Delhi

West Delhi

CC/21/429

SHIV NARESH SPORTS PVT LTD. - Complainant(s)

Versus

YES BANK - Opp.Party(s)

10 Jan 2022

ORDER

DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-III WEST

GOVT. OF NCT OF DELHI

C-150-151, COMMUNITY CENTRE, JANAKPURI

NEW DELHI-110058

 

Complaint Case No.  429/21

 

In the matter of:

 

	Shiv Naresh Sports Private Limited CIN: U18109DL1998PTC097659. Regd. Office at E-23, Karampura Delhi-110015	Complainant
	Versus
1.       2.         3.	M/s Yes Bank Limited Yes Bank House, Off Western Express Highway, Santacruz East, Mumbai-400055   M/s Yes Bank Limited Ground Floor, Plot no. 33 North West Avenue Road, Punjabi Bagh New Delhi-110026   M/s Yes Bank Limited Northern Regional Corporate Office, 48, Nyaya Marg, Chanakyapuri, New Delhi-110021	Opposite Parties

 

DATE OF INSTITUTION:         JUDGMENT RESERVED ON:               DATE OF DECISION      :

03.12.2021 04.01.2022 10.01.2022

 

Ms. Sonica Mehrotra, President

Ms. Richa Jindal, Member

Mr. Anil Kumar Koushal, Member

Order passed by Ms. Sonica Mehrotra, President

 

ORDER

1. The averments contained in the present complaint shorn of unnecessary details as narrated in the present complaint are that complainant is a private limited company incorporated under companies Act 1956 and is carrying on business activity of manufacturing and trading of sportswear items, construction of synthetic athletic tracks and sports infrastructural facilities. The complainant  was availing cash credit and other facilities from OP since 2015 for meeting its working capital requirements for running its business activity efficiently which facilities were renewed / enhanced from time to time as per requirements and business requisition of the complainant. However, dispute arose between the parties when complainant was awarded a project / work order on 08.04.2021 from State Government of Andhra Pradesh under Samagra Shiksha Scheme to supply of school bags of different range / mark and valuing / aggregating Rs. 70,12,63,681/- (in words) against which EMD (Earnest Money Deposit) / security deposit of 10% of the above mentioned total value aggregating Rs.7,01,26,368/- in form of bank guarantee was to be deposited / furnished and therefore when complainant approached OP for enhancement of existing cash credit facility and requested to expedite the same, the said request was not sincerely taken into consideration by OP which only offered to arrange / accommodate the complainant to the extent of unutilized bank guarantee of                  Rs. 1.20 crore and therefore complainant was compelled to approach alternate financial institution (HDFC Bank) in this case for remaining funds of Rs. 5,81,27,000/- (In words) which was proposed to be sanctioned by HDFC in June 2021 vide sanctioned letter no. / reference no. 85448507 dated 29.06.2021. However, when complainant decided to shift all their banking operations and existing credit facilities from OP to HDFC Bank and requisited to OP for accepting Counter Bank Guarantee (CBG) being offered by HDFC and asked for release of its title deed of immoveable property and moveable properties hypothecated with OP which were required by HDFC Bank to disburse funds / credit facility, OP neither deliberated nor expedited the same on pretext or the other which resulted in economic loss to the complainant as  sanction was delayed and finally when OP shared format of CBG to be furnished by complainant which was then forwarded by complainant to HDFC Bank, OP showed its reluctance / diffidence in accepting /acknowledging the CBG from HDFC Bank without any rationale which further frustrated business prospect / financial transaction of complainant and also put it to the risk of losing additional financial arrangement which were to be accommodated  by HDFC Bank and despite several emails dated 24.08.2021 and 07.09.2021 to OP and furnishing of CBG by complainant to OP on 08.09.2021 in prescribed format, OP vide email dated 20.10.2021 informed the complainant that format of such CBG was not acceptable to OP and when clarification was sought by complainant from OP in this regard, OP vide email dated 26.10.2021 instructed the complainant to submit 100% FD for takeover of BG limit because CBG was not acceptable to OP and also directed complainant to pay foreclosure charges @ 4% and demanded a further sum of Rs. 24.79 lakhs with DPD for 5 days  for regularizing overdue reporting. However, such an act on part of OP was only to dishearten and restrain the complainant. The complainant was therefore compelled to serve legal notice dated 30.10.2021 to OP for such misconduct and malevolent approach on the part of OP vide which notice complainant also sought amicable redressal requesting OP to accept CBG from HDFC Bank and release title document of complainant as well as waiver of foreclosure charges. However, all such requests were ignored by OP and complainant was constrained to file the present complaint before this Commission against OP alleging impassive, insensible, callous and indifferent approach praying for relief in the nature of direction to OP to accept CBG offer from by HDFC Bank and release of the title deeds hypothecated by complainant with OP along with waiver of foreclosure charges and compensation for loses as well as litigation charges.
2. At the preliminary stage of admission, the bench of this Commission had directed the counsel for complainant to satisfy on the maintainability of the present complaint as to how the complainant is a consumer within the meaning of Section 2(7)(ii) of Consumer Protection Act of 2019 in view of the commercial nature of service availed by complainant in form of cash credit limit from OP to further business prospect since as per the settled law of the Hon'ble Supreme Court in Hewlett Packard India Ltd. Vs Shri Ramachander Gehlot in CA No. 7107/2003 decided on 16.02.2004 the Hon'ble Supreme Court held that issue of maintainability has to be decided before admitting or hearing the matter on merit and in judgment of Hon’ble NCDRC in Koshy Varghese Vs HDFC Bank Ltd III (2017) CPJ 52 (NC) wherein Hon’ble National Commission held that question in which law point is involved can be decided at any stage of the proceedings. Therefore, without going into the merits of the case, we shall adjudicate the admissibility / non-admissibility of the present complaint.
3. Counsel for the complainant argued that the complainant had availed of cash credit facility from OP in due course of its business transaction and was seeking enhancement of limit in view of the work order of Rs. 70 crores which it received from state government of Andhra Pradesh but OP did not offer or entertain the same and instead created hurdles in complainant exercising alternate option to avail the credit limit from HDFC Bank therefore giving rise to present dispute. The counsel for complainant merely argued that the complaint is within the ambit of CPA 2019 and complainant is a consumer but did not buttress his argument by any cogent documentary proof or otherwise.
4. We have heard the arguments forwarded by the counsel for complainant through video conference and have carefully perused the documents placed on record / relied upon by complainant.
5. The key issue for consideration before us is whether the complainant is a consumer within the meaning of Section 2(7) (ii) of the Act, 2019 which is the crux of the issue in the present complaint and which alone shall decide whether complainant would be entitled to raise a consumer dispute u/s 2(8) of the Act.

