M/S. Kozyflex Mattresses Private Limited vs SBI General Insurance Company Limited and another

2024 INSC 234 NON-REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S). 7966 OF 2022

M/S. KOZYFLEX MATTRESSES PRIVATE LIMITED .….APPELLANT(S)

VERSUS

SBI GENERAL INSURANCE COMPANY LIMITED AND ANR. …..RESPONDENT(S)

JUDGMENT

Mehta, J.

1. This appeal under Section 67 of the Consumer Protection Act,

2019 (hereinafter being referred to as ‘Act of 2019’) has been

preferred by the appellant herein for assailing final order dated 24th

August, 2022 rendered by National Consumer Disputes Redressal

Commission (hereinafter being referred to as ‘National

Commission’), rejecting the Consumer Case No. 754 of 2015 filed

by M/s. Kozyflex Mattresses Private Limited(hereinafter being Signature Not Verified

referred to as the ‘insured-appellant’) praying for a direction to the Digitally signed by Narendra Prasad Date: 2024.03.20 17:32:38 IST Reason:

SBI General Insurance Company(hereinafter being referred to as

1 the ‘insurer-respondent’) to indemnify it for the loss caused by fire

in the insured premises being the manufacturing unit of the

insured-appellant company situated at Sy. No.-41-25, village

Poosapatirega, Mandal and District Vizianagaram.

2. Brief facts essential for adjudication of the present civil

appeal are noted hereinbelow.

3. The insured-appellant herein being a Private Limited

Company registered under the Companies Act, 1956 is engaged in

the business of manufacture and sale of coir foam mattresses,

pillows, cushions and other coir by-products. The manufacturing

unit of the insured-appellant is situated at Sy. No.-41-25, village

Poosapatirega, Mandal and District Vizianagaram and was

registered as a small scale industry with the District Industries

Centre, Vizianagaram. The insured-appellant obtained a ‘Standard

Fire and Special Perils Policy(Material Damage)’

No.0000000000807725 (in short ‘Policy’) for the period

commencing from 28th March, 2013 to 27th March, 2014 for a sum

of Rs. 1.25 crores on the plant and machinery and a sum of

Rs.30,00,000/- on stock from the insurer-respondent. By an

endorsement dated 29th March, 2013, the sum insured for stock

2 was further enhanced to Rs.1.55 crores and for building the sum

insured was enhanced to Rs.20,00,000/-.

4. It is claimed that a massive fire incident took place in the

manufacturing unit of the insured-appellant in the intervening

night of 13th/14th April, 2013. Immediate action by way of

informing the police and the fire service station was taken and fire

tenders were sent to the spot. The insured-appellant informed the

insurer-respondent about the fire accident and the losses suffered

in the manufacturing unit in the fire incident on 15th April, 2013.

The insurer-respondent appointed Professional Surveyor & Loss

Adjustor Pvt. Ltd., Secunderabad as the surveyor on 15th April,

2013. The surveyor inspected the factory premises on 16th April,

2013 and 17th April, 2013 and took photographs, videography and

prepared inventory. The surveyor asked the insured-appellant to

remove the collapsed roof from the manufacturing unit premises

in order to conduct inspection of the machinery and stock and for

carrying out the measurement and quantification. The collapsed

roof was not found removed till the subsequent inspection

conducted by the surveyor on 15th and 16th May, 2013. The third

inspection was conducted between 15th and 17th July, 2014 and it

is stated that by that time, the machineries in the manufacturing

3 unit had been repaired. The insured-appellant submitted an

insurance claim for a sum of Rs. 3.31 crores i.e. Rs.40,11,152/-

for building, Rs.1,08,47,435/- for plant and machinery and

Rs.1,87,72,489/- for stock.

