Beneficiaries of Insurance policy are ‘consumers’ even if they are not parties to contract of insurance

The Supreme Court in the matter of Canara Bank vs United Indian Insurance Corporation (Civil Appeal No. 1042 of 2020), decided on 06.02.2020 observed that the beneficiaries of the policy taken out by the insured are also ‘consumers’ under the Consumer Protection Act, even if they are not parties to the contract of insurance.

Facts

In this case, the farmers had stored their agricultural produce in a cold store run by a partnership firm under the name and style of Sreedevi Cold Storage. This Cold Storage firm was insured with the United India Insurance Company Limited. The State and National Consumer Forum had granted relief in the complaints filed by Farmers against repudiation of the claim of the cold storage by the insurance company. In the appeal filed by the insurance company, the contention taken was that there was no privity of contract between the farmers and the insurance company because the policy was taken by the cold storage and not by the farmers and therefore they cannot be called ‘consumers’.

Issue

Whether in facts of the present case, the farmers/ beneficiaries could be defined as consumers?

Ratio

The Apex Court noted that the definition of ‘consumer’ under the Act is very wide and it not only includes the person who hires or avails of the services for consideration but also includes the beneficiary of such services who may be a person other than the person who hires or avails of services.

It observed that there are two parts of Section 2(d) of the Consumer Protection Act, which defines consumers. sub clause (i) of Section 2(d) deals with a person who buys any goods and includes any user of such goods other than the person who buys such goods as long as the use is made with the approval of such person. In the second part of the definition, consumer includes not only the person who has hired or availed of the services but also includes any beneficiary of such services.

Considering the same, the bench held that the definition of ‘consumer’ includes beneficiaries who can take benefit of the insurance availed by the insured.