The word ‘consumer’ is the fulcrum of the Consumer Protection Act (the Act) and is defined in Section 2 (7)(ii) of the Act meaning any person who

1. buys any goods 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 user of such goods other that the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
2. 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.

 

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 purpose of earning his livelihood by means of self-employment.

The term ‘consumer’ has, thus, been defined to mean, a person who is-

1. a buyer, or
2. with the approval of the buyer, the user of the goods in question, or    
3. a hirer or person otherwise availing, or
4. with the approval of such aforesaid persons, the beneficiary, of the service(s) in question

with the condition super added that such buying of the goods or hiring or availing of any such service, is for a consideration, -

1. paid, or
2. promised, or
3. partly paid or promised, or
4. covered by any system of deferred payment

 

On bare reading of the above, it is clear that consumer is a person who buys goods or hires/avails of services for consideration but excludes a person who does the same for commercial purpose. The term consumer used in Section 2(1)(d) of the Consumer Protection Act 1986 came up for consideration in Laxmi Engineering Works Vs PSG Industrial Institute (1995) 3 SCC 583 passed by Hon’ble Supreme Courtin which the two judge bench of the Hon’ble Apex Court elucidated upon the meaning of ‘commercial purpose’ as follows:

10.  
11.  

…The explanation reduces the question, what is a “commercial purpose”, to a question of fact to be decided in the facts of each case. It is not the value of the goods that matters but the purpose to which the goods bought are put to. The several words employed in the explanation, viz., “uses them by himself”, exclusively for the purpose of earning his livelihood” and “by means of self-employment” make the intention of Parliament abundantly clear, that the goods bought must be used by the buyer himself, by employing himself for earning his livelihood.”

