JUSTICE J.M. MALIK 1. The case filed in the year 1999/2000, has, however, a chequred history. Had it been a complaint by a ‘consumer’, it would not have taken 15 years’ to decide it. 2. The Consumer Education & Research Society, the Complainant No.1, is a registered Society under the Societies Registration Act, (XXI) of 1860, and has statutory locus standi to be a complainant, under Section 2 (1) (d) (ii) read with Section 12(b) of Consumer Protection Act, 1986. It is a Public Charitable Trust under the Bombay Trusts Act. It has been recognized as a registered Consumer Association, in terms of clause (n) of Section 2 of the Monopolies Restrictive Trade Practices Act, 1969. The Society was promoted and set up by the Consumer Education and Research Centre, Ahmedabad, an organization working in the field of consumer protection, since 1978. 3. Ambhe Ferro Metal Processors Pvt. Ltd., Complainant No.2 is a Company, registered under the Companies Act, 1956. Late Dr. Rakesh Chand D. Gupta, was insured with the Senior Branch Manager, LIC of India, Bombay Divisional Office, OP1 and Sh. Vijay N. Jani, its agent, OP2, under their “Keyman Insurance Scheme”. The main object of this Scheme is to indemnify the company from adverse financial effects of an employee’s pre-mature death by making funds available to the company. The beneficiary in this case is Complainant No.2. Dr. Rakesh Chand D. Gupta, was a qualified Doctor and had adequate knowledge of the Steel Industry. The company depended upon his marking knowledge, experience, entrepreneurial vision and talent to the extent of his contribution to the success of the company. The company has made good profits due to his efforts. The details of profits from the year 1995-96, 1996-97 were detailed in the complaint. 4. Sh. Vijay N. Jani, OP2, who is the agent of OP1, approached the complainant No.2, persuaded the company to take out “Keyman Insurance Policy”, for Dr. Rakesh Chand D. Gupta, Director of complainant No.2. Dr. Rakesh Chand D. Gupta, had to undergo different medical tests, through the Medical Examiners, duly appointed by OP1. The following tests were conducted : “1) ECG (2) Tele (3) CBC (4) ESR (5) SMA-12 (6) RVA (7) Treadmill Ex. (8) Elisa Test for HIV (9) VDRL (10) S. Amylase and (11) Acid Phosphates and Australian Antigen test”. 5. Thereafter, three policies under “Keyman Insurance Scheme”, were obtained, by Dr. Rakesh Chand D. Gupta, the insured. The total sum insured was Rs.1.25 crores. Dr. Rakesh Chand D. Gupta, unfortunately passed away, on 12.04.1996. OP1 repudiated the claim made by the company. The claim in respect of three policy Nos. 901098407/8 and 9 was repudiated on the ground that the date of their commencement was 18.02.1995 and the premium due was on 18.02.1996. The said premium was not paid even within the grace period of one month, i.e., by 17.03.1996. Since those policies had lapsed, therefore, the company was not entitled to claim any compensation regarding the same. 6. The claim in respect of policy No.901089410 was repudiated for alleged suppression of pre-existing disease. The explanation given by the complainant is two-fold. The three policies mentioned above were issued by OP1, on 07.02.1996, hence, the policies were effective from the date of issue. The premium was payable yearly. Under these circumstances, the question of lapsing of the policy does not arise. An application for Keyman Insurance Policy was submitted on 30.03.1995, vide proposal Nos. 8465 to 8468 through OP2, Sh. Vijay N. Jani. The complainant No.2 issued cheque dated 30.03.1995 for payment towards the first premium of the above referred four policies. The premium could have been paid for reviving the policy at any time within a period of six months without any medical examination of the insured by paying the overdue amount, with interest. The death of the insured took place within a period of six months. Consequently, the OP1 cannot repudiate the claim on the ground that the policy stood lapsed. 7. The insurance company was informed through Vijay N. Jani, the LIC agent, who wrote letter, dated 15.04.1996 to the Senior Manager, LIC Branch No.902, Bombay, informing therein that Dr. Rakesh Chand D. Gupta, the insured, had expired on 12.04.1996, at Bombay, marked as Annexure A. The claim of the complainant was repudiated vide letter dated 17.08.1998, on the ground of suppression of pre-existing disease. It is alleged that OP1 took two years and repudiated the claim on the ground that :- a) the insured had suffered milder chest pain in 1995; and b) insured had undergone a stress test in 1994-95. The complainant opined that withholding of these details about the disease cannot be held to be suppression of material fact/pre-existing disease. 