Date of judgement:
22nd February, 2022
Bench:
L. NAGESWARA RAO; B.R. GAVAI, JJ.
Parties:
Plaintiffs – Shrikant G. Mantr
Defendants – Punjab National Bank
SUBJECT
An appeal was filed against the order of the National Consumer Disputes Redressal Commission (NCDRC) where the Commission had held that the appellant was not a consumer of the respondent bank.
OVERVIEW
- The appellant, a stockbroker by profession, had an account with Nedungadi Bank Limited. The appellant had availed an overdraft facility from the Bank for an amount of 1 crore which was later enhanced to 5 crores.
- On 17th March 2001, this limit was temporarily enhanced by an additional 1 crore.
- Thereafter, the appellant's account became irregular and he failed to regularise the same. Resultantly, he was asked to pay around 6 crores along with interest.
- The appellant advised the bank to sell his shares pledged as security. The Bank recovered a part of the debt by the sale of shares and filed a recovery suit before the Debts Recovery Tribunal (DRC) for the remaining debt.
- However, the appellant and the Bank agreed upon a one-time settlement and the bank issued a no objection certificate and withdrew the recovery proceedings.
- The appellant also worked as the stockbroker of the bank. After settlement, the appellant sought the release of the shares and the Bank initiated arbitration proceedings. The respondents failed in the proceedings.
- Thereafter, the appellant filed an appeal before the National Consumer Dispute Redressal Commission seeking the release of the shares by the bank.
- The Commission held that appellant was not a consumer under Section 2(1)(d) of the Act.
- An Appeal against this order was filed before the Supreme Court of India.
IMPORTANT PROVISIONS
Consumer Protection Act
- Section 2(1)(d): Definition of consumer.
ISSUES RAISED
- Whether the appellant was a consumer of the respondent bank as per Section 2(1)(d)?
JUDGMENT ANALYSIS
- The appellant submitted that he had a dual relationship with the bank in the form of a consumer as well as a broker.
- The appellants contended that his overdraft account was settled and the Bank had no legal reason to withhold the shares after the finality of the arbitration proceedings.
- Furthermore, the appellants pleaded that the complainant was self employed as a stockbroker and his overdraft account was for his self employment purposes.
- He relied on the case of Internet and Mobile Association of India vs. Reserve Bank of India, (2020) 10 SCC 274 and pleaded that bank services are essential for business.
- The respondents, on the other hand, submitted that providing such a broad meaning to the definition of consumer would defeat the purpose of the Act which is meant to provide speedy justice to consumers.
- The Court noted that any person who purchases a product for resale or commercial proposes is excluded from the definition of consumer. By the 1993 Amendment, the Legislature expanded the scope of the section in such a manner so as to include persons who buy and use goods for earning their livelihood through self employment within the definition of consumer.
- Similarly, the 2002 amendment provided that while commercial services would not be within the ambit of Section 2(1)(d), a person availing services for livelihood purposes through self-employment would be considered to be a consumer.
- The Court relied on the case of Laxmi Engineering Works vs. P.S.G. Industrial Institute, (1995) 3 SCC 583 to define the phrase 'commercial purposes' and held that it includes those activities which have profit as their primary aim.
- However, in the present case, the relationship between the bank and appellant was purely business to business and the overdraft facility was used by the appellant to increase his income.
- The transactions between the appellant and the respondent bank were thus commercial in nature. Hence the Court upheld the decision of the National Commission.
CONCLUSION
The Court in this case laid down the complete history of the various amendments to the Consumer Protection Act and highlighted the intention of the Legislature behind each amendment. The Court rightly notes that a person involved in buying goods or availing services for the purpose of earning his livelihood through self-employment would be within the ambit of the definition of consumer.
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