(Emphasis Supplied)

6. The said observations form part of the order passed by Hon'ble Supreme Court in Lilavati Kirtilal Mehta Medical Trust Vs Unique Shanti Developers IV (2019) CPJ 65 (SC) passed on 14.11.2019 in Civil Appeal no. 12322/2016 in which the Hon'ble Supreme Court post discussion on the said issue of determining / defining commercial purpose, which cannot be strait-jacketed, culled out the following broad principles for determining whether an activity or transaction is ‘for a commercial purpose’:

1. The question of whether a transaction is for a commercial purpose would depend upon the facts and circumstances of each case. However, ordinarily, ‘commercial purpose’ is understood to include manufacturing / industrial activity or business-to-business transactions between commercial entities.
2. The purchase of the goods or service should have a close and direct nexus with a profit-generating activity.
3. The identity of the person making the purchase or the value of the transaction is not conclusive to the question of whether it is for a commercial purpose. It has to be seen whether the dominant intention or dominant purpose for the transaction was to facilitate some kind of profit generation for the purchaser and / or their beneficiary.
4. If it is found that the dominant purpose behind purchasing the goods or service was for the personal use and consumption of the purchaser and / or their beneficiary, or is otherwise not linked to any commercial activity, the question of  whether such a purchase was for the purpose of ‘generating livelihood by means of self-employment’ need not be looked into.

7. Further, a Three-Members Bench of Hon'ble National Commission in Revision Petition No. 2833 of 2018 decided on 06.01.2020 and after considering several decisions on this issue, including Synco Textiles Pvt. Ltd.  Vs Greaves Cotton & company Ltd., I (1991) CPJ 499 (NC), Cheema Engineering Services Vs Rajan Singh, VI (1988) SLT 20=1996 (SLT Soft) 817 =(1997)1 SCC 131; Kalpavruksha Charitable Trust vs Toshniwal Brothers (Bombay) Pvt. Ltd. (2000) 1 SCC (512), Madan Kumar Singh (Dead) through L.R. Vs District Magistrate, Sultanpur & Ors., VI (2009) SLT 269=IV(2009) CPJ 3 (SC)=(2009)  9 SCC 79 and Paramount Digital Colour Lab & Ors Vs Agfa India Pvt. Ltd. & Or. III (2018) 14 SCC 81, inter alia held as under:
1.  

(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.

In the instant case, on the basis of documentary evidence placed on record by the complainant, the facility letter dated 06.04.2015 issued by OP is for extending cash credit facility to the extent of Rs. 35 crore in the nature of loan against properties moveable and immoveable by way of exclusive charge of hypothecation and equitable mortgage respectively. Therefore the said sanction letter filed by the complainant as annexure C-3 also reflects the product financed as Loan Against Property (LAP). The complainant has admitted to having mortgaged its moveable and immoveable assets with OP for securing cash credit facility with working capital as its sub limit. Even the correspondence exchanged between the parties by way of emails for revised terms and conditions are also with respect to enhancement of the said credit limit. Further, in the legal notice dated 30.10.2021 sent by complainant’s counsel to OP, complainant has admitted that the said facility of cash credit as well as bank guarantee performance / financial facility was availed by it from OP “owing to financial urgency and working capital requirement for running business activities efficiently’’. Cash credit facility and working capital facility are loans in which the borrower uses equity of its industrial and / or residential property apart from land and building as collateral or equitable mortgage. LAP is commercial in nature and therefore outside the purview of this Commission. The complainant had created a collateral mortgage of its residential properties, industrial properties and factory land and building as security for sanction of cash credit facility from OP thereby pledging the said property for securing Business loan.The Hon'ble National Commission in Shiv Shankar Lal Gupta Vs Kotak Mahindra Bank Ltd. II (2013) CPJ 56 (NC) held that loan against collateral security of immovable property is a commercial transaction which means the person entering into such a transaction is not a consumer. (emphasis supplied).

