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Judgment
Dr. Inder Jit Singh, Presiding Member
The present First Appeal (FA) has been filed by the Appellant against Respondent as detailed above, under section 19 of Consumer Protection Act 1986, against the order dated 05.07.2018 of the State Consumer Disputes Redressal Commission, U.P., Lucknow (hereinafter referred to as the ‘State Commission’), in Consumer Complaint (CC) No. 82/2014 inter alia praying for setting aside and quashing the impugned order dated 05.07.2018 passed by the State Commission.
The Appellant was Complainant and the Respondent was Opposite Party (OP) in the said CC No. 82/2014 before the State Commission. Notice was issued to the Respondent on 18.09.2018. Parties filed Written Arguments/ Synopsis on 25.08.2022 (Appellant) and 26.10.2023 (Respondent) respectively.
Brief facts of the case, as emerged from the FA, Order of the State Commission and other case records are that:
The Appellant/complainant purchased a BMW car having Registration No. UP78DB-0777 on 04.04.2012.The said car was financed by HDFC Bank and insured from Tata AIG Insurance Co. Ltd.The insurance was renewed by the Respondent/Bajaj Alliance General Insurance Co. Ltd. and a new policy was issued on 02.07.2013 insuring the car for the period 02.07.013 to the midnight of 01.07.2014 after taking premium for total insured value of Rs.31,50,000/-.On 16.09.2013 at about 9-30 P.M., the said car, which was driven by the driver of the Appellant/complainant, met with an accident and the car was completely damaged.In the morning, the Appellant/complainant informed the SHO P.S. Bakawar Distt. Etawah in writing. The Respondent/Insurance Company was also informed on its Toll Free Number and thereafter a surveyor was appointed by the Respondent who visited the spot and took photographs. The Car was brought to company’s garage at Lucknow by towing the car in a Truck on 18.09.2013.The car was in a condition which was non-repairable and despite providing all documents to the Respondent/Insurance Company, the Respondent kept delaying and repudiated the claim of the Appellant/complainant vide letter dated 07.02.2014 stating that (i) the Appellant/complainant failed to give logical and satisfactory reply to the letters dated 22.12.2013 and 30.12.2013 (ii) as per verification, the details of driver and spot shown are not genuine and (iii) in view of non-cooperation and providing misleading information.Hence, the complainant filed Complaint before the State Commission.
Vide Order dated 05.07.2018, the State Commission has dismissed the complaint with liberty to the complainant to file its case before the competent court having jurisdiction.
Appellant/complainant has challenged the Order dated 05.07.2018 of the State Commission mainly on following grounds:-
(i) The State Consumer presumed that as the vehicle was purchased in the name of the Company and used by Managing Director of the Company and as such, the use of the vehicle was for commercial purpose, hence the Complainant/Appellant does not come within domain of Consumer Protection Act.
(ii) The State Commission failed to apply judicious mind that a vehicle purchased in the name of a Company does not mean in itself that the said vehicle is purchased for commercial purpose. The State Commission wrongly jumped to a conclusion that as the vehicle was purchased in the name of the Company M/s Khemka Herbs & Spices Pvt. Ltd. and the same was used by the Managing Director of the said company, therefore, the vehicle was not for private purpose but for benefit of the Company and hence, was having commercial over tones. The State Commission has wrongly interpreted the meaning of "Commercial Purpose" in Section 2(1) (d) of the Consumer Protection Act. The impugned judgment is based upon surmises and conjectures as it has been presumed that the vehicle was meant for commercial purpose. The State Commission has wrongly relied upon the judgment in the case "General Motor India Pvt. Ltd. & Anr. V/s G.S. Fertilizers Pvt. Ltd. & Ors." decided on 07.02.2013 and "Crompton Greaves Ltd. & Anr. Vs Daimler Crysler India Pvt. Ltd. & Ors." and came to conclusion that purchase of Car by Company for the purpose of Company amount to purchase for commercial purpose even if such a Car is used by Directors of the Company for their personal purposes. The State Commission did not interpret the judgment in "Crompton Greaves Ltd. & Anr. Vs Daimler Crysler India Pvt. Ltd. & Ors." decided on 08.07.2016 in its true spirit, wherein it has been held that "if a Car or any other goods are obtained or any services are hired or availed by a Company for the use/personal use of its Directors or Employees, such a transaction does not amount to purchase of goods or hiring or availing of services for a commercial purpose, irrespective of whether the goods or services are used solely for the personal purpose of the Directors or Employees of the Company or they are used primarily for the use of the Directors or Employees of the Company and incidentally for the purpose of the Company.
(iii) The State Commission failed to acknowledge the fact that the Company is in the business of Herbs & Spices and the Car (Vehicle) was purchased primarily for the use of Managing Director of the Company and not for the business of the Company.
