JUSTICE V.K.JAIN (ORAL)

The complainant which is a private limited company took a loan of Rs.1,54,47,000/- from OP-1 Jana Small Finance Bank Ltd.  Mr. Basant Singh Chauhan one of the Directors of the complainant company had stood as a guarantor for the working loan which OP-1 had sanctioned to the complainant company. Deduction towards payment of the insurance premium was also made by OP-1 bank. Shri  Basant Singh Chauhan died on 15.10.2018. The claim lodged with OP-2 Mahindra Life Insurance Co. Ltd. was, however, rejected on the ground that no policy on the life of Mr. Basant Singh Chauhan had been taken by OP-1. Being aggrieved, the complainant is before this Commission.

2.      Admittedly, the grievance of the complainant is against the OP-1 bank since this is not its case with the insurance policy had actually been taken by OP-1. It is an undisputed position that the insurance policy had not actually been taken.

3.      In terms of Section 2(1)(d) of the C.P. Act, a person hiring or availing services for a commercial purpose is not a consumer, unless the services are hired or the goods purchased for the purpose of earning livelihood by way of self employment. The working loan facility which OP-1 sanctioned to the complainant company were taken for the business of the complainant company which is stated to be running a hotel. The insurance policy was to be taken by OP-1 for the purpose of securing the credit/loan facility which it sanctioned to the complainant company, Mr. Basant Singh Chauhan being one of the guarantors of the loan besides being a director of the complainant company.

4.      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:-

“5.      Section 2(1)(d) of the Act to the extent it is relevant provides that though consumer means any person who hires or avails of any services for a consideration, it does not include a person who avails of such services for any commercial purpose. The explanation attached below the aforesaid clause, to the extent it is relevant, stipulates that commercial purpose does not include use by a person, of the services availed by him, exclusively for the purpose of earning his livelihood by means of self-employment.  It would thus be seen that emphasis is on the purpose for which the goods are purchased or the services are hired or availed.

The term 'commercial purpose' has not been defined in the Consumer Protection Act and as held in Laxmi Engineering Works v. P.S.G. Industrial Institute [(1995) 3 SCC 583], in the absence of a statutory definition, we have to go by its ordinary meaning. 'Commercial' denotes 'pertaining to commerce' (Chamber's Twentieth Century Dictionary); it means "connected with, or engaged in commerce; mercantile, having profit as the main aim" (Collin's English Dictionary) and the word 'commerce' means "financial transactions, especially buying and selling of merchandise on a large scale" (Concise Oxford Dictionary)". As observed by a three members Bench of this Commission vide its order dated 08.07.2016 in CC No. 51 of 2006 Crompton Greaves Limited & Anr. Vs. Daimler Chrysler India Private Limited & Ors., acquisition of the goods or the hiring or availing of services, in order to bring the transaction within the purview of section 2 (1) (d) of the Consumer Protection Act, therefore, should be aimed at generating profits for the company or should otherwise be connected or interwoven with the business activities of the company. The purpose behind such acquisition should be to promote, advance or augment the business activities of the company, by the use of such goods or services.

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.

8.      The complainant/appellant had opened a current account with the respondent bank for the purpose of carrying out its business activities. The purpose behind opening the said account therefore was to serve the commercial interests of the company. Therefore, it can hardly be disputed that the services of the bank were hired or availed by the complainant for a commercial purpose”.

5.      In view of the above-referred decisions of this Commission, I have no hesitation in holding that the complainant company cannot be said to be a consumer within the meaning of the Consumer Protection Act, it having hired of availed the services of the respondent Bank for a commercial purpose. Since the complaint is a company, which is a juridical person, it cannot even claim to have hired or availed the services of the bank for the purpose of earning livelihood by way of self-employment. Such a claim can be made only by a natural person.

6.      For the reasons stated hereinabove, I hold that the complainant cannot be said to be a consumer within the meaning of Section 2(1)(d) of the C.P. Act. The complaint is, therefore, dismissed with liberty to the complainant to avail such remedy other than a consumer complaint as may be open to it in law, on the same cause of action.