The Hon’ble National Commission in the judgment of Union Bank of India and Anr. Vs Learning Spiral Pvt. Ltd. III (2018) CPJ 514 (NC) in which the Hon’ble National Commission was faced with a complaint of illegal encashment of cheque from current account for business purpose and after considering the key question whether the complainant maintaining a current account with the bank can be said to be a consumer within the meaning of CPA, the Hon’ble National Commission following the view taken by itself in its previous decisions of Sutlej Industries Vs PNB I (2018) CPJ 593 (NC), Subhash Motilal Shah Vs Malegaon Merchants Co-op Bank Ltd in RP No. 2571/2012 decided on 12.02.2013, M/s Sam Fine O Chem Ltd Vs UBI in CC No. 39/13 decided on 12.04.2013 and Samkit Art and Craft Pvt. Ltd. Vs SBI and Ors in CC No. 11/2007 decided on 14.10.2014, held that the complainant cannot be said to be a consumer within the meaning of Consumer Protection Act as it had hired / availed of service of the bank for commercial purpose i.e. for running a current account for business purposes and if the business activity of a company cannot be conveniently undertaken without goods purchase or 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 services would be to enable the company to earn profits by undertaking and advancing its business activity. Therefore, the Hon’ble National Commission had dismissed all these complaints with liberty to the complainant to approach the appropriate Civil Court for redressal.

The Hon'ble National Commission in Primus Chemicals Ltd Vs IFCI Ltd I (2017) CPJ 615 (NC) held that availing services of a financial institution for loan which was for commercial purpose was availing services for commercial use and held complainant was not a consumer. The Hon'ble National Commission in Miracle Coro Plast Pvt. Ltd. Vs United Bank of India II (2018) CPJ 29 (NC) held that the term loan and credit limit availed from the bank was taken for business and therefore was a case of hiring / availing of services of bank for commercial purpose and therefore the complainant had no locus standi to file the consumer complaint as he was not a consumer.The Hon’ble NCDRC in the recent judgment of Parikshit Das Vs Allahabad Bank I (2020) CPJ 360 (NC) decided on 08.01.2020 held in a case of complainant availing overdraft facility from the bank and mortgaging immovable property as collateral security there against that the services of the bank were hired by the complainant for commercial purpose he having taken a business loan by way of overdraft from the bank and therefore was not a consumer as defined in the Act.

