Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(SCDRC) 3002

STATE CONSUMER DISPUTES REDRESSAL COMMISSION
Sangita Dhingra Sehgal, President, Bimla Kumari, Member
Nucore Transformers Pvt. Ltd. – Appellant
Versus
Oriental Insurance Co. Ltd. – Respondent
FIRST APPEAL NO.- 233/2022|FA/233/2022

Advocates:
For the Appellants/Petitioners: Kabir Singh Sudan
For the Respondents: Bhupesh Kumar Chandna, Aman Prasad

An insurance policy obtained to indemnify against losses for business assets does not automatically constitute a commercial purpose; it constitutes a consumer transaction if the service lacks a close and direct nexus to profit-generating activity.

Headnote:(A) Consumer Protection Act, 2019 - Section 2(7) - Definition of Consumer - Commerical purpose - Insurance contracts - Indemnity of loss - Insurance as a service availed for protection of assets cannot be strictly categorized as a commercial purpose if there is no direct nexus to profit generation. (Paras 16, 17, 18)

(B) Appeals - Scope - Appellate courts should examine the facts of each case to determine whether the dominant purpose of a transaction was profit-oriented or merely defensive to indemnify risk - No straightjacket formula exists to exclude commercial entities from the definition of a consumer. (Paras 16, 17)

Facts of the case:
The appellant had imported a consignment of materials and obtained an insurance policy to cover risks. Upon delivery, it was discovered that the container seals had been tampered with and the goods were missing. A claim for the insured amount was filed, but the insurer repudiated/closed the claim under a 'No Claim' head. The lower commission dismissed the complaint on the grounds that the appellant, being a commercial entity, was not a 'consumer' as the goods were imported for business purposes.

Findings of Court:
The commission found that the insurance policy was obtained to indemnify against potential loss or damage to goods, which is a defensive measure and not a profit-generating activity. The legal precedents cited by the lower commission were distinguished, and it was held that there is no close or direct nexus between the insurance service and a profit-generating activity in this context.

Issues: Whether the appellant falls within the definition of a 'consumer' under the relevant statute and if the insurance policy was availed for a 'commercial purpose' that would exclude it from the jurisdiction of consumer forums.

Ratio Decidendi: A contract of insurance is essentially a contract of indemnity for defined loss. If the primary purpose of the insurance policy is to indemnify risk rather than to generate profit, the insured party qualifies as a 'consumer' even if the entity is commercial in nature, as there is no direct nexus to profit-generating activity.

Result: Appeal allowed. The order of the District Commission was set aside and the matter was remanded for adjudication on the merits.

Table of Content
1. summary of factual matrix and procedural history. (Para 1 , 2)
2. parties' contentions regarding maintainability of the consumer complaint. (Para 3 , 4 , 5 , 6 , 7 , 8 , 9)
3. defining the core issue of 'consumer' status in insurance disputes. (Para 10 , 11 , 12 , 13)
4. insurance for indemnity does not necessarily constitute commercial purpose. (Para 14 , 15 , 16 , 17 , 18 , 19)
5. setting aside the district commission order and remanding matter. (Para 20 , 21 , 22 , 23 , 24 , 25 , 26)

Present: Mr. Kabir Singh Sudan, counsel for the Appellant.

Mr. Bhupesh Kumar Chandna, counsel for the Respondent no. 1. Appeared through VC.

None for the Respondent No. 2.

Mr. Aman Prasad, counsel for the Respondent no. 3. Appeared through VC.

Respondent no 4. (Mr. R.M. Kaul) in person.