5. The insurer-respondent appointed Mr. Kalahasti

Satyanarayana, Dy.S.P. (Retd.), Insurance Claim Investigator,

Guntur and Mr. K. Jagannadha Sastry, Advocate, Independent

Investigator and Fact Finder, Vizianagaram to verify the

documents submitted by the insured-appellant in support of his

claim and to submit their independent reports. Mr. Kalahasti

Satyanarayana submitted his inspection report dated 12th

October, 2013 and Mr. K. Jagannadha Sastry submitted his

inspection report dated 25th January, 2014 noting inter-alia that

the purchase of machinery from M/s. Maheshwari Ribbons,

Gudivada to the tune of Rs. 1,39,64,475/- and stock from

Jageswari Enterprises to the tune of Rs. 64,39,810/- were mere

paper and money transactions which have been done with the

intention to siphon money from the State Bank of Hyderabad and

the National Small Scale Industries Corporation Ltd. and that

there had been no actual sale/purchase of such machinery and

stock.

4

6. After examining all the documents submitted by the insured-

appellant as well as the reports of the two investigators, the

surveyor submitted a final survey report dated 11th February, 2014

observing that the claim was fraudulent and was based on

fabricated documents and accordingly recommended for the

repudiation of the claim. The Competent Authority of the insurer-

respondent examined the entire material and repudiated the claim

of the appellant by invoking Clause 8 of the General Terms and

Conditions of Policy vide letter dated 3rd March, 2014.

7. The insured-appellant made a representation dated 11th

January, 2015 to the Grievance Redressal Manager against the

repudiation of its claim. However, such representation did not

meet the desired result, upon which the insured-appellant filed

Complaint No.329 of 2015 before the National Commission which

was dismissed as withdrawn on 30th June, 2015 with the liberty to

file a fresh complaint. Thereafter, the subject complaint came to

be filed on 4th August, 2015 alleging deficiency in service on the

part of the insurer-respondent. The insured-appellant contested

the complaint by filing a detailed reply. The factum of obtaining

the policy and the endorsement dated 29th March, 2013 made

therein was not disputed. However, the insurer-respondent

5 alleged that the loss had occurred within 16 days of obtaining the

insurance policy and the claim was for a very heavy amount and

thus, two independent investigators referred to supra were

appointed to verify the veracity of the documents submitted by the

insured-appellant in support of his claim and submit their

independent reports. Both the investigators submitted their

respective investigation reports wherein, the very factum of

purchase of machinery and stock by the insured-appellant were

found to be fabricated and mere paper transactions carried out

with the intention to siphon money from the State Bank of

Hyderabad and the National Small Scale Industries Corporation.

The surveyor examined the reports of the investigators and

submitted a final report dated 11th February, 2014 stating therein

that the claim was fraudulent and based on fabricated documents

and recommended repudiation of the claim. The Competent

Authority of the insurer-respondent after examining the report of

the surveyor repudiated the claim by letter dated 3rd March, 2014.

It was further stated that the claim was repudiated as the same

was fraudulent and exaggerated. The delay was attributable to the

insured-appellant who did not cooperate with the surveyor and

investigators who were not promptly provided with the requisite

6 documents and clarifications. A preliminary objection was raised

that the complaint involved complicated issues of fact which

required examination of voluminous documentary evidence and

cross-examination of witnesses and hence, it was prayed that the

insured-appellant should be relegated to Civil Court for redressal

of its grievances.

8. The insured-appellant filed its documentary evidence and the

affidavit of evidence. The insurer-respondent also filed reports of

the investigators, final survey report of the surveyor and affidavits

of evidence of its authorized representatives. The National

Commission, in its order referred to Clause-8 of General Terms

and Conditions of Policy which reads as under: -

“8. If the claim be in any respect fraudulent, or in any false declaration be made or used in support thereof or any fraudulent means or devices are used by the Insured or any one acting on his behalf to obtain any benefit under the policy or if the loss or damage be occasioned by the wilful act, or with the connivance of the insured, all benefits under this policy shall be forfeited.”

9. After referring to the said clause and relying upon the reply

of the insurer-respondent and the reports of the investigators and

the surveyor, the National Commission proceeded to accept the

same and upheld the repudiation letter dated 3rd March, 2014,

7 rejecting the complaint vide order dated 24th August, 2022 which

is assailed in the present appeal.

10. Learned counsel for the insured-appellant submitted that the

queries raised by the investigators and surveyor were duly replied

by the insured-appellant and the same forms part of the record

before the National Commission. Neither the preliminary report

nor the final report was provided to the insured-appellant and were

directly produced along with the reply affidavit filed by the insurer-

respondent before the National Commission and hence, there was

no opportunity for the insured-appellant to rebut the same.

