Corporate Entity's Complaint Maintainable Under Consumer Protection Act 1986 : Supreme Court

In a significant development, the Supreme Court held that the corporate entity/company wouldn't be barred under the old Consumer Protection Act of 1986 to be treated as a 'person' for filing a consumer complaint.

Setting aside the order of the National Consumer Disputes Redressal Commission, the Bench Comprising Justices B.R. Gavai and Sandeep Mehta observed that although the word 'person' doesn't specifically include a corporate entity however, the definition of 'person' as provided in the Act of 1986 is inclusive to even cover corporate entities/company as a person eligible to file an insurance claim.

“We may at the outset record that the definition of 'person' as provided in the Act of 1986 is inclusive and not exhaustive. Consumer Protection Act being a beneficial legislation, a liberal interpretation has to be given to the statute. The very fact that in the Act of 2019, a body corporate has been brought within the definition of 'person', by itself indicates that the legislature realized the incongruity in the unamended provision and has rectified the anomaly by including the word 'company' in the definition of 'person'.”, the Judgment authored by Justice Sandeep Mehta said.

The case relates to the invalidation of the fire insurance claim amounting to Rs. 3.31 crores by the insurance company and the National Consumer Disputes Redressal Commission (NCDRC).

Before the Supreme Court, the respondent/insurance company contended that the claim of the appellant doesn't survive as being a corporate entity working for commercial purposes it doesn't fulfill the mandatory requirements of being a 'person' under Section 2 (m) of the Consumer Protection Act, 1986.

Rejecting such a contention, the Supreme Court held that the claim of the appellant/insured cannot be rejected merely on the ground that it doesn't fulfill the mandatory requirement of Section 2(m) of the 1986 act. The court clarified that the definition of 'person' as provided in the Act of 1986 is inclusive and not exhaustive, thereby including 'company' in the definition of the 'person'.

“The very fact that in the Act of 2019, a body corporate has been brought within the definition of 'person', by itself indicates that the legislature realized the incongruity in the unamended provision and has rectified the anomaly by including the word 'company' in the definition of 'person'. Hence, the first preliminary objection raised by learned counsel for the respondent regarding 'company' not being covered by the definition of 'person' under the Act of 1986 has no legs to stand and deserves to be rejected.”, the court said.

Further, the court clarified that the insurance policy in the present case was taken under the title 'Standard Fire and Special Perils Policy (Material Damage)' and was covering the risk of these elements only, therefore no commercial purpose was involved to deny the appellant's claim.

“The claim was also filed for indemnifying the insured-appellant for the damage caused in a fire accident at the insured premises. Hence, this Court has no hesitation in holding that both the preliminary objections raised by the learned counsel for the respondent are unsustainable.”, the court observed.

After noting that the copies of the surveyor's report and the investigators' report were not provided timely and thus, the insured-appellant did not get a proper opportunity to rebut the same, the court provided a proper opportunity to file its rebuttal/objections to the affidavit/reports submitted by the insurer-respondent before the National Commission and consequently.

Accordingly, the court directed “that the appellant shall be permitted to file its rebuttal/rejoinder affidavit before the National Commission limited to the contents of the reports referred to supra. Thereafter, the matter shall be reheard and decided on merits afresh.”

The appeal is disposed of accordingly.

Counsel For Appellant(s) Mr. Krishna Kumar Singh, Adv. Ms. Pranali Tayade, Adv. Mr. P. Santhosh Kumar, Adv. Mr. S. Shaskank Reddy, Adv. Ms. Mamatha Ralla, Adv. Ms. B. Renuka Devi, Adv. Mr. Sravan Kumar Karanam, AOR

Counsel For Respondent(s) Mr. D. Varadarajan, Adv. Mr. Rajat Khattry, Adv. Mr. Shagun Ruhil, Adv. Mr. Abhay Kumar, AOR

Case Title: M/S. KOZYFLEX MATTRESSES PRIVATE LIMITED VERSUS SBI GENERAL INSURANCE COMPANY LIMITED AND ANR.

Citation : 2024 LiveLaw (SC) 255

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