M/s. Kozyflex Mattresses Pvt. Ltd. vs. SBI General Insurance Company Ltd. [March 20, 2024]
Citation: 2024 INSC 234
Background and Facts
M/s. Kozyflex Mattresses Pvt. Ltd. (the appellant) purchased a “Standard Fire and Special Perils” insurance policy from SBI General Insurance Company Ltd. (the respondent) for its manufacturing unit in Vizianagaram, Andhra Pradesh. Just two weeks after the policy’s commencement, a major fire broke out at the factory. Kozyflex promptly notified SBI and filed a claim for approximately ₹3.31 crores, though the policy coverage was for ₹1.55 crores.
SBI General Insurance repudiated the claim, alleging that Kozyflex had submitted fraudulent and exaggerated documents regarding the purchase of machinery and stock, and that there was a delay in cooperating with surveyors and investigators. The insurer relied on a policy clause that forfeited benefits if fraudulent means were used to obtain them. The National Consumer Disputes Redressal Commission (NCDRC) upheld the repudiation and dismissed Kozyflex’s complaint, prompting an appeal to the Supreme Court.
Legal Issues
Whether a company is a “person” entitled to file a complaint under the Consumer Protection Act, 1986.
Whether the insurer’s repudiation of the fire insurance claim was justified on grounds of alleged fraud and non-cooperation.
Supreme Court’s Analysis and Ruling
The Supreme Court, per Justices B.R. Gavai and Sandeep Mehta, addressed the preliminary objection that a company is not covered by the definition of “person” under Section 2(1)(m) of the Consumer Protection Act, 1986. The Court held that the definition is inclusive and not exhaustive, and that companies are indeed entitled to file consumer complaints. The subsequent inclusion of “body corporate” in the 2019 Act was seen as a legislative clarification, not a substantive change.
On the merits, the Court found that the NCDRC had not adequately considered whether the insurer’s repudiation was justified and whether Kozyflex’s conduct amounted to fraud or mere irregularity. The Supreme Court emphasized that consumer protection statutes are beneficial and should be interpreted liberally to protect consumers, including corporate entities. The Court set aside the NCDRC’s order and remitted the matter back to the NCDRC for fresh adjudication on the merits, directing it to consider all evidence and submissions afresh.
Significance
This judgment is a landmark in affirming that companies are “persons” under the Consumer Protection Act, 1986 and can seek remedies for deficiency in services, including insurance disputes. The ruling clarifies the scope of consumer rights for corporate policyholders and underscores the importance of procedural fairness and transparency in insurance claim settlements. The decision also reinforces the judiciary’s commitment to liberal and purposive interpretation of consumer protection laws to advance their remedial objectives.
Citation
2024 INSC 234
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