Case: SHRIKANT G. MANTRI Vs. PUNJAB NATIONAL BANK

2. The facts in the present case are not in dispute. The bare necessary facts for adjudication of the present appeal are as under:3. The appellant--complainant had opened an account with erstwhile Nedungadi Bank Limited (hereinafter referred to as the erstwhile Bank) in the year 1998. The appellant is a stock--broker by profession. The appellant had applied for an overdraft facility on 25th April, 1998, in connection with his day--to--day share and stock transactions. It is not in dispute that the said overdraft facility was sanctioned by the erstwhile Bank to the appellant--complainant initially for an amount of Rs.1 crore, for which the appellant--complainant had pledged certain shares worth more than Rs.1 crore, as security as per the margin requirements specified by the erstwhile Bank. Subsequently, in the year 1999, the appellant--complainant applied for enhancement of the said overdraft facility. The said overdraft facility was enhanced by the erstwhile Bank from Rs.1 crore to Rs. 5 crore, vide its letter dated 13th December, 1999.4. Again, in March 2001, the appellant--complainant approached the erstwhile Bank for temporary increase in the overdraft limit. The erstwhile Bank, vide its letter dated 17th March, 2001, granted the request of the appellant and temporarily enhanced the overdraft facility from Rs.5 crore to Rs.6 crore, for a period of one week.5. It appears that due to steep fall in the share market, the erstwhile Bank, vide its letters dated 16th and 17th March, 2001, called upon the appellant--complainant to pledge additional shares to regularize the overdraft account. As an additional security, the appellant--complainant pledged 37,50,000 equity shares of face value of Rs.10/- of unlisted company Ansal Hotels Ltd. (hereinafter referred to as the said shares) towards the dues of the Bank, vide his letter dated 30th March, 2001. It is not in dispute that subsequently, consequent to the merger of Ansal Hotels Ltd. with ITC Ltd., and the bonus and splitting of ITC shares, the aforesaid 37,50,000 equity shares of Ansal Hotels Ltd. became equivalent to 3,75,000 shares of ITC Ltd.6. It appears that during 2001, the overdraft account of the appellant--complainant became irregular and as such, the erstwhile Bank called upon the appellant--complainant to regularise the overdraft account. As the appellant- complainant was unable to regularise the overdraft account, the erstwhile Bank, vide letter dated 14th September, 2001, called upon the appellant--complainant to pay a sum of Rs.600.61 lakhs along with interest thereon.7. It is the case of the appellant--complainant that though he had advised the erstwhile Bank to sell the pledged shares in December, 2001, so as to close overdraft account, the erstwhile Bank chose not to sell the said shares at that point of time. It is the case of the appellant--complainant that the said shares were sold by the erstwhile Bank in November 2002, when the market value of the said pledged shares was at the lowest, which resulted in huge loss to the appellant- complainant.8. After selling a part of the pledged shares for a sum of Rs.2,69,66,215.79, the respondent Bank, the successor-in- interest of the erstwhile Bank, filed a Recovery Petition before the Debts Recovery Tribunal, Mumbai against the appellant- complainant for recovery of the balance amount due as on 26th December, 2002. The said petition was decreed by the Debts Recovery Tribunal, Mumbai, vide order dated 26th May, 2004. However, the matter was settled between the parties and a One Time Settlement (OTS for short) was reached between them on payment of Rs. 2 crore. As such, the respondent--Bank issued a No Dues Certificate dated 14th May, 2005, certifying that no dues were left outstanding against the overdraft account of the appellant. After the OTS, the respondent--Bank withdrew the recovery proceedings filed against the appellant.9. It is the case of the appellant that since the respondent--Bank failed to return the said shares to the appellant, he sent a notice on 14th June, 2005 to the respondent--Bank, seeking release of the said shares.10. It appears that the appellant was also working as a stock--broker of the respondent--Bank. With regard to the transactions with the appellant in the capacity as a stock- broker, the respondent--Bank had initiated arbitration proceedings against the appellant before the Arbitration forum of the Bombay Stock Exchange (BSE for short). According to the appellant, the respondent--Bank failed in the said arbitration proceedings, which have attained finality.11. In this background, the appellant filed a complaint before the Commission, alleging deficiency in services on the part of the respondent--Bank. The main relief claimed in the said complaint was for a direction to the respondent--Bank to return 3,75,000 shares of ITC Ltd. (earlier 37,50,000 shares of Ansal Hotel Ltd.) along with dividend and all accretions thereon.12. In the said proceedings, on being served with the notice, the respondent--Bank raised a preliminary objection with regard to maintainability of the said complaint, on the ground that the appellant--complainant was not a consumer as envisaged under Section 2(1)(d) of the said Act. The Commission, by the impugned order, held that the appellant had availed the services of the respondent--Bank for commercial purpose and as such, he was not a consumer as envisaged under Section 2(1)(d) of the said Act.13. Being aggrieved thereby, the appellant--complainant has approached this Court by way of the present appeal.