8. It is also averred that the insured had undergone complete investigation as required by OP1. It is alleged that the claim of the complainant was repudiated on false, illegal and untenable grounds. Under these circumstances, ultimately the complaint dated 07.10.1999 was filed before this Commission, on 03.12.1999, but the same was numbered in the year 2000, as Original Petition No.196 of 2000, with the following prayers :- “a) the National Commission may direct the Opposite Party No.1 to pay the complainant No.2, ₹ 1.25 crores along with interest at 18% from the date of death. b) the National Commission may direct the Opposite party No.1 to pay the complainant No.2 a sum of ₹ 5.00 lakhs for the harassment, mental cruelty, delay in settlement, etc. c) direct Opponent No.1 to pay ₹ 50,000/- as costs to complainant No.2 d) direct Opponent No.1 to pay ₹ 10,000/- as costs to complainant No.1 e) direct any other relief as the Hon.Commission may deem fit”. DEFENCE :- 9. The OP 1 has contested this case by filing a very lengthy written statement, running into 31 pages, in this summary proceedings. Their defences, succinctly stated, are these. The Keyman Insurance Policy is for a ‘commercial purpose’, to compensate the company for the loss allegedly suffered by it. The complainants are, therefore, not ‘consumers’. It also entails complicated and intricate questions which can be decided only by the Civil Court. 10. It was further submitted that on 30.03.1995, the OP received a proposal for four insurance policies which were received from the complainants through insurance agent, OP2. The sum proposed to be assured in respect of these policies, initially was, ₹ 50.0 lakhs for each policy, total being ₹ 2.00 crores. The premium was originally to be paid half-yearly, as per the proposal made by the complainant. According to the said proposal, first three policies were proposed to be dated back w.e.f. 18.02.1995, the date of commencement of risk and the fourth policy was to be dated back w.e.f. 05.03.1995. True copy of the said proposal has been placed on record as Annexure A. 11. When these policies were being processed, the proposal reduced the amount of first three proposals from ₹ 50.00 lakhs to ₹ 25.00 lakhs, each, and for the fourth proposal, the amount remained as ₹ 50.00 lakhs, total being ₹ 1.25 crores. The date of commencement of the risk for first three proposals was 18.02.1995 and for the fourth proposal, it was 05.03.1995. The premium in respect of the first three proposals was to be paid yearly, w.e.f. 18.02.1995, i.e., in February of every year and for the fourth proposal, the premium was to be paid half-yearly, w.e.f., 05.03.1995, i.e., March-September, in every year. The complainant sent a letter dated 30.03.1995 requesting that the premium receipt and policy documents be issued in Financial Year 1994-95. All these facts were detailed in letter dated 27.06.1995, sent by the complainant. 12. The premium in respect of the first three policies of ₹ 25.00 lakhs each, became due in February, 1996, which could not be paid on or before 18th February or within the grace period of 30 days, or even till 30.03.1996. Consequently, all these policies lapsed on 18.02.1996. At the time of death of the insured, all these three policies were lying lapsed. 13. The OP has produced various certificates from Hinduja National Hospital and Medical Research Centre, Mumbai and Jaslok Hospital and Research Centre, Mumbai, which reveal that the complainant was suffering from DM (Diabetes Miletus)/Diabetic, Vegetarian. Prior to the receipt of the fourth policy, though the insured was well aware of this ailment, yet, he has withheld the correct information from the insurer. This matter was considered by the officials of the OP1 as well as by the Central Claims Review Committee of OP1 which consists of a Retired Chief Justice of a High Court, which dismissed the claim of the complainant. There is no deficiency on the part of OP1. The repudiation is valid. 