JUSTICE V.K. JAIN, PRESIDING MEMBER (ORAL)

The complainant obtained a loan of Rs.23 lacs from the OP- Allahabad Bank on 14.10.2006 for his business purpose.  He applied for an increase in the over-draft limit to Rs.35 lacs but was sanctioned an over-draft limit of only Rs.31 lacs.  The complainant could not service the loan which he had taken from the bank, as a result of which, the loan amount become NPA.  For the purpose of taking the aforesaid loan for his business purpose, the complainant had mortgaged an immovable property worth about Rs.1 crore with the bank.  A notice under Section 13(2) of Sarfaesi Act was issued to the complainant consequent to the account having become NPA.

2. Vide his application dated 26.08.2017, the complainant requested One Time Settlement of the dues outstanding in his loan account.  The One Time Settlement sought by the complainant, however, was declined by the bank.  A Writ Petition was then filed by the complainant before the Hon’ble High Court of Odisha, which was disposed of vide order date 31.10.2017.  On 15.01.2018, the complainant sought settlement of the dues on payment of Rs.31 lacs to the bank.  On 07.01.2019, possession notice was issued by the bank to the complainant in exercise of the powers conferred under Section 13(4) of Sarfaesi Act read with Rule-9 of the Security Interest (enforcement) Rules, 2002.  This was followed a notice of sale of the mortgaged property on 25.02.2019.  The complainant made payment of Rs.31 lacs to the bank but the bank is asking for further payment of Rs.11 lacs from the complainant.  Being aggrieved, he is before this Commission, seeking closure of his loan account and payment of compensation from the bank.

3.     The term ‘consumer’ has been defined in Section 2(1)(d) of the Consumer Protection Act, which to the extent it is relevant for the purpose of this petition means a person who buys goods or hires or avails services for consideration but does not include a person who obtains goods for resale or who purchases goods or avails services for any commercial purpose.  As per the explanation, inserted with effect from 15.3.2003, for the purpose of the above referred clause, commercial purpose does not include use of the goods or services exclusively for the purpose of the earning livelihood by means of self-employment.

4.     The term ‘Consumer’ used in Section 2(1)(d) of the Consumer Protection Act came up for consideration of a Three-Members Bench of this Commission in Revision Petition No.2833 of 2018 decided on 06.01.2020 and after considering several decisions on the issue, including Synco Textiles Pvt. Ltd. Vs. Greaves Cotton & Company Ltd. I (1991) CPJ, 499 (NC), Cheema Engineering Services Vs. Rajan Singh (1997) 1 SCC 131, Madan Kumar Singh (Dead) through L.R. Vs. District Magistrate, Sultanpur & Ors. (2009) 9 SCC 79 and Paramount Digital Colour Lab & Ors. Vs. Agfa India Private Limited & Ors. (2018) 14 SCC 81, the larger Bench inter-alia held as under:

 (b)     There should be a direct nexus between the large scale commercial activities in which a person is engaged and the goods purchased or the services hired or availed by him, before he can be excluded from the purview of the term ‘consumer’.  Therefore any goods purchased or the services hired or availed even by a person carrying on business activities on a large scale for the purpose of making profit will not take him out of the definition of the term ‘consumer’, if the transaction of purchases of goods or hiring or availing of services is not intended to generate profit through the large scale commercial activity undertaken by him and does not contribute to or form an essential part of his large scale commercial activities.

(c)     What is crucial for the purpose of determining whether a person is a ‘consumer’ or not is the purpose for which the goods were purchased or the services were hired or availed and not the scale of his commercial activities.

5. The question as to whether a company taking credit facility from a bank can be said to be a  consumer within the meaning of the C.P. Act has come up for consideration of this Commission in several decisions including Revision Petition No.1750 of 2017 – Union Bank of India & Anr. Vs. M/s Learning Spiral Pvt. Ltd. & Ors., decided on 30.7.2018 and the following was the view taken by this Commission:-

If the business activities of a company cannot be conveniently undertaken without the goods purchased or the services hired or availed by a company, such purchase or hiring/availing as the case may be, would be for a commercial purpose, because the objective behind such purchase of goods or hiring or availing of the services would be to enable the company to earn profits by undertaking and advancing its business activities.

6.       In Subhash Motilal Shah & Ors. Vs. Malegaon Merchants Co.-op Bank Ltd., R.P.No.2571 of 2012 decided on 12-02-2013,  the petitioner which had a current account with the bank  had alleged deficiency in service on the part of the bank. The State Commission dismissed the complaint, holding inter alia as under:

"Admittedly, since Rainbow Corporation is a firm of Ajay Subhash Shah (HUF), i.e., juristic 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".

Being aggrieved from the order of the State Commission, the complainant in the said case approached this Commission by way of a revision petition and it was contended by the complainant that considering the aims and objectives behind enactment of the Act, the expression 'consumer' and 'service' as defined under the Act should be construed in a comprehensive manner so as to include the services of commercial and trade oriented nature. In other words, the contention was that any person who hires services for consideration shall be deemed to be a consumer, even if the services were obtained in connection with a commercial activity. However, relying upon the amendment made in the Act with effect from 15-03-2003 the revision petition was dismissed by this Commission thereby upholding the view taken by the State Commission.

7.    In M/s. Sam Fine O Chem Limited Vs. Union Bank of India, C.C.No.39 of 2013, decided on 12-04-2013, the complainant had availed credit facility from Union Bank of India. Alleging deficiency in the services provided by the bank he preferred a complaint before this Commission. Rejecting the complaint this Commission inter alia noted that the complainant had availed the credit facility service of the bank for expansion of its manufacturing activity which was a commercial purpose and, therefore, the complainant did not fall within the definition of 'consumer' given in Section 2(1)(d) of the Act.

In CC No.11 of 2007, Samkit Art & Craft Pvt. Ltd. Vs. State Bank of India & Ors., decided on 14-10-2014, the complainant which was engaged in the business of export had obtained cash credit limit and term loan facility from the State Bank of India. He filed a complaint alleging deficiency on the part of the bank in the services rendered to him. It was held by this Commission that obtaining cash credit facility for the purpose of export of goods was a commercial purpose and, therefore, the complainant company was not a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act.

6. It is evident from a bare perusal of the complaint and documents annexed thereto that the services of the bank were hired or followed by the complainant for commercial purposes he having taken a business loan by way of over-draft etc. from the bank.   This is not the case of the complainant that his case was covered under the explanation appeal Section-2(1)(d) of the C.P. Act and that the business for which the loan was taken by him was being carried by him for the purpose of earning his livelihood by way of self-employment. In any case, the complainant is more than 80 years old.  Therefore, having hired or availed the services of the bank for a commercial purpose, he cannot be said a ‘consumer’ as defined in the C.P. Act.  The consumer complaint, therefore, is not maintainable for redressal of his grievances.  I, therefore, need not go into the question as to whether this Commission would be competent to entertain a matter in which notice under Section-13 of Sarfaesi Act has been issued by the bank to the borrower.  The consumer complaint is therefore dismissed with liberty to the complainant to avail such remedy other than a consumer complaint as may be open to him in law.