PER: HON’BLE JUSTICE SANGITA DHINGRA SEHGAL, (PRESIDENT)

JUDGMENT

1. The facts of the case as per the District Commission record are as under:

“…2. In March/April 2016 complainant negotiated with OP5 ("the Supplier/ the Consignor/ the Seller") for the supply of Aluminum Alloy Ingots-ADC-125 from China and placed orders for the supply of the same, Aproforma invoice dated 30.03.2016 bearing Invoice No. JRL003/2016 was raised by the Supplier. The Supplier/ Consignor raised a commercial Invoice No. JRL0236/2016 dated 05.04.2016 for supply of 25.28 MTS Aluminium Ingots to the complainant. M/s CCIC Tianjin Co. Ltd conducted a pre-shipment inspection on 06.04.2016 and a Certificate of Quality dated 06.04.2016 was issued by M/s CCIC Tianjin Co. Ltd. Complainant got the said consignment insured from OP1 vide cover note issued on 07.04.2016 bearing no. 131201/21/2017/4 for the sum insured INR 23,45,053/-. Subsequent to the issuance of Certificate of Quality, M/s Om Freight Shanghai Co Ltd. ("the Freight Forwarder") issued the in house Bill of Lading bearing No. OMCH000832B ("the in house B/L for Aluminum Ingots") for the goods being 25.28 Mts of Aluminum Alloy Ingots (confirming that the said goods) had been duly received by the Freight Forwarder in the container No. SEGU1536620 with the bottle seal no. HD2868405 ("the original seal for Aluminum Ingots").

On 16.04.2016, M/s Hyundai Merchant Marine Co. Ltd ("the Marine Linder") issued a Master Bill of Lading bearing no. GID0415773 ("the Master B/L") showing the Consignor as M/s Om Freight Shanghai Co Ltd and consignee as M/s Om Freight Forwarders Pvt Ltd, the port of discharge as Nhava Sheva, India and the place of delivery as ICD, Dadri, India and reflecting the original seal for Aluminum Ingots scrap. Complainant had communicated the details/ copy of the in house B/L for Aluminum Ingots to the OP1 Insurance Company. Further it is pleaded that it is only on the strength of the aforestated documents namely Certificate of Quality, the in house bill of lading for Aluminium Ingots, and after being satisfied about the bonafides of import; the OP issued insurance policy bearing no. 131201/21/2017/4 dated 07.04.2016 (w.e.f. 07.04.2016 as the cover note qua the same date had already been issued).

Complainant being the importer filed the Bill of Entry bearing no. 5359731 ("the B/E for Aluminum Ingots") dated 23.05.2016 for the description of goods stated herein above and even paid the total customs duty to the tune of INR 7,40,219/- (seven lakhs forty thousand two hundred and nineteen only. Complainant emailed OP1 informing them about the factum of seals being different (at the time of taking delivery, and requesting them for a joint inspection with the custom authorities.

It is further pleaded that Insurance Company had appointed Mr. R.M Kaul for joint inspection of the complainant's Cargo received from China as well as to assess the damage caused to the complainant's consignment. The Indian customs department on/ around 01.06.2016 on examination of the goods as described in the B/E noted that the actual bottle seal bearing no. Seal no. HD2868405 had been replaced with a false and fabricated Seal no. 314856 on

Click Here to Read the rest of this document

2026 Supreme(Online)(SCDRC) 3002

STATE CONSUMER DISPUTES REDRESSAL COMMISSIONSangita Dhingra Sehgal, President, Bimla Kumari, MemberNucore Transformers Pvt. Ltd. – AppellantVersusOriental Insurance Co. Ltd. – RespondentFIRST APPEAL NO.- 233/2022|FA/233/2022

An insurance policy obtained to indemnify against losses for business assets does not automatically constitute a commercial purpose; it constitutes a consumer transaction if the service lacks a close and direct nexus to profit-generating activity.

Cases Referred (1)

STATE CONSUMER DISPUTES REDRESSAL COMMISSION
Sangita Dhingra Sehgal, President, Bimla Kumari, Member
Nucore Transformers Pvt. Ltd. – Appellant
Versus
Oriental Insurance Co. Ltd. – Respondent
FIRST APPEAL NO.- 233/2022|FA/233/2022