(iv) The impugned order is bad in law and against the provisions of the Consumer Protection Act, 1996. The observation of the State Commission against the Complainant/Appellant are contrary to the settled Law laid down by this Commission and Hon'ble Supreme Court of India. The State Commission did not apply the judicious mind while passing the impugned order and thus, erred in law and facts.
Heard counsels of both sides. Contentions/pleas of the parties, on various issues raised in the FA, based on their FA/Reply, Written Arguments, and Oral Arguments advanced during the hearing, are summed up below.
6.1 It is contended by the Appellant that the Respondent/Insurance Company repudiated the claim on frivolous grounds.The State Commission dismissed the complaint on the ground that the complaint is not maintainable before the State Commission since the car was purchased in the name of the Company, therefore theAppellant is not a consumer.The State Commission did not discuss the issues concerning merits of the case nor adjudicated.The State Commission while passing the impugned order wrongly relied upon the judgment in the case of “Crompton Greaves Ltd. & Anr. Vs. Diamler Chrysler India Pvt. Ltd. & Ors. (supra) and came to the conclusion that purchase of car by the company for the purpose of company amount to purchase for commercial purpose even if such a car is used by the Director of the Company for their purpose whereas it has been held in the same judgment in its para 11 (a), whichstates that “(a) If a car or any other goods are obtained or any services are hired or availed by a company for the use/personal use of its directors or employees, such a transaction does not amount to purchase of goods or hiring or availing of services for a commercial purpose, irrespective of whether the goods or services are used solely for the personal purposes of the directors or employees of the company or they are used primarily for the use of the directors or employees of the company and incidentally for the purposes of the company.”. It is further contended that para 6 of the judgment of the above judgment states that the goods and services made available by a company to its Directors or Employees is classified into three categories (a), (b) and (c).The Appellant falls in category (a) and utmost category (b) and in no manner the Appellant falls in category (c ) as the car is luxury car purchased by the Managing Director Mr. Sunil Khemka for his personal use in the name of his company as it is an admitted fact that the said vehicle was used by the Managing Director of the Company and also that the Appellant is in the business of Herbs and Spices and in no manner can use the car primarily for its business. Hence, the impugned order be set aside being contrary to the settled law.
6.2 On the other hand Respondent/Insurance Company contended that the vehicle met with accident on 16.09.2013 but no FIR was lodged in this regard and only a copy of the intimation dated 17.09.2013 was provided to the insurance company, authenticity whereof is doubtful.Claim intimation was given to the call centre of the Insurance Company on 01.10.2013 after a delay of 15 days and the date of loss was mentioned as 16.09.2013 and name of driver was disclosed as Rupesh Kumar.Upon verification of the said intimation dated 17.09.2013 from concerned police station, it was found that neither any intimation was given to police nor any GD entry was made in this regard by the police concerned.Due to delayed intimation, the insurance company could not conduct a spot survey. Upon receipt of claim intimation, the insurance company immediately appointed an IRDA licensed Surveyor for assessment of loss and during investigation, it was revealed that the cause of accident and place of accident is not genuine. The insured had misrepresented about the name of the driver in the intimation dated 01.10.2013 as Mr. Rupesh Kumar instead of Mr. Suraj. Hence, the claim of the respondent/complainant was closed as 'No Claim' and intimated to the respondent/complainant vide letter dated 07.02.2014 with the observations: "1. You failed to give logical and satisfactory reply to our letters dated 22/12/2013, 30/12/2013 which were necessary to ascertain the actual facts to ascertain admissibility of the claim; 2. As per verification the details of driver and spot shown are not genuine; 3. Further in view of your non-cooperation and providing misleading information, it is clear that you had tried to mislead us and suppressed the material facts with regard to this claim which are very much necessary to ascertain the admissibility of the claim." It is further contended that the respondent / complainant had failed to prove that the insured vehicle had met with an accident and the damages related to the accident and had concocted a false story in order to get the claim on total loss basis. The Surveyor had inspected the vehicle in open / dismantled condition. There was delay in intimation of the loss to the insurance company which amounted to violation of Condition No. 1 of the policy. The complainant had tried to mislead the insurance company by giving wrong details of the driver. The claim of the complainant had been rightly closed by the insurance company and there was no deficiency in service on the part of insurance company. The vehicle in question was purchased in the name of Company and used by the Managing Director of the Company and as such it is very clear that the use of vehicle was for commercial purpose and the State Commission has rightly dismissed the complaint.In support of their contention, the insurance company relied upon the judgment passed by this Commission in R.D.S. Project Ltd. Vs. Scoda Auto India Pvt. Ltd. & Anr. in FA/786/2016 decided on 18.03.2019.