14. It was contended that a contract of insurance is a contract of uberrima fide. In Greenhill Vs. Federal Insurance Co. Ltd., (1927) 1 KB 65, it was inter alia, held that “……. The assured bears a great deal and it is the duty of the insured to inform the underwriter of everything ….”. 15. All the other allegations have been denied. SUBMISSIONS AND FINDINGS : 16. We have heard the parties at length. The entire case swirls around the argument urged by the counsel for the OP which has got three prongs. A) The insurance policy in question was obtained for ‘commercial purpose’ and it is hit by Section 2 (1) (d) of the CP Act, 1986. The Keyman Insurance Policy is for commercial purpose to compensate the company for the loss allegedly suffered by it. B) The first three policies of the complainant stood lapsed and he is not entitled for any claim. C) Regarding the last, i.e. fourth policy, the insured obtained the same in the sum of ₹ 50.00 lakhs. The complainant had suppressed pre-existing disease and as such, the OP cannot be saddled with any claim. POINT A (Commercial purpose) : 17. First of all, we turn to the above said objection. Counsel for the complainants argued that this case pertains prior to the amendment which was introduced in the year 2003. Consequently, this case should not be read in line of the new amendment. He has invited our attention to Kurji Holy Family Hospital, through the Administrator Vs. Boehringer Manheim India Ltd.,, III (2007) CPJ 371 (NC), passed by this Commission, wherein, this Commission has held at para Nos. 13, 14 & 17, as under : 13. Thereafter, with effect from 15.3.2003 Section (2)(1)(d)(ii) is amended and following sentences are added to the said clause: “but does not include a person who avails of such services for any commercial purpose”. [Explanation: For the purposes of this clause, “commercial purpose” does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment.] 14. This would mean that prior to the coming into force of the amended provision, a person would be a consumer for the services which are to be rendered for commercial purposes. Admittedly, the complaint was filed in the year 1998, i.e. much prior to the amendment of the Act in the year 2003. 17. Finally, in the case of M/s, Birla VXL Ltd. vs. National Insurance Co. Ltd. (Original Petition No.172 of 1995, decided on 29th May, 2003) , this Commission held that amendment in the definition to Section 2(1)(d)(ii) by adding “but does not include a person who avails of such services for any commercial purpose” came into force from 15th March, 2003 and it would not have any retrospective effect and that the amendment was prospective in nature. Therefore, pending cases are required to be decided on the basis of un-amended definition. 18. We are also aware of the celebrated authority of this Commission, (for which, an appeal is pending before the Hon’ble Apex Court), in Harsolia Motors Vs. National Insurance Co. Ltd., 1 (2005) CPJ 27 (NC) (First Appeal Nos. 159, 160 & 161 of 2004, decided on 03.12.2004), wherein it was held, as under :- “13. In Halaburys Laws of England, vol. 25, 4th Edition, the origin and common principles of insurance is discussed and in paragraph 3 it has been mentioned that it “is based on principle of indemnity. Thereafter, relevant discussion is to the effect that most of contract of insurance belong to general category of contracts of indemnity. In the sense that insurers liability is limited to the actual loss which is, in fact, proved. The contract is one of indemnity and, therefore, insured can recover the actual amount of loss and no more”. [EMPLASIS SUPPLIED]. 19. Further, this Commission, in Harsolia Motors, (supra), while referring to Laxmi Engineering Works V. PSG Industrial Institute, II (1995) CPJ 1 (SC) = (1995) 3 SCC 583, in para Nos. 20, 24, 25 and 26 of its judgment, it has held, as under :- “20. In that case, the Court referred to with approval, the earlier decision of this Commission wherein Balakrishna Eradi, J. as he then was, dealt with the meaning of the words for any commercial purpose’’, in the following words: Since cases of resale have been separately referred to, it becomes obvious that the words for any commercial purpose are intended to cover cases other than those of resale of the concerned goods. The words for any commercial purpose are wide enough to take in all cases where goods are purchased for being used in any activity directly intended to generate profit. According to the meaning given in standard dictionaries, the expression commercial means connected with, or engaged in commerce; mercantile; having profit as the main aim (see Collins English Dictionary). Pertaining to commerce: mercantile (see Chambers Twentieth Century Dictionary). 