In Brief
Farmers in Bengaluru stored Byadgi chillies and other produce in a cold storage facility, with the Bank providing loans secured against that produce under a tripartite agreement. The cold storage held an insurance policy. A fire destroyed the facility and goods in January 2014. The insurance company denied the farmers' claims, arguing they were not parties to the policy and the fire was deliberate arson. The Supreme Court held farmers are consumers under the Consumer Protection Act and beneficiaries of the insurance, even without privity of contract. The fire was accidental, caused by electrical short circuit. The insurance company must pay the value of goods (per warehouse receipts) plus 12% p.a. interest from the fire date, with the Bank recovering its principal and interest first.", <parameter name="principles">["The Consumer Protection Act definition of 'consumer' includes beneficiaries of services, not merely parties to the contract.", "Privity of contract is not required for a person to be a 'consumer' under the Consumer Protection Act.", "In insurance contracts, coverage provisions should be interpreted broadly in favour of the insured, while exclusion clauses must be read narrowly.", "Non-disclosure that does not render a policy void ab initio cannot be used as a ground for repudiation after acceptance of premium for multiple years.", "The presence of hydrocarbons from burnt debris cannot alone prove use of external accelerants (kerosene) when the building materials themselves contain hydrocarbon-based compounds.", "An Agreed Bank Clause in an insurance policy indicating payment to a bank as agent for 'other parties' evidences awareness of third-party interests in insured goods.", "Where quality of agricultural produce is not recorded in warehouse receipts, valuation must be based on the value recorded at deposit, not speculative market rates on the loss date.", "A financial institution advancing loans on security of goods must take reasonable steps to ensure the insured is aware of third parties' interests; failure to do so may result in loss of contractual interest benefits."]
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