At, National Consumer Disputes Redressal Commission NCDRC
By, THE HONOURABLE MR. JUSTICE R.K. AGRAWAL
By, PRESIDENT & THE HONOURABLE MRS. M. SHREESHA
For the Appellant: S. Siva Sankar, Advocate. For the Respondent: S. Dhakshnamoorthy, Advocate.
M. Shreesha, Member
1. Aggrieved by the order dated 26.3.2015 in CC No. 27 of 2006 passed by the State Consumer Disputes Redressal Commission, Tamil Nadu (for short the “State Commission”), M/s Shri Mookabiga Spinning Mills preferred the present First Appeal under Section 19 of the Consumer Protection Act, 1986 (for short “the Act”). By the impugned order, the State Commission has dismissed the Complaint with a liberty to the Complainant to approach necessary legal Forum by invoking the provision under Section 14 of the Limitation Act, if necessary. The State Commission has given a finding to the issue whether the Complainant is a ‘Consumer’ as follows:
“On the ground on the basis of preliminary objection whereas the Complainant pleaded in the Complaint in para-12 that they are consumer vis-a-vis the opposite party inasmuch as they have availed service of the opposite party by taking insurance policies for their windmills on payment of premium and thereby the complaint is maintainable before this Hon’ble Commission and will not be hit by the explanation to Section 2(1)(d) of the Consumer Protection Act, 1986 inasmuch as a person who takes an insurance policy to cover the envisaged risk does not take the policy for commercial purpose. The policy is only for indemnification of an actual loss and is not intended to generate profit. The contention cannot be accepted in view of the precedent relied upon by the opposite party and also by considering the facts and circumstances of the case as the complainant having more than 10 windmills being a public limited company and is engaged in the business of generation of power from renewable energy sources, predominantly wind and further as far as the case is concerned the policy produced under Ex. A2 revealed that the coverage for the insurance is for Rs. 3,00,00,000 having premium of Rs. 50,873 and the coverage is subject to the warranties and clauses as per forms attached and is extended to cover risks of bank names subject to windmill 4 in numbers and each windmill would cost several lacs of rupees and even in the FIR filed attached with the Ex. A5 the loss is mentioned as several lacs due to damage caused to the windmill which was fallen. In those circumstances being the public limited company having business engaged in generation of power insured for the risk coverage of windmills which alone in the generation of profit in business is concerned cannot be considered it only for the purpose of earning livelihood as per explanation Clause Section 2(1)(d) of the CPA and thereby we are of the view that the complainant is not a consumer and they cannot claim any relief from the opposite parties and this point is answered accordingly.”
2. Without going into the merits of the case, we are of the considered view that the State Commission has erred in not taking into consideration the judgment of this Commission in Harsolia Motors v. National Insurance Co. Ltd., I (2005) CPJ 27 (NC) wherein it was held that a person who takes Insurance Policy to cover an envisaged risk cannot be construed to be for commercial purpose. Policy is only for indemnification of the actual loss. It is not intended to generate profit and is not directly involved in the profit-making process of a Business. For better understanding of the ratio, the relevant paragraphs are reproduced as hereunder:
“At the outset, it is to be stated that an insured who takes the insurance policy cannot trade or carry on any commercial activity with regard to the insurance policy taken by him. Under Section 3 of the Insurance Act, 1938, no person is permitted to carry on business of insurance unless he obtains a certificate of registration from the Insurance Recovery and Development Authority.
Further, hiring of services of the Insurance Company by taking insurance policy by Complainants who are carrying on commercial activities cannot be held to be a commercial purpose. The policy is taken for reimbursement or for indemnity for the loss which may be suffered due to various perils. There is no question of trading or carrying on commerce in insurance policies by the insured. May be that insurance coverage is taken for commercial activity carried out by the insured.
In Halsburys Laws of England, Vol. 25, 4th Edition, the origin and common principles of insurance is discussed and in paragraph 3 it has been mentioned that it is based on principle of indemnity. Thereafter, relevant discussion is to be effect that most of contract of insurance belong to general category of contracts of indemnity. In the sense that insurers liability is limited to the actual loss which is, in fact, proved. The contract is one of indemnity and, therefore, insured can recover the actual amount of loss and no more.
In this view of the matter, taking of the insurance policy is for protection of the interest of the assured in the articles or goods and not for making any profit or trading for carrying on commercial purpose.
Further, from the afore-said discussion, it is apparent that even taking wide meaning of the words for any commercial purpose it would mean that goods purchased or services hired should be used in any activity directly intended to generate profit. Profit is the main aim of commercial purpose. But, in a case where goods purchased or services hired in an activity which is not directly intended to generate profit, it would not be commercial purpose.”
3. The afore-said principles laid down by the National Commission is strictly applicable to the facts of the present case and, therefore, the Complainant is a “Consumer” within the meaning of Section 2(1)(d) of the Act. In
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view of the foregoing discussion, this Appeal is allowed and the order of the State Commission is set aside and the matter is remanded back to the State Commission as we have held that the Complainant is a ‘Consumer’ as defined under Section 2(1)(d) of the Act. As the Consumer Complaint is of the year 2006 and more than 13 years have passed, we request the State Commission to dispose of the matter as expeditiously as possible preferably within 6 months from the date of receipt of a copy of this Order. Both the parties, through their Counsel, are directed to appear before the State Commission on 26.8.2019. Appeal allowed.