24. Similarly, a hospital which hires the services of a medical practitioner, it would be a commercial purpose. But, if a person avails of such services for his ailment it would be held to be not a commercial purpose. 25. 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. 26. 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”. 20. In the present case, we have to see, whether, the policy was obtained to cover the risk or for commercial purposes for the use of the company. Whether its purpose was to generate profits or not?. The crux of the matter is, “whether, the insurance policy is intended to generate profit in that case, it would be for the commercial purposes, otherwise, it is abundantly clear that services may be for any commercial activity, yet, it would be within the purview of ‘consumer’, under the Act. It has made clear-cut distinction between the two. 21. It must be borne in mind that this amount will not go to the family members of Dr. Rakesh Chand D. Gupta. This insurance policy was not taken for domestic benefit. This amount will go to the company. The company will degenerate profit due to the death of Dr. Rakesh Chand D. Gupta. Consequently, this policy was taken for commercial purposes which will benefit the company. 22. Again, in Kalpavruksha Charitable Trust Vs. Toshniwal Brothers (Bombay) Pvt. Ltd. & Anr., 1999 AIR (SC) 3356, at para Nos.4 & 5 of its judgment, while placing reliance on Laxmi Engineering Works (supra), the Hon’ble Apex Court has held, as under :- “4. The main reliance on behalf of the appellant has been placed on the decision of this Court in Laxmi Engineering Works vs. P.S.G. Industrial Institute (1995) 3 SCC 583 in support of the contention that the appellant was a "consumer" within the meaning of the definition set out in the Consumer Protection Act, 1986. The definition was considered by us and it was held that since the machinery in question was installed by the appellant for commercial purpose, it would not be a "consumer". 5. It is contended by the counsel for the appellant that the term "commercial purpose" has been considered by this Court in the case of Laxmi Engineering Works (supra) and the observation of National Commission that "commercial purpose" would mean "profit-making activity on a large scale" was approved and, therefore, the activity of the present appellant would not be a commercial activity as no "profit-making on a large scale" is involved. We do not agree. This Court in that decision had further held in para 21 as under : "21. We must, therefore, hold that : (i) The explanation added by the Consumer Protection (Amendment) Act 50 of 1993 (replacing Ordinance 24 of 1993) with effect from 18.6.1993 is clarificatory in nature and applies to all pending proceedings. (ii) Whether the purpose for which a person has bought goods is a "commercial purpose" within the meaning of the definition of expression 'consumer' in Section 2(d) of the Act is always a question of fact to be decided in the facts and circumstances of each case. (iii) xxxx Applying those tests, the Court in the case of Laxmi Engineering Works (supra) held that the appellant was not a `consumer' as the machinery in that case were not purchased for self-employment, but were purchased for "commercial purposes". 23. Further, the Hon’ble Apex Court, in the same judgment (Kalpavruksha Charitable Trust) (supra) , has held as under :- “9.In the instant case, what is to be considered is whether the appellant was a "consumer" within the meaning of the Consumer Protection Act, 1986, and whether the goods in question were obtained by him for "re-sale" or for any "commercial purpose". It is the case of the appellant that every patient who is referred to the Diagnostic Centre of the appellant and who takes advantage of the CT Scan etc. has to pay for it and the service rendered by the appellant is not free. It is also the case of the appellant that only ten per cent of the patients are provided free service. That being so, the "goods" (machinery) which were obtained by the appellant were being used for "commercial purpose". 