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M/S. Kozyflex Mattresses Private Limited vs. SBI General Insurance Company Limited & Anr.

Not available · 2024 INSC 234Decided 20 Mar 2024
Not available
Justice B.R. Gavai · Justice Sandeep Mehta

Background

A private company manufacturing coir foam mattresses had a fire insurance policy on its factory, machinery, and stock. After a major fire damaged the factory in 2013, the company claimed about Rs. 3.31 crores in losses. The insurer appointed a surveyor and two independent investigators, who concluded that key purchases of machinery and stock shown in the claim were fabricated paper transactions meant to siphon money from lenders, and the insurer repudiated the claim as fraudulent. The National Consumer Disputes Redressal Commission upheld the repudiation and dismissed the company's complaint.

Decision Breakdown

The Supreme Court rejected the insurer's preliminary objections (that a company could not be a "consumer" under the pre-2019 Consumer Protection Act, and that the policy was for a "commercial purpose") holding that a beneficial statute like this deserves a liberal interpretation and that a standard fire policy is distinct from a purely commercial transaction. On merits, however, the Court found that the insured company had a genuine grievance that it was never given a proper opportunity to rebut the surveyor's and investigators' reports before the National Commission ruled against it. The Court set aside the National Commission's order and remitted the matter, directing that the company be allowed to file a rebuttal to those reports before the complaint is reheard on merits.

Lesson Learnt

Natural justice requires that a party facing adverse investigation or survey reports in a consumer or insurance dispute must be given a genuine opportunity to see and rebut those reports before a decision is made against them, even if the underlying allegations (like fraud) are serious.

Official source (sci.gov.in)View Judgment (PDF)

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