V Rajendran (Advocate and Cyber Law Consultant) 08 August 2013

Definition of 'consumer' in consumer cases

There seems to be some ambiguity in some district foums about the definition of the word "consumer" vide section 2 (1) (d) of the Consumer Protection Act. The Act amended in March 2013 excludes from the purview of the ACt, those consumers who use the product for commercial purpose (with an exception that when the commercial use is for the livelihood of the consumer). In other words, the intended purport of the Amendment is that a user of a goods or services for commercial purpose cannot be called a consumer. That is, a car dealer or an AC dealer cannot file a case in the consumer forum for a defect in the product (car or AC etc) purchased by him, which he is going to re-sell since he is not a conumer. Understandable. Some forums mistake this to mean that commerical companies or those with current acconts in banks cannot file a case in consumer forum for a deficiency in service (of banking). There are instances where complaints have been questioned (and rejected) at the admissibility stage, stating that current account holders or account-holders of firms or trusts are not consumers of banking service. This puts a blanket ban on all account holders other than pure savings bank account holders, to approach Consumer Forum or Commission. Certainly this is not the essence of the Amendment of March 2013. Officials at the registry forget that banking is not the product that is coming for re-sale and account holders irrespective of the type of accounts (Current A/c, Loan A/.c or Savings Bank A/c) are essentailly consumers of banking service and here banking as a service is not being dealt with and is not a commercial product per se. Otherwise, even law firms and professionals having current a/cs will be taken outside the purview of the Consumer Forums and Commissions. I would be obliged if members can share their experience and suggest remedial or corrective measures and awareness initiatives.. V Rajendran, Advocate and Cyber Law Consultant.

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4 Replies

Suri.Sravan Kumar (senior) 09 August 2013

pl refer National Commission Judgement onChhattisgarh Rajya Laghu Vanopaj v/s State Bank of Indore date of judgement 22/1/2013

Suri.Sravan Kumar (senior) 09 August 2013

current account with overdraft facility was for commercial purpose, prima facie, complainant does not fall within the purview of consumer under the Consumer Protection Act and complaint is not maintainable.

National Commission in M/S Safe Home Developers & contractors V/S Samata Sahakari Bank Ltd (date of judgement 16/10/2012)

Suri.Sravan Kumar (senior) 09 August 2013

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

NEW DELHI

REVISION PETITION NO. 2571 OF 2012

(From order dated 27.02.2012 in First Appeal No. A/10/1246 of the

Maharashtra State Consumer Disputes Redressal Commission, Mumbai )

WITH

I.A. No. 1 OF 2012

(Exemption from filing official translation)

Subhash Motilal Shah (HUF)

Dead through his LRs :

1. Smt. Mahananda S.Shah

W/o Late Subhash Motilal Shah

‘Triveni’, Vardhaman Nagar

Malegaon, Dist.Nashik

2. Ajay Subhash Shah

S/o Late Subhash Motilal Shah

107, Tilak Road, Malegaon

District Nashik

3. Sanjay S.Shah

S/o Late Subhash Motilal Shah

‘Samkeet’, Near Ekata Chowk

Malegaon, District Nashik

4. Vijay S.Shah

S/o Late Subhash Motilal Shah

‘Triveni’ Vardhaman Nagar

Malegaon, District Nashik

5. Smt. Neena B.Shah

D/o Late Subhash Motilal Shah

1^st Floor, Chandanbala Apartment

Shingada Talao, Nashik

6. Rainbow Corporation

Mr.Ajay S.Shah (HUF)

Through its Proprietor

Mr.Ajay S.Shah

R/o R.No.107, Tilak Road

Malegaon, District Nashik

7. Rainbow Agencies

Through its Proprietor

Seema Ajay Shah

Dist.Nasik … Petitioners

Versus

Malegaon Merchants Co-op Bank Ltd.

