The Apex Court in the present case marks a significant milestone in the interpretation of consumer rights, particularly in the context of insurance disputes involving corporate entities. This case brings the questions about the scope of consumer protection laws, the rights of corporate policyholders, and the procedural fairness in insurance claim settlements. The Supreme Court's decision clarifies the applicability of consumer protection laws to companies and underscores the importance of transparency and fairness in the insurance claim process.
The Court first addressed the preliminary objections raised by the insurer-respondent regarding the maintainability of the complaint before the National Commission. These objections were: that a 'company' is not covered within the definition of 'person' under Section 2(1)(m) of the Consumer Protection Act, 1986, and, that the insured-appellant, having taken the policy for commercial purposes, cannot invoke the jurisdiction of the National Commission.
Regarding the first objection, the Court held that the definition of 'person' in the Act of 1986 is inclusive and not exhaustive. Emphasizing that the Consumer Protection Act is beneficial legislation requiring liberal interpretation, the Court noted that the inclusion of 'body corporate' in the definition of 'person' in the 2019 Act indicates that the legislature recognized and rectified an incongruity in the earlier provision. Thus, the Court rejected the argument that a company was not covered under the 1986 Act's definition of 'person'.
As for the second objection concerning commercial purposes, the Court relied on Shrikant G. Mantri v. Punjab National Bank and National Insurance Company v. Harsolia Motors and Ors. The Court observed that, unlike those cases which dealt with insurance policies taken for straightforward commercial purposes, the policy in question was specifically a 'Standard Fire and Special Perils Policy (Material Damage)' covering only the risk of fire and related perils. The claim was filed to indemnify losses from a fire accident at the insured premises, not for general commercial activities. Consequently, the Court rejected both preliminary objections raised by the insurer-respondent.
Moving to the merits of the case, the Court focused on a crucial point raised by the insured-appellant in their appeal. The appellant contended that they were not provided timely copies of the surveyor's report and the investigators' reports, thus depriving them of a proper opportunity to rebut these findings. The Court noted that this allegation was not specifically refuted by the insurer-respondent in their counter-affidavit, with only a formal denial offered. Hence, the Court determined that the ends of justice required the insured-appellant to have a proper opportunity to file rebuttal or objections to the affidavits and reports submitted by the insurer-respondent before the National Commission. The Court felt that the complaint should be reconsidered on its merits after providing such an opportunity to the appellant.
Consequently, the Supreme Court set aside the impugned order issued by the National Commission. The Court remitted the matter back to the National Commission with specific directions. It ordered that the appellant should be permitted to file a rebuttal or rejoinder affidavit before the National Commission, limited to the contents of the reports in question. Following this, the National Commission was directed to rehear the matter and decide it afresh on its merits.
The Supreme Court's decision focused on ensuring procedural fairness and a comprehensive examination of all relevant evidence. By allowing the appellant to respond to crucial reports that they claim were not previously available to them, the Court aimed to facilitate a more thorough and equitable consideration of the case. The beneficiaries of this judgment, ‘companies’ can indeed be considered 'persons' under the Consumer Protection Act, 1986. This broadens the avenue for businesses to seek redressal through consumer forums, potentially leading to more efficient resolution of disputes. Earlier in Morgan Stanley Mutual Fund v. Kartick Das 4 SCC 225, the Supreme Court held that a company, as an entity, could file a complaint under the Consumer Protection Act if it falls within the definition of a "consumer" under the Act. The Court emphasized that the services availed by the company must be for a purpose that is not linked to its commercial activities. In Laxmi Engineering Works v. P.S.G. Industrial Institute 3 SCC 583, the Supreme Court clarified that a corporate entity can be a "consumer" if the goods or services are not purchased for resale or for any commercial purpose. It was held that services availed for commercial purposes are excluded from the purview of the Act unless they are used exclusively for the purposes of earning livelihood by means of self-employment.