In the present case, it is evident from a bare perusal of the complaint and documents annexed thereto by complainant himself as well as by OP that the complainant is trying to camouflage a business loan under the garb of a consumer dispute whereas it is actually a cash credit and working capital facility Loan Against Property which is purely commercial in nature. Since the account itself was connected and related to the commercial transaction of the complainant, service hired for that purpose would fall within the category of hiring services for commercial purpose. Therefore, it is clear that the services of OP were hired by the complainant for commercial purpose in course of enhancement of income by virtue of having availed cash credit and working capital facility loan against property with OP for the purpose of carrying out its business activities, the purpose behind availing of such loan was to serve the commercial interest of its business for which the alleged loan was probably applied for and therefore is not a subject matter to be decided on merits by this Forum. Requirements of restricted meaning of “Commercial Purpose” are that the complainant ought to have availed the services of OP exclusively for purpose of earning livelihood by way of self-employment. The Hon’ble SCDRC Delhi in the recent judgment of Indo Arab Air Services Vs ICICI Home Finance Co. Ltd. I (2020) CPJ 220 (Del.) decided on 20.12.2019 held that a loan against property is a transaction done for commercial purpose and therefore outside the scope and ambit of provision of the Act and had dismissed the complaint. The Hon'ble National Commission in Bird Machines Pvt. Ltd. Vs Indusind Bank Ltd. II (2020) CPJ 258 (NC) decided on 31.01.2020 dealt with a similar issue of a private limited company having availed cash credit facility, term loan and working capital term loan from OP and was alleging deficiency of service for deduction made towards GST and foreclosure charges / processing fees. The Hon'ble National Commission while referring to it earlier judgment on similar issue in West FortHi-Tech Hospital Limited Vs Punjab National Bank decided on 07.01.2020 in FA no. 1264/2018 in which the view was taken that availing term loan, overdraft facility and cash credit facility are for the purpose of business and can hardly be disputed that such services of bank hired / availed for commercial purpose and the complainant company cannot be a consumer within the meaning of Section 2(1)(d) CPA of 1986 dismissed the complaint on ground of the credit facility having been taken by the complainant from the bank for the purpose of its business activity and was to be used for serving the commercial interest of the company. The Hon'ble National Commission in the recent judgment of Freight System (India) Pvt. Ltd. Vs Omkar Realtors and Developers Pvt. Ltd. II (2021) CPJ 33 (NC) in CC no. 886/2020 decided on 25.01.2021 observed that a company is included in the definition of ‘person’ contained in Section 2(31) of CPA 2019, it is not per se precluded from being ‘consumer’, provided, if, for a particular purpose, it means the requirement of ‘consumer’ as defined in Section 2(7) of the Act of 2019 explanation to which with respect to “commercial purpose” excludes use bysuch a person. A plain reading of Section 2(7)(ii) and Section 2(42) of the Act 2019 makes it clear that complainant company which had availed services of bank forpromoting business and earning profit is not a consumer under the Act 2019. The Hon'ble National Commission relying upon the verdict of Hon'ble Supreme Court in Lilavati Supra case where ‘broad principles’ including the yardstick of ‘close and direct nexus’ and ‘dominant purpose’ were laid down, observes that such tests would be extrapolated to juridical person depending on facts and circumstances of each case. Applying the said ratio which is squarely relevant to the present case, the services availed by the complainant from OP had ‘close and direct nexus’ to furthering business prospect for commercial profitability and ‘dominant purpose’ behind availing such service was link to large scale commercial activity and even otherwise it was never the case of the complainant in pleadings or oral submission that it was a consumer within the meaning of Section 2(7)(ii) of the Act 2019 or that the services from OP were availed for self employment or generating livelihood and therefore cannot be construed within the service as defined Section 2(42) CPA 2019. The Hon'ble National Commission had therefore, dismissed the Freight (supra) complaint in limine on facts and on law.

8. We are guided by the above settled principle of law as discussed at length in the legal discourse of catena of judgments passed by Hon’ble Apex Court and Hon’ble NCDRC cited in forgoing paras and can be safely applied in the present case specially after appreciating the nature of transaction entered into between complainant and OP and the perusal of cash credit facility letter, project work order and emails exchanged between complainant and OP pertaining to the cash credit facility etc., placed on record by complainant himself.

The case of complainant clearly relates to relationship between the complainant and OP for the purpose of furthering commercial activity for which complainant had availed the services of OP for commercial purpose. Therefore, in view of inbuilt exception in the definition of consumer, complainant cannot be termed as a consumer as envisaged under Section 2(7)(ii) of the Act. That being the case, the complainant has no locus standito file the present complaint before this Commission and therefore we have no hesitation in concluding inescapably that the complainant is not a consumer and on this count alone, dismiss the present complaint. It is however made clear that denial to avail remedy before a consumer protection fora to a ‘person’ who is not a ‘consumer’ and does not meet the ingredient of ‘consumer’ under the Act 2019 does not take away or affect his right to agitate his case in any appropriate forum / court as per law. Notwithstanding or having said so, on the present complaint which blatantly is a commercial dispute but has been filed before this Commission, we are guided by the observation of Hon'ble National Commission in Freight (Supra) case here that any how allowing anyone into consumer protection fora has adverse ramification, including inter alia:

1. Evasion of court fee in Civil Courts; and
2. Eroding into the time and resources of consumer protection Fora, which could otherwise be better devoted to the ordinary general consumers, who straightway fall, ex facie, in the definition of ‘consumer’ (without having to write a treatise to enable their anyhow entry into the Fora).

We therefore dismiss the present complaint as non maintainable before this Commission without entering into merits of the dispute between the opposing sides and the complainant company is free to agitate its case in any appropriate court as per law. The registry is directed to send a copy of this order to the complainant company free of cost as per Regulation 21 of the Consumer Protection Regulations, 2005.

9.   File be consigned to record room.
10.   Announced on 10.01.2022.

 

(Richa Jindal)     Member

(Anil Kumar Koushal)          Member

(Sonica Mehrotra)         President