H/o Somwar Ward Mamcobhavan

Malegaon Branch Malegaon

District Nashik … Respondent

BEFORE:

HON’BLE MR.JUSTICE J. M. MALIK , PRESIDING MEMBER

HON’BLE MR. VINAY KUMAR, MEMBER

For the Petitioners : Mr. Sudhanshu S. Choudhary, Advocate

Pronounced on_12.02.2013

O R D E R

JUSTICE J.M.MALIK

1. Subhash Motilal Shah, Petitioner No.1/Complainant No.1, and subsequently represented by his LRs, Petitioner Nos. 2, 3, 4 and 5, Rainbow Corporation, Petitioner No.6/Complainant No.2, and Rainbow Agency, Petitioner No.7/Complainant No.3, filed a complaint against Malegaon Merchants Co-op. Bank Ltd., OP, before the District Forum. The complaint was dismissed and the appeal preferred by the complainants was also dismissed. Both the foras below came to the conclusion that the petitioners are not “consumers”, since the transaction in question relates to “commercial one”.

2. It was alleged that the respondent Bank was deficient in service as they honoured various cheques, which according to the complainants were cheques, not issued by the account holder, and the signatures of operating persons were forged.

3. We have heard the learned counsel for the petitioner. The State Commission was pleased to hold :-

“Admittedly, since Rainbow Corporation is a firm of Ajay Subhash Shah (HUF), i.e., jurisdic person, there arise no question of self-employment so as to cover the case under explanation to section 2(1)(d)(ii) of the Consumer Protection Act, 1986 (‘Act’ for brevity). It is a case relating to an action related with services given while operating the Current Account of Appellant Rainbow Corporation which was admittedly opened and used for business purpose, of the business of ‘commission agent’ and business of ‘yarn sale’. Therefore, since the account itself is connected and related to the business transactions and such banking activity is required for the functioning of a given business enterprise of the appellant/complainant, services hired for that purpose would fall within the category of hiring services for commercial purpose. A useful reference can be made to free dictionary by FARLEX (on Internet) which defines the ‘Business Activity’ as the activity undertaken as a part of commercial enterprise. Further, reference can be made to an article available on the internet Website Wise Geek (copyright protected 2003-12 by Conjecture Corporation) and which is written by Alexis. W, edited by Heater Bailey. Under the circumstances, prima facie appellant/complainant Rainbow Corporation cannot be a consumer within the meaning of Section 2(1)(d)(ii) of the Act”.

4. Learned counsel for the petitioner vehemently argued that the view taken by the State Commission is erroneous, because, even ‘commercial transaction’ can be taken into consideration. He has cited a Supreme Court’s authority in support of his case which is reported in Regional Provident Fund Commissioner Vs. Shiv Kumar Joshi, (2000) 1 SCC 98, wherein it was held that the combined reading of the definitions of “consumer” and “service” under the Act and looking at the aims and object for which the Act was enacted, it is imperative that the words “consumer” and “service” as defined under the Act should be construed to comprehend consumer and services of commercial and trade-oriented nature only. Thus any person who is found to have hired services for consideration shall be deemed to be a consumer notwithstanding that the services were in connection with any goods or their user. Such services may be for any connected commercial activity and may also relate to the services as indicated in Section 2(1)(o) of the Act.

5. As a matter of fact, there was amendment in the Act. By the Act No.62 of 2002, w.e.f. 15.03.2003, the said Amendment, runs as follows:-

Section 2(d)(ii) : hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purpose.

[Inserted by Act 62 of 2002, sec.2 (w.e.f. 15.03.2003)]

Explanation – For the purposes of this clause, “commercial purpose” does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment.

[Subs.by Act 62 of 2002, sec.2, for Explanation (w.e.f.15.03.2003)].

Consequently, this authority has no application to the present case.

6. The revision petition is without merit and the same is, therefore, dismissed.

.…..…………………………

(J. M. MALIK,J.)

PRESIDING MEMBER

.…..…………………………

(VINAY KUMAR)

MEMBER

dd/3

V Rajendran (Advocate and Cyber Law Consultant) 09 August 2013

The two responses given by Advocate Shravan Kumar are 'speaking' and very clear. I still wonder whether these judgements would mean that current account holders (and for that matter, non-Savings Bank Account holders) are not consumers within the purview and definition of the Act and hence cannot seek redress under the CPA. This is a far-reaching judgement and has wider ramifications, a great boon to the banking industry.