Case Note & Summary
The present appeals by special leave assail the judgment and order dated 3rd December, 2004 of the National Consumer Disputes Redressal Commission (National Commission). The National Commission had reversed the finding of the Gujarat State Consumer Disputes Redressal Commission (State Commission) regarding maintainability of the complaint filed by the respondent under the Consumer Protection Act, 1986. The respondent no.1, M/s Harsolia Motors, a dealer in TATA vehicles and a partnership firm, and respondent no.2 were claimants. Respondent no.1 took a fire insurance policy with the appellant for a cover of Rs.75,38,000/- and respondent no.2 for a cover of Rs.90 lakhs. On 28th February, 2002, damage was caused to the goods of the respondents due to fire during the Godhra riots. The appellant denied the claim of respondent no.1 while admitting the claim of respondent no.2 to the extent of Rs.54,29,871/-. The respondents filed a complaint before the State Commission. The State Commission held that the respondent is not covered under the expression 'consumer' as defined under Section 2(1)(d) of the Act, 1986, and held that the complainant being a company running a business from the premises to earn profits falls under the term 'for commercial purpose' and the complaint is not maintainable. On appeal, the National Commission held that a person who takes an insurance policy to cover the envisaged risk does not take the policy for commercial purpose, as the policy is only for indemnification of an actual loss and not intended to generate profits, and thus the respondent was a consumer and the complaint was maintainable. The Supreme Court considered the question of law and held that the insurance policy was taken for commercial purpose, as the premises were used for business to earn profits. The Court reversed the National Commission's order and restored the State Commission's order, holding that the complaint is not maintainable under the Consumer Protection Act, 1986.
Headnote
A) Consumer Protection Act - Definition of Consumer - Commercial Purpose - Insurance Policy - The issue was whether a commercial entity taking fire insurance policy for its business premises is a 'consumer' under Section 2(1)(d) of the Consumer Protection Act, 1986. The Court held that the policy was taken for commercial purpose as the premises were used for business to earn profits, and thus the complainant is not a consumer. The National Commission's view that insurance is only for indemnification and not for generating profits was reversed. (Paras 1-5)
Issue of Consideration
Whether a person who takes an insurance policy to cover the envisaged risk for commercial premises is a 'consumer' under Section 2(1)(d) of the Consumer Protection Act, 1986, and whether the complaint filed by such person is maintainable before the Consumer Forum.
Final Decision
The Supreme Court allowed the appeals, set aside the order of the National Commission, and restored the order of the State Commission, holding that the complaint is not maintainable under the Consumer Protection Act, 1986.
Law Points
- Insurance policy for commercial premises is for commercial purpose
- Commercial entity not a consumer under Consumer Protection Act
- 1986
- Section 2(1)(d) excludes commercial purposes
- Indemnity insurance does not change commercial character
