SC: Beneficiaries of an Insurance Contract are “Consumers”

In the case of Canara Bank v. United India Insurance Company Ltd. and Ors., the Supreme Court of India held that beneficiaries of an insurance policy come within the scope of ‘consumers’ as defined by Section 2(d) of Consumer Protection Act.

In this case, certain farmers were using a cold storage company called Sreedevi Cold Storage to store their agricultural produce. This company was insured by the defendant – United India Insurance Co. Ltd. Appeals by the farmers relating to the insurance contract were heard by both the State and the National Consumer Court and relief was granted. The claim that the farmers were not ‘consumers’ and thus could not approach the Consumer Court was then heard by the Supreme Court which ruled in the favour of the farmers.

The bench of Justices S. Abdul Nazeer and Deepak Gupta held that “As far as the definition of consumer in relation to hiring or availing services is concerned, the definition, in our view, is much wider… consumer includes not only the person who has hired or availed the services but also includes the beneficiary of such services. Therefore, an insured could be a person who hires or avails the services of the insurance company but there could be many other persons who could be beneficiaries of the services… They are consumers.”