NATIONAL INSURANCE CO. LTD. versus HARSOLIA MOTORS AND OTHERS

Citation: [2023] 3 S.C.R. 448 · Decided: 13-04-2023 · Supreme Court of India · Bench: AJAY RASTOGI, C.T. RAVIKUMAR · Disposal: Dismissed

Cited by 5 judgment(s) · cites 5 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2023] 3 S.C.R.
[2023] 3 S.C.R. 448
448
NATIONAL INSURANCE CO. LTD.
v.
HARSOLIA MOTORS AND OTHERS
(Civil Appeal No(s). 5352-5353 of 2007)
APRIL 13, 2023
[AJAY RASTOGI AND C. T. RAVIKUMAR, JJ.]
Consumer Protection Act, 1986 – s.2(1)(d) – Respondent
(commercial enterprise) had taken fire insurance policy from the
appellant insurance company – Respondent sufferred damage due
to fire – Appellant denied the claim of respondent – Respondent
filed complaint before the State Commission for compensation –
State Commission held that respondent was not a “consumer” as
defined u/s. 2(1)(d) of the Consumer Protection Act, 1986, and the
complaint was not maintainable – However, National Commission
held that the respondent was a “consumer” and the complaint was
maintainable – Issue before the Supreme Court was, whether the
insurance policy taken by respondent (commercial enterprise)
insured amounts to hiring of services for “commercial purpose”
thereby excluded from the purview of the expression “consumer”
as defined u/s. 2(1)(d) of the Act, 1986 – Held: There is no such
exclusion from the definition of the term “consumer” either to a
commercial enterprise or to a person who is covered under the
expression “person” defined in Section 2(1)(m) of the Act, 1986
merely because it is a commercial enterprise – Each case has to be
examined on its own facts and circumstances – What needs to be
determined is whether the insurance service had a close and direct
nexus with the profit generating activity and whether the dominant
intention or dominant purpose of the transaction was to facilitate
some kind of profit generation for the insured or to the beneficiary
– In the instant case, hiring of insurance policy is clearly an act for
indemnifying a risk of loss/damages and there is no element of profit
generation – Judgment of the National Consumer Disputes Redressal
Commission upheld.
Consumer Protection Act, 1986 – Nature of the insurance
contract – Insurance contracts are contracts of indemnity whereby
one undertakes to indemnify another against loss/damage or liability
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arising from an unknown or contingent event and is applicable
only to some contingency or act likely to come in future.
Consumer Protection Act, 1986 – A social benefit-oriented
legislation – Discussed.
Words and Phrases – “Consumer”, “Commercial Purpose” –
Discussed – Consumer Protection Act, 1986.
Dismissing the appeals, the Court
HELD: 1. The provisions of the Act, 1986 thus have to be
construed in favour of the consumer to achieve the purpose of
enactment as it is a social benefit-oriented legislation. The
primary duty of the Court/Commission while construing the
provisions of such an Act is to adopt a constructive approach
subject to that it should not do violence to the language of the
provisions and is not contrary to attempted objective of the
enactment. [Para 24][458-F]
2. The word “consumer” so defined does not include a
person, who, in case of goods obtains such goods for resale or
for any commercial purpose, or who, in case of service, avails of
such services, for any commercial purpose. An explanation
appended to the above definition states that the expression
“commercial purpose” does not include the use by the buyer of
such goods or the person availing such service or services,
exclusively for the purpose of earning his livelihood by means of
self-employment. [Para 27][460-F]
3. What is culled out is that there is no such exclusion from
the definition of the term “consumer” either to a commercial
enterprise or to a person who is covered under the expression
“person” defined in Section 2(1)(m) of the Act, 1986 merely
because it is a commercial enterprise. To the contrary, a firm
whether registered or not is a person who can always invoke the
jurisdiction of the Act, 1986 provided it falls within the scope and
ambit of the expression “consumer” as defined under Section
2(1)(d) of the Act, 1986. Applying the above principles to the
present case, what needs to be determined is whether the
insurance service has a close and direct nexus with the profit
NATIONAL INSURANCE CO. LTD. v. HARSOLIA MOTORS
AND OTHERS
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SUPREME COURT REPORTS
[2023] 3 S.C.R.
generating activity and whether the dominant intention or
dominant purpose for the transaction was to facilitate some kind
of profit generation for the purchaser and/or their beneficiary.
The fact that the insured is a commercial enterprise is 

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