MAHENDRA CONSTRUCTION vs ORIENTAL INSURANCE CO. LTD.

This appeal is directed against the order of the State Commission, Jharkhand dated 21-12-2010 in Consumer Complaint No.01 of 2009.

Briefly put facts relevant for the disposal of the appeal are that the complainant-firm filed the Consumer Complaint No.01 of 2009 against the opposite party-insurance company before the State Commission, Jharkhand on the allegations that the complainant acquired one hydraulic excavator machine and got it insured with New India Assurance Co. Ltd. for the period from 15-11-2004 to 14-11-2005. On 12-04-2005 the excavator was set on fire by naxalites. The matter was reported to the police as also the insurance company. The New India Assurance Co. Ltd. settled the insurance claim of the complainant-firm and the excavator was put to repairs. It is further alleged that because the excavator was under repairs insurance was not renewed. Complainant-firm after the repairs of excavator got it insured for Rs.32,00,000/- with the opposite party-M/s. Oriental Insurance Co. Ltd. from 01-10-2006 to 10-10-2007 after payment of premium to the tune of Rs.43,847/-. On 15-10-2006, while under use the excavator caught fire at 6:50 P.M.. The matter was reported to the police as also the fire brigade. The opposite party-insurance company was also informed and an insurance claim was lodged. The surveyor inspected the machine and confirmed the damage caused to the excavator. The insurance company instead of settling the claim repudiated the claim vide letter dated 25-11-2006. Being aggrieved by the repudiation of the insurance claim the appellant-firm filed the consumer complaint.

The opposite party-insurance company, on being served with the notice of the complaint, filed written statement raising a preliminary objection that the complaint was not maintainable as the complainant is not a consumer as envisaged under Section 2(1)(d) of the Consumer Protection Act, 1986. It was also pleaded that the insurance policy was obtained by the complainant by concealing the fact that earlier also the same excavator was insured with New India Assurance Co. Ltd. and a claim on account of the damage due to fire was submitted which was reimbursed. It was also pleaded that the claim was suspicious because the alleged fire took place within five days of taking the insurance cover.

The State Commission on consideration of the record came to the conclusion that the services of the insurance company were availed by the complainant for commercial purpose. As such the complainant is not a consumer and the consumer complaint filed by him is not maintainable. On merits the State Commission took the view that the subject insurance policy was obtained by the complainant by concealment of material fact regarding previous insurance claim in respect of the subject excavator taken by the complainant.

Being aggrieved of the order of the State Commission the appellant-complainant has preferred this appeal. Learned counsel for the appellant has contended that the impugned order of the State Commission is passed against the facts and law. It is argued that controversy as the issue whether the complainant is a consumer has been set at rest by the decision of the coordinate bench of this Commission in the matter of Harsolia Motors Vs. National Insurance Co. Ltd., I (2005) CPJ 27 (NC) . It is further contended that even on merits the finding of the State Commission regarding concealment of material fact is not supported by rational reasoning or evidence.

Learned counsel for the respondent, on the contrary, has argued in support of the impugned order. It is contended that the excavator was admittedly purchased by the complainant-firm for running it on hire i.e. a commercial purpose, therefore, the State Commission has rightly held that the complainant is not a consumer. It is further argued that perusal of paras 11 and 12 of the impugned order would show that the State Commission on the basis of evidence has concluded that the insurance contract is not valid because it has been obtained by concealing material fact i.e. that earlier also the complainant had obtained insurance claim pertaining to the excavator on the plea that it got damaged due to fire.

We have considered the rival contentions and perusal the material on record. The first issue which needs adjudication in this appeal is whether the complainant is a consumer as envisaged under Section 2(1)(d) of the Consumer Protection Act, 1986. At the outset, it may be mentioned that this question has been adequately answered by the coordinate bench of this Commission in the matter of Harsolia Motors (supra) wherein it was observed, thus:

"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."

"Further, from the aforesaid 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.

In this view of the matter, a person who takes insurance policy to cover the envisaged risk does not take the policy for commercial purpose. Policy is only for indemnification and actual loss. It is not intended to generate profit."

On reading of the above it is clear that hiring/availing of services of an insurance company for insuring the goods, etc., against some unforeseen damage cannot be termed as the services hired for commercial purpose. Therefore, a person hiring/availing of services of the insurance company does not come within the purview of the exclusion carved out in the definition of the consumer under Section 2(1)(d) of the Consumer Protection Act, 1986. We find no reason to differ from the above finding. Thus, in our view, the State Commission has committed an error in holding that the appellant-complainant is not a consumer.

Coming to the merits of the case, paras 11 and 12 of the impugned order deal with the merits of the case which are reproduced as under:

"11. We further went through the documents, it is apparent that the vehicle insured with the respondent Oriental Insurance Co. on 10-10-2006 and incident occurred on 15-10-2006. Earlier the said machine has been involved in similar incident of arson dated 12-04-2005 when the machine was insured with New India Assurance Co.. The machine was got repaired through the reimbursement of policy received from New India Assurance Co.. But when this policy was obtained on 10-10-2006 no mention was made about the earlier policy and the reimbursement, etc..

In our considered view this information has been concealed which was material for the purpose of assessing the value of the machine by the insurance company. Learned counsel for the insurance company relied upon AIR 1962(SC) 814 in the case of Mithoo Lal Nayak Vrs. LIC wherein their lordship were laid down that a policy stands to be repudiated for fraudulently suppressing of material facts."

On reading of the above it is clear that the aforesaid finding of the State Commission is cryptic and bereft of reasoning. The order being non-speaking cannot be sustained.

In view of the discussion above we are of the opinion that the impugned order is not sustainable. We, accordingly, accept the appeal and set aside the order of the State Commission, Jharkhand. The matter is remanded back to the State Commission with direction to decide the complaint on merits after due hearing to the parties. The parties are directed to appear before the State Commission on 09-01-2017. The State Commission is requested to decide the complainant at the earliest. The revision petition stands disposed of.