six-and-a-half years after the fire and was time-barred, so there was even less basis to shift that liability onto the Bank. The appeal was allowed, the NCDRC's order set aside, and the Bank was permitted to withdraw amounts it had deposited pursuant to an interim order, with accrued interest.
Lesson Learnt
An appellate consumer forum cannot create a fresh liability against a party in an appeal that only another party filed and that party never challenged the original order: appellate relief must track what was actually appealed.