24. The Hon’ble Apex Court, in Rajeev Metal Works & Ors. Vs. The Mineral & Metal Trading Corporation Ltd., 1996 AIR 1083, took the same view and observed :- “…..Whether the transaction is in the nature of buying the goods for a consideration which has been paid or promised? Whether the transaction in question excludes the person who obtains such goods for resale or for any commercial purpose from the purview of the Act? It is true as contended for the appellants that the definition requires to be interpreted broadly so as to give effect to the legislative intention envisaged under the Act. But when the legislature having defined the term ‘consumer’ in broader terms, sought to exclude certain transactions from the purview of the Act what could be the meaning that would be assigned to the exclusionary clause, viz., “but does not include a person who obtains such goods for resale or for any commercial purpose”. The intention appears to be that when the goods are exchanged between a buyer and the seller for commercial purpose or for resale, the object of the Act appears to be to exclude such commercial transactions from the purview of the Act. Instead, legislature intended to confine the redressal to the services contracted or undertaken between the seller and the ‘consumer’, defined under the Act. It is seen that the appellants admittedly entered their letters of credit with the respondent. The respondent is a statutory authority to act as canalized agency on behalf of the industries to procure required goods on their behalf from the foreign seller and acts in that behalf in terms of the letter of credit and conditions enumerated thereunder. It is seen that the respondent did not undertake any direct responsibility for supply or liability for non-supply of the goods. On the other hand, the appellants had solicited to have the goods supplied to it through the respondent and opened letter of credit in favour of the respondent. After collecting requirements from various industries in the country admittedly a consolidated demand for supply of the required quantity of the G.P. Sheets was indented with foreign sellers so as to procure the required goods for onward supply to the appellant and others. The goods supplied were required for commercial purpose, i.e., for manufacture and resale as finished goods during the course of their commercial business. Under the circumstances, the appellants intended to purchase these goods for commercial purpose, namely, to manufacture the tin sheets for resale”. 25. This Commission, in M/s. Sterocraft Vs. M/s. Monotype India Ltd., I (1991) CPJ 111, (Revision Petition No.7 of 1990, decided on 13.07.1990), the Bench consisting of Hon’ble Mr.Justice V.Balakrishna Eradi, President, Smt. A.S. Vijayakar, Member, Mr.Y.Krishan, Member, Dr.Rais Ahmed, Member, held :- “2. It is seen from the petition and accompanying documents that the machinery was purchased by the complainant firm for the purpose of its printing press business. Since the purchase was for a commercial purpose, the complainant cannot be regarded as a ‘consumer’, falling with the definition of the said expression contained in Section 2(1)(d)(i) of the Consumer Protection Act, 1986”. 26. We, therefore, hold that the arguments urged by the counsel for the complainants must be eschewed out of consideration. Thus the case of the complainants withers away in the consumer’s court. We hold that the complainants are not the ‘consumers’ , and decide this point against them. 27. This Commission has no jurisdiction to entertain this case. For the reasons stated above, we refrain from speaking our piece, on other issues. We make it clear that we are not deciding all other issues and have taken the cue from the judgment of the Hon’ble Supreme Court passed in Civil Appeal No. 7842 of 2014, titled M/s. Rohit Chemicals & Allied Industries Pvt. Ltd. Vs. National Research Development Corporation, on 30.07.2014, which was filed against the order of this Commission passed in Consumer Complaint No. 34 of 2012, dated 04.09.2013, wherein the judgment of this Bench was upheld while dismissing the SLP. 28. Consequently, we dismiss the complaint and grant liberty to the complainants to approach the appropriate forum for redressal of their grievances. They can take the benefit of law laid down in Laxmi Engineering Works (supra) for exclusion of time taken in bonafide litigation. |
