In Brief
The Supreme Court examined whether commercial enterprises that take out insurance policies can be treated as 'consumers' under the Consumer Protection Act, 1986. A fire during the Godhra riots caused losses to two commercial businesses that had obtained insurance. The insurer denied one claim and partially admitted the other, leading to complaints that the insurer deemed non-maintainable because the buyers were commercial entities. The Court held that commercial enterprises are not automatically excluded from being consumers merely because they are businesses. Insurance contracts are indemnity contracts designed to cover losses, not generate profits. Therefore, if the dominant purpose of obtaining insurance is to cover risk and indemnify losses (not generate profit), the purchaser qualifies as a consumer despite being a commercial entity. Each case must be examined on its specific facts to determine whether the transaction has a direct nexus with profit-generating activity.
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