JUSTICE V.K. JAIN (ORAL)

The complainant, namely, Lakshmi Nivasa Plastic (Pvt.) Ltd. which is appellant in FA/548/2013 and respondent No.1 in FA/211/2013 filed a consumer complaint alleging therein that it had established a plastic blow molding and injection molding industry as a small-scale industry by taking loan from Syndicate Bank in the year 2003. It was further alleged that the bank had initially sanctioned CC limit of Rs.10 lakhs towards working capital which was renewed in the year 2007. While renewing the CC limit, the bank according to the complainant,  had to insure the stock in trade as well as machinery with United India Insurance Co. Ltd. However, the policy issued by United India Insurance Co. at the time of renewal of the credit facilities covered the stock and machinery only against theft and burglary and did not cover the same against loss by fire. This is also the case of the complainant  that its stock as well as machinery got substantially damaged in an incident of fire on 2.9.2010, thereby causing huge loss to it. The insurer, however, repudiated the claim lodged by the complainant on the ground that the loss by fire was not covered under the insurance policy. Being aggrieved, the complainant company approached the concerned State Commission by way of a consumer complaint impleading the bank as well as the insurer as the opposite parties.

2.      Vide impugned order dated  13.11.2012,  the State Commission partly allowed the complaint by directing the bank to pay a sum of Rs.16 lakhs to the complainant along with interest @ 9% p.a. and cost quantified at Rs.10,000/-. The complaint was dismissed against the insurer.

3.      Being aggrieved from the order passed by the State Commission, the bank is before this Commission by way of FA/211/2013. Since the complainant is also not satisfied with the quantum of the compensation awarded to it by the State Commission, it is also before this Commission by way of FA/548/2013.

4.      The first question which arises for consideration in these appeals is as to whether the complainant can be said to be a consumer of Syndicate Bank appellant in FA/211/2013. As noted earlier, the complainant is a company and it had set up a plastic blow molding and injection molding industry as a small-scale industry by taking loan from the bank in the year 2003. The bank had initially sanctioned a CC limit of Rs.10 lakhs to the complainant towards working capital and the said CC limit was renewed in the year 2007.

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 Syndicate Bank for 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. The State Commission, therefore, did not have inherent jurisdiction to entertain a consumer complaint filed by the said company. The impugned order therefore, cannot be sustained and the same is accordingly set aside. It is however, made clear that dismissal of the complaint shall not come in the way of the complainant availing such remedy other than a consumer complaint as may be open to it in law. In the event of the complainant approaching a Civil Court for redressal of its grievances, it may also seek the benefit of provisions contained in Section 14 of the Limitation Act. Both the appeals stand disposed of accordingly.