Company Now Recognised As Person Under Consumer Protection Act – SC

We must give a liberal interpretation to the Consumer Protection Act, recognizing it as beneficial legislation – Supreme Court

A bench of Justices B R Gavai and Sandeep Mehta said. “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 status

Observations

In the matter titled M/s Kozyflex Mattresses Private Limited Vs SBI General Insurance Company Limited and anr.

The Supreme Court has said that a ‘company’ has been recognized as a ‘person’ under the Consumer Protection Act by the legislature in 2019. Consequently, after removing the anomaly in the original law, it can also file complaints for deficiency of services.

“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 realised the incongruity in the unamended provision and has rectified the anomaly by including the word ‘company’ in the definition of ‘person’,” the bench said. 

Facts of the Case

The appellant ” M/s Kozyflex Mattresses Private Limited” approached the Supreme Court against the order passed by Nationnal Consumer Disputes Redressal Commission’s. In order dated August 14, 2022 upholding repudiation of insurance claim of Rs 3.31 Cr made by it on March 3, 2014 for the fire accident and the losses suffered in the manufacturing unit in the incident on April 15, 2013.

The respondent ” SBI General Insurance Company Limited ” vehemently and fervently contended that the insured appellant being a body corporate is not a consumer within the meaning of Section 2(1)(m) of the Consumer Protection Act, 1986 as it would not be covered by the definition of consumer provided under the Act of 1986. 

The counsel of respondent contented that the definition of ‘person’ has been amended by the Consumer Protection Act, 2019 wherein, the word ‘company’ has been included. It has to be presumed that company or body corporate was not covered under the definition of a ‘person’ under the Act of 1986. Additionally, he mentioned that insurance policies for commercial purposes are not entitled to invoke the jurisdiction of forums established under the Consumer Protection Act.

Orders by the Supreme Court

The bench observed 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 and nothing else. 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 counsel for the respondent are unsustainable,” the bench said.

Further the Court Observed that ” 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’. Hence, the first preliminary objection raised by learned counsel for the respondent regarding ‘company’ not being covered
by the definition of ‘person’ under Act of 1986 has no legs to stand and deserves to be rejected.

The court remitted the matter to the National Commission for considering and deciding the complaint afresh, by giving the appellant opportunity to file its rebuttal/rejoinder to the affidavit/reports submitted by the insurer-respondent.

For more information contact us at [email protected]

Visit us at http://www.consumerseva.com