Read about the legal battle between Kozyflex Mattresses Pvt. Ltd. and SBI General Insurance Company. The case revolves around the repudiation of an insurance claim by the insurer, citing fraudulent documents and delayed cooperation from the insured-appellant. The National Commission’s decision to uphold the repudiation is now being challenged, with the insured-appellant seeking a fresh review of the complaint. Stay tuned to learn more about this ongoing dispute.
Facts
- The insured-appellant, M/s. Kozyflex Mattresses Private Limited, filed a complaint against SBI General Insurance Company for indemnification of losses due to a fire incident in their manufacturing unit.
- The claim was repudiated by the insurer-respondent on grounds of fraudulent and exaggerated documents.
- The insurance policy was obtained for a sum of Rs. 1.55 crores, but the claim was for Rs. 3.31 crores.
- Two investigators found that the purchase of machinery and stock by the insured-appellant were fabricated transactions to siphon money.
- The National Commission upheld the repudiation citing a clause in the policy which forfeits benefits if any fraudulent means are used to obtain them.
- Insured-appellant’s delay in cooperating with surveyor and investigators was noted, contributing to the repudiation of the claim.
- Immediate action was taken by the insured-appellant post-fire incident, but the claim was repudiated based on findings of the investigators.
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Arguments
- The insured-appellant argues that the stock and machinery destroyed in the fire were obtained through legitimate transactions documented in their account books.
- The appellant points out that the definition of ‘person’ under the Consumer Protection Act, 2019 has been amended to include ‘company’, indicating that a company or body corporate may not be considered a ‘person’ under the Act of 1986.
- The insured-appellant provided responses to queries from investigators and the surveyor, which are on record with the National Commission.
- They argue that they were not provided with the preliminary or final reports, which were introduced along with the insurer’s reply affidavit, denying them a chance to refute the reports.
- All financial accounts were disclosed to the surveyor and investigators, claiming their reports are biased and unreliable.
- There are discrepancies between the surveyor’s report and the investigators’ reports, casting doubt on the accuracy of the surveyor’s findings.
- The insured-appellant requests a remand of the complaint to the National Commission to challenge the investigation and surveyor reports presented by the insurer-respondent.
- In contrast, the insurer’s counsel argues that the insured-appellant, being a body corporate, does not qualify as a consumer under the Consumer Protection Act of 1986.
- The counsel for the respondent relied on judgments in Shrikant G. Mantri v. Punjab National Bank and National Insurance Company v. Harsolia Motors and Ors.
- It was argued that the insured-appellant got the insurance policy for commercial purposes and thus cannot utilize the Consumer Protection Act forums.
- The learned counsel requested the Court to dismiss the appeal based on the above grounds.
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Analysis
- The definition of ‘person’ under the Consumer Protection Act is inclusive and not exhaustive, allowing for a liberal interpretation of the statute.
- The inclusion of ‘body corporate’ in the Act of 2019 indicates that the legislature recognized and rectified the anomaly of excluding ‘company’ from the definition of ‘person’.
- The objection that a claim filed for commercial purposes cannot be brought before the National Commission is refuted as the insurance policy in this case was specific to fire and special perils with no commercial intent.
- Judgments cited for commercial policy cases are deemed distinguishable from the present situation, ensuring the claim’s validity before the National Commission.
- The insured-appellant made a valid plea regarding the untimely provision of surveyor’s report and investigators’ report, which deprived them of the opportunity to properly respond.
- The insurer-respondent only offered a formal denial in response to this plea, without specifically refuting it.
- The ends of justice necessitate that the insured-appellant be given the chance to file their objections and rebuttals to the reports submitted by the insurer-respondent.
- It is deemed necessary for the complaint to be reconsidered on its merits after providing the insured-appellant with the opportunity to respond adequately.
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Decision
- The appellant is granted permission to file a rebuttal/rejoinder affidavit before the National Commission specifically limited to the contents of the reports mentioned earlier.
- The observations made in the discussion or in the order do not impact the final decision of the consumer case on remand.
- The impugned order dated August 24, 2022, is overturned by this decision.
- Any pending applications related to this matter are disposed of accordingly.
- The National Commission is directed to reconsider and make a fresh decision on the complaint based on the given directions.
- The complaint will be reheard and decided on its merits once again after the above steps are completed.
Case Title: M/S KOZYFLEX MATTRESSES PRIVATE LIMITED Vs. SBI GENERAL INSURANCE COMPANY LIMITED (2024 INSC 234)
Case Number: C.A. No.-007966 / 2022