The vehicle in question being in the name of complainant company M/s Khemka Herbs & Spice Pvt. Ltd., is not in dispute. Further, Mr. Sunil Khemka being the MD of the Company, and the said vehicle having been bought for use by MD of the Company is not in dispute. The main contention of OP before the State Commission on maintainability of the case was that the vehicle having been purchased in the name of company was not for private purpose but for benefit of the company and hence, was having commercial overtones and hence, not maintainable. OP argues that complainant company does not come within the definition of consumer. Relying on various decisions of this Commission in General Motors India Pvt. Ltd. and Anr. Vs. G.S. Fertilizers (P) Ld. And Ors., First Appeal No. 723 and 736 of 2006 decided on 07.02.2013, IV (2016) CPJ 469 (NC), Crompton Greaves Ltd. & Anr. Vs. Daimler Chrysler India Pvt. Ltd. & Ors., the State Commission held that if a vehicle is purchased by a company for being used by the MD for the purpose of Company then purchase amounts for commercial purpose. In the instant case, finding that vehicle was purchased in the name of the Company for use of its MD, State Commission held that it was for the purpose of the Company and that the vehicle was to be used by its MD, therefore, the purchase was for commercial purposes only. Since Mr. Sunil Khemka was to use the vehicle as MD of the Company, it was being used for commercial purpose of the Company. Hence, the complaint was dismissed as not being maintainable without going into the merits of the case.
This issue was considered at length by a larger Bench of this Commission. In Crompton Greaves Ltd. & Anr. Vs. Diamler Chrysler India Pvt. Ltd. & Ors. decided on 08.07.2016 (2016 SCC Online NCDRC 2121). Extract of relevant paras of this judgment are reproduced below:
“Noticing an apparent conflict in the decisions rendered by this Commission in Controls and Switchgear Company Ltd. Vs. Daimler Chrysler India Pvt. Ltd. and T and T Motors Ltd. IV (2007) CPJ 1 (NC) and General Motors Pvt. Ltd. Vs. G.S. Fertilizers Pvt. Ltd. [First Appeal No. 723 of 2006] decided on 07.02.2013, both rendered by Benches comprising two Members, the following issue was referred to this larger Bench, for decision:-
· Whether the purchase of a car or any other goods by a company for the use/personal use of its Director amounts to purchase for a commercial purpose, within the meaning of Section 2(1)(d) of the Consumer Protection Act, or not.
x x x x
The term ‘commercial purpose’ has not been defined in the Consumer Protection Act and as held in Laxmi Engineering Works v. P.S.G. Industrial Institute [(1995) 3 SCC 583], in the absence of a statutory definition, we have to go by its ordinary meaning. ‘Commercial’ denotes ‘pertaining to commerce’ (Chamber’s Twentieth Century Dictionary); it means “connected with, or engaged in commerce; mercantile, having profit as the main aim” (Collin’s English Dictionary) and the word ‘commerce’ means “financial transactions, especially buying and selling of merchandise on a large scale” (Concise Oxford Dictionary)”.
Going by the dictionary meaning, a car or for that matter any goods obtained and the services hired or availed by a company can be said to have been obtained or hired or availed for a commercial purpose, only if the said goods or services are intrinsically connected with, or related to the business or commerce in which the company is engaged. The acquisition of the goods or the hiring or availing of services, in order to bring the transaction within the purview of section 2 (1) (d) of the Consumer Protection Act, therefore, should be aimed at generating profits for the company or should otherwise be connected or interwoven with the business activities of the company. The purpose behind such acquisition should be to promote, advance or augment the business activities of the company, by the use of such goods or services. As observed by the Hon’ble Supreme Court in Laxmi Engineering Works (supra), it is not the value of the goods but the purpose for which the goods are brought or put to use, which is relevant to decide whether the goods were obtained for a commercial purpose or not. The same would be the position, where services are hired or availed by a company. If the business activities of a company cannot be conveniently undertaken without the goods purchased or the services hired or availed by a company, such purchase or hiring/availing as the case may be, would be for a commercial purpose, because the objective behind such purchase of goods or hiring or availing of the services would be to enable the company to earn profits by undertaking and advancing its business activities.
If a car or other goods are purchased or the services are hired or availed by a company for the personal use of its directors or employees, the purpose behind such acquisition is not to earn profits or to advance the business activities of the company. The purpose is to make certain facilities and amenities available to the directors and employees of the company as a part of the incentive offered to them by the company, as a reward or remuneration for the work which they are expected to perform for the company. It is not as if a company cannot run its business without providing such facilities and amenities to its directors and employees. It is not necessary for the business of the company, to provide such facilities and amenities to its directors and employees. Providing such facilities and amenities only motivates them to perform their work in an efficient and congenial environment, besides serving as an incentive aimed at eliciting better performance. The company does not earn profit merely by making a car or certain other goods or services available to its directors and employees. Therefore, it would be difficult to say that such goods are purchased or the services are hired or availed by the company for a commercial purpose.
