NAME OF THE CASE: Harsolia Motors Vs. National Insurance Co. Ltd.
ISSUE: whether insurance policy taken by commercial units could be held to be hiring of services for commercial purpose and thereby excluded from the purview of the Consumer Protection Act, 1986.
FINDINGS OF THE COURT: The court stated that an insured who takes the insurance policy cannot trade or carry on any commercial activity with regard to the insurance policy taken by him. Under Sec. 3 of the Insurance Act, 1938, no person is permitted to carry on business of insurance unless he obtains a certificate of registration from the Insurance Recovery and Development Authority.
While citing the provisions of Sections 2(1)(d) and 2(1)(o) as well as earlier decisions, the court held that-
“The combined reading of the definitions of “consumer” and “service” under the Act and looking at the aims and object for which the Act was enacted, it is imperative that the words “consumer” and “service” as defined under the Act should be construed to comprehend consumer and services of commercial and trade oriented nature only. Thus any person who is found to have hired services for consideration shall be deemed to be a consumer notwithstanding that the services were in connection with any goods or their user. Such services may be for any connected commercial activity.
Therefore, the court cited the two fold classification for commercial purpose and non-commercial purpose.
If the goods are purchased for resale or for commercial purpose then such consumer would be excluded from the coverage of Consumer Protection Act, 1986. Such illustration could be that a manufacturer who is producing one product ‘A’ , for such production he may be required to purchase articles, which may be raw-material, then purchase of such articles would be for commercial purpose. As against this, the same manufacturer if he purchases a refrigerator, a television or an air-conditioner for his use at his residence or even in his office, it cannot be held to be for commercial purpose and for this purpose he is entitled to approach the consumer forum under the Act.
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.
Further, the court from the aforesaid discussion, made it 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, the court finally stated that 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.