11. It was further submitted that the stock as well as the

machinery destroyed in the fire were purchased through properly

accounted transactions which are clearly reflected in the account

books of the insured-appellant. All these accounts were produced

by the insured-appellant before the surveyor and investigators and

thus, the reports of the surveyor and investigators are partisan

and unacceptable. The veracity of the surveyor’s report is

questioned on the ground that the same is contradicted by the

investigators’ reports. Learned counsel thus prayed that it is a fit

matter warranting remand of the complaint to the National

Commission for reconsideration after giving an opportunity to the

8 insured-appellant to rebut the investigation reports and the

surveyor report filed on behalf of the insurer-respondent.

12. Per contra, learned counsel representing the insurer-

respondent 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

(hereinafter referred to as ‘Act of 1986’) as it would not be covered

by the definition of consumer provided under the Act of 1986. He

contended that the definition of ‘person’ has been amended vide

Consumer Protection Act, 2019 wherein, the word ‘company’ has

been included and hence, it has to be presumed that company or

body corporate was not covered under the definition of a ‘person’

under the Act of 1986. In this regard, he placed reliance on the

judgments rendered by this Court in the cases of Shrikant G.

Mantri v. Punjab National Bank1 and National Insurance

Company v. Harsolia Motors and Ors.2 and urged that the

insured-appellant having taken the insurance policy for

commercial purposes is not entitled to invoke the jurisdiction of

forums established under the Consumer Protection Act. On these

1 (2022) 5 SCC 42 2 (2023) 8 SCC 362 9 grounds, learned counsel implored the Court to dismiss the

appeal.

13. We have given our thoughtful consideration to the

submissions advanced at bar and have gone through the material

placed on record.

14. We proceed to deal with the preliminary objections raised by

the learned counsel for the respondent regarding maintainability

of the complaint before the National Commission. The objections

are twofold:

(1) That the word ‘company’ is not covered within the definition

of ‘person’ under Section 2(1)(m) of the Consumer Protection

Act, 1986.

(2) That the insured-appellant having taken the policy for

commercial purposes cannot invoke the jurisdiction of the

National Commission because the transactions leading to

filing of the complaint cannot be termed to be lack of

service/deficiency in service.

15. 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

10 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.

16. The second preliminary objection raised by the respondent

was regarding claim being filed for a commercial purpose. We have

given our thoughtful consideration to the said submission and find

that the judgments relied upon by learned counsel for the

respondent in the cases of Shrikant G. Mantri(supra) and

Harsolia Motors(supra) are totally distinguishable as the same

deal with the situation wherein, the insurance policy was taken for

a commercial purpose plain and simple. The situation in the case

at hand is entirely different. 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

11 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.

Having held so, we now come to the merits of the matter.

17. The insured-appellant has taken a pertinent plea in the

instant civil appeal that the copies of the surveyor’s report and the

investigators’ report were not provided timely and thus, the

insured-appellant did not get proper opportunity to rebut the

same. This pertinent plea taken by the insured-appellant in the

memo of appeal has not been specifically refuted and only a formal

denial was offered in the counter-affidavit filed by the insurer-

respondent.

18. In this background, we feel that ends of justice require that

the insured-appellant should have been provided proper

opportunity to file its rebuttal/objections to the affidavit/reports

submitted by the insurer-respondent before the National

Commission and consequently, the complaint should be

reconsidered on merits after providing such opportunity to the

appellant.

19. As a result of the above discussion, it is hereby directed that

the appellant shall be permitted to file its rebuttal/rejoinder

12 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.

20. Resultantly, the impugned order dated 24th August, 2022 is

set aside. The matter is remitted to the National Commission for

considering and deciding the complaint afresh in light of the above

directions. However, we make it clear that none of the observations

made hereinabove shall prejudice the decision of the consumer

case on remand.

21. The appeal is disposed of accordingly.

22. Pending application(s), if any, shall stand disposed of.

………………….……….J. (B.R. GAVAI)

………………………….J. (SANDEEP MEHTA) New Delhi;

March 20, 2024

13