The goods and services made available by a company to its directors or employees can be classified into the following three broad categories:-
(a) The goods and services which are obtained for and made available to the directors or employees of the company and are used by them only for their personal purposes, unconnected with the business of the company. For instance, the cars used by the directors and employees of the company for their shopping, outings, recreations, etc. or for commuting to and from the office of the company. Another example can be the air conditioners and furniture provided at the residence of the directors and employees of the company or the telephone or broadband got installed by the company at their residence.
(b) The goods and services made available to the directors or employees of the company and used by them primarily for their personal purposes but incidentally, also for the purposes of the company. For instance, a car used mainly for outings, recreations, personal commuting etc. of the directors and employees or their families, but also for visiting the factory and offices of the company or attending the business meetings.
(c) The goods and services made available by a company to its directors and employees primarily for the purposes of the company and used by them mainly for the purposes of the company but incidentally also for their personal purposes. For instance, a vehicle purchased for being used as a staff car or a delivery van, but sometimes also used for the personal purposes of the directors or employees, unrelated to the business of the company.
As far as the goods and services falling in category (a) are concerned, there can be no dispute that since such goods were purchased or the services were hired or availed by the company and made available to its directors and employees for the purposes wholly unrelated to the business activities of the company, such an acquisition cannot be said to be for a commercial purpose. No commercial purpose of the company is achieved by purchasing such goods or hiring or availing such services and then making them available to its directors and employees.
In our opinion even if such goods or services are incidentally used by the directors or employees of the company for the purposes of the company, that would not lead to the conclusion that the acquisition of such goods or services was for a commercial purpose. The dominant purpose behind such acquisition being to provide an amenity to the directors or the employees as the case may be, it cannot be said that the company was seeking to make a profit or advance its business by such an acquisition. The use for the purposes of the company being subsidiary and incidental in nature, cannot override the dominant purpose for which they were acquired and made available to the director or the employee of the company. Therefore, the acquisition of goods and services, even if they fall under category (b) above, cannot be said to be for a commercial purpose.
As far as the goods or services falling in category (c) are concerned, since the dominant purpose behind such acquisition is to advance and sustain the business activities of the company and the use for the personal purposes of the directors or the employees being incidental, it can be safely said that such an acquisition was for the commercial purposes of the company.
x x x x
For the reasons stated hereinabove, the issue referred to the larger Bench is answered as follows:-
(a) If a car or any other goods are obtained or any services are hired or availed by a company for the use/personal use of its directors or employees, such a transaction does not amount to purchase of goods or hiring or availing of services for a commercial purpose, irrespective of whether the goods or services are used solely for the personal purposes of the directors or employees of the company or they are used primarily for the use of the directors or employees of the company and incidentally for the purposes of the company.
(b) The purchase of a car or any other goods or hiring or availing of services by a company for the purposes of the company amount to purchase for a commercial purpose, even if such a car or other goods or such services are incidentally used by the directors or employees of the company for their personal purposes.
The Appellant contends that State Commission did not interpret the judgment dated 08.07.2016 of this Commission in Crompton Greaves Ltd. (supra) in its true spirit, arguing that the company is in the business of Herbs & Spices and this car was purchased primarily for the use of its MD of the Company and not for the business of the company. The Appellant further contends that the Appellant falls in category (a) (of para 6 of judgment of this Commission in Crompton Greaves (supra) and at the most in category (b) and in no manner the Appellant falls in category (c) as the car is a luxury car purchased by the MD Mr. Sunil Khemka for his personal use in the name of the Company and the said vehicle was used by MD of the Company and that Appellant is in the business of Herbs and Spices and in no manner can use the car primarily for its business.
We have carefully gone through the orders of State Commission, other relevant records and rival contentions of the parties and are in agreement with the contentions of Petitioner herein (Appellant before the State Commission) and hold that in the given facts and circumstances of the case, the Petitioner’s case does not fall in category (c) of Para 6 of judgment of this Commission in Crompton Greaves Ltd. (supra). It falls in category (a) or at the most category (b) of para (6) of the said judgment. Hence, the State Commission went wrong in concluding that the said vehicle was used by the Company for the purpose of the Company and the purchase was for commercial purpose. Hence, we hold that the complainant fulfills the definition of consumer under the Consumer Protection Act and the said complaint is maintainable. Accordingly, we set aside the order of the State Commission and remand the matter back to the State Commission for fresh disposal on merits, after giving an opportunity of hearing to both sides. Both sides will appear before the State Commission on 22.02.2024. Thereafter the State Commission will have the liberty to fix further dates of hearing as per its own convenience. However, the State Commission should endeavor to dispose of the case as soon as possible, preferably within about 3 months from the date of first appearance of parties before the State Commission as per this order.
The pending IAs in the case, if any, also stand disposed off.