Complainant/petitioner had purchased an Ultrasound System with Accessories ATI Model HDI 1500 Colour Doppler for Rs.23 lakh from M/s Philips Medical System, India (P) Ltd., which was installed in the hospital on 14.12.2001. The same was insured by the petitioner with the respondent from 15.3.2003 to 14.3.2004.  In September 2003, a defect cropped up in one of the Probes (C.S.S.-2)/2- SMIIZ Broadband Electronic Convex Curved Arrary Transducer.  Shri Balaji, service engineer attended and examined the equipment on 8.9.2003 and found that the particular probe was defective was not repairable and advised its replacement.  M/s Philips Medical System India (P) Ltd. quoted price of the said part as Rs.3,10,817/-.  The respondent insurance company thereafter deputed surveyor Shri P.P. Tiwary, who after physical verification of the defective part asked the petitioner to submit relevant papers relating to survey and assessment of captioned loss, which were submitted on 16.10.2003.  In spite of having received the papers, the respondent failed to settle the claim.  On the contrary, on 22.10.2003, the respondent sent a letter cancelling the insurance policy and assuring pro rata refund of the premium subsequently.

Aggrieved by this, petitioner filed complaint before the District Forum.  District Forum allowed the complaint and directed respondent to pay Rs.3,10,817/-, i.e. the price of the defective parts, and in addition Rs.1,57,380/- for the loss suffered by the complainant due to non-functioning of the machine.  Rs. 25,000/- were awarded by way of compensation and Rs.10,000/-  as costs. 

Respondent insurance company preferred appeal before the State Commission, which has allowed the same and set aside the order of the District Forum by holding that the complainant is not a ‘consumer’ as defined under the C.P. Act, as the complainant had purchased the said machine for commercial purpose.  The dispute was not settled on merits.

View taken by the State Commission runs counter to the decision rendered by a three-Member Bench of this Commission in M/s.Harsolia Motors vs. National Insurance Co. Ltd.  – F.A. No.159/2004 and other connected cases decided on 3.12.2004 which in substance says that contract of insurance is a contract of indemnity and, by taking the insurance policy, a person does not indulge in commercial activity as he takes the same for the purpose of getting indemnity for the loss caused to the insured item.  Paras 25 and 26 of the said judgement read as under :

“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.”

          Since the order of the State Commission is at variance to the law laid down by this Commission, the same is set aside and the case is remitted back to the State Commission to decide it afresh on merits in accordance with law keeping in view the judgement of this Commission in M/s.Harsolia Motors case (supra).

Parties, through their counsel, are directed to appear before the State Commission on 16.8.2011.

Since this is an old matter, we would request the State Commission to dispose of the appeal as expeditiously as possible and preferably within a period of 4 months from the date of first appearance.