The Rajasthan High Court has held the a bank's claim of loss from dacoity cannot be rejected by the insurance company on the ground of bank's failure to follow the security guidelines prescribed by the RBI, when the fact of such non-compliance was communicated by the bank to the insurance company in the policy proposal.

The bench of Justice Anoop Kumar Dhand held that once appropriate premium amount was accepted and the policy was released by the insurance company in the bank's favour, the former was bound by promissory estoppel.

The Court held that before issuing the policy in the bank's favour, the insurance company could have asked the bank to complete the requisite formalities, regarding the security guidelines issued by the RBI. However, without doing do, straight-away the policy was issued by the petitioner.

For context, a bank had taken insurance policy for a certain amount of money from the petitioner-insurance company. There was an incident of dacoity/robbery, after which claim was raised. The Permanent Lok Adalat ordered the insurance company to pay Rs. 8.67 lakhs to the bank. Against this order, the petition was filed before the Court.

It was the case of the petitioner that the bank was not following the security guidelines issued by the RBI. There were no CCTV cameras installed, neither any gunman was deployed at the premises of the bank. Hence, the insurance company could not be held responsible for the loss suffered by the bank.

After hearing the contentions, the Court highlighted that prior to obtaining the policy, the bank had disclosed these facts to the insurance company. Accordingly, appropriate premium was accepted from the bank, and the policy was released in its favour. The Court observed,

“…petitioner-Insurance Company, being bound by the principle of promissory estoppel, is estopped from taking a different view regarding payment of loss suffered by the respondent-Bank, after accepting premium amount and releasing the insurance policy thereafter. Be that as it may, before issuing the insurance policy in favour of the respondent-Bank, the petitioner-Insurance Company could have asked the respondent-Bank to complete the requisite formalities, pertaining to the security guidelines issued by the RBI, however, instead of doing so, straightaway the policy was issued by the petitioner-Insurance.”

Hence, it was held that the petitioner was duty-bound to compensate the bank and release the amount of loss. Accordingly, the petitioner was dismissed.

Title: United India Insurance Company Limited & Anr. v Baroda Rajasthan Shetriya Gramin Bank

Citation: 2026 LiveLaw (Raj) 369

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