Court's reasoning:
32. The purpose of the said Act has been succinctly described by this Court in the case of Laxmi Engineering Works vs. P.S.G. Industrial Institute (1995) 3 SCC 583,  which is as under:10. A review of the provisions of the Act discloses that the quasi-judicial bodies/au- thorities/agencies created by the Act known as District Forums, State Commis- sions and the National Commission are not courts though invested with some of the powers of a civil court. They are quasi-judi- cial tribunals brought into existence to ren- der inexpensive and speedy remedies to consumers. It is equally clear that these fo- rums/commissions were not supposed to supplant but supplement the existing judi- cial system. The idea was to provide an ad- ditional forum providing inexpensive and speedy resolution of disputes arising be- tween consumers and suppliers of goods and services. The forum so created is unin- hibited by the requirement of court fee or the formal procedures of a court. Any con- sumer can go and file a complaint. Com- plaint need not necessarily be filed by the complainant himself; any recognized con- sumers association can espouse his cause. Where a large number of consumers have a similar complaint, one or more can file a complaint on behalf of all. Even the Central Government and State Governments can act on his/their behalf. The idea was to help the consumers get justice and fair treatment in the matter of goods and ser- vices purchased and availed by them in a market dominated by large trading and manufacturing bodies. Indeed, the entire Act revolves round the consumer and is de- signed to protect his interest. The Act pro- vides for business--to--consumer disputes and not for business-to-business dis- putes. This scheme of the Act, in our opin- ion, is relevant to and helps in interpreting the words that fall for consideration in this appeal.33. It could thus be seen that this Court has clearly held that the idea of enacting the said Act was to help the consumers get justice and fair treatment in the matter of goods and services purchased and availed by them in a market dominated by large trading and manufacturing bodies. It has been held that the entire Act revolves round the consumer and is designed to protect his interest. It provides for business--to--consumer disputes and not for business-to-business disputes. It has been held that forums/commissions provided by the said Act are not supposed to supplant but supplement the existing judicial system. The idea was to provide an additional forum providing inexpensive and speedy resolution of disputes arising between consumers and suppliers of goods and services.34. In the case of Laxmi Engineering Works (supra), this Court, while considering the scope of the definition of the expression consumer with relation to Section 2(1)(d)(i) of the said Act and the Explanation added by 1993 Amendment Act, observed thus:11. Now coming back to the definition of the expression consumer in Section 2(d), a consumer means insofar as is relevant for the purpose of this appeal, (i) a person who buys any goods for consideration; it is im- material whether the consideration is paid or promised, or partly paid and partly promised, or whether the payment of con- sideration is deferred; (ii) a person who uses such goods with the approval of the person who buys such goods for considera- tion; (iii) but does not include a person who buys such goods for resale or for any com- mercial purpose. The expression resale is clear enough. Controversy has, however, arisen with respect to meaning of the expression commercial purpose. It is also not defined in the Act. In the ab- sence of a definition, we have to go by its ordinary meaning. Commercial de- notes pertaining to commerce (Cham- bers Twentieth Century Dictionary); it means connected with, or engaged in commerce; mercantile; having profit as the main aim (Collins English Dictio- nary) whereas the word commerce means financial transactions espe- cially buying and selling of merchan- dise, on a large scale (Concise Oxford Dictionary). The National Commission ap- pears to have been taking a consistent view that where a person purchases goods with a view to using such goods for carrying on any activity on a large scale for the purpose of earning profit he will not be a con- sumer within the meaning of Section 2(d)(i) of the Act. Broadly affirming the said view and more particularly with a view to obvi- ate any confusion — the expression large scale is not a very precise expression — Parliament stepped in and added the explanation to Section 2(d)(i) by Ordi- nance/Amendment Act, 1993. The ex- planation excludes certain purposes from the purview of the expression commercial purpose — a case of ex- ception to an exception. Let us elaborate: a person who buys a typewriter or a car and uses them for his personal use is cer- tainly a consumer but a person who buys a typewriter or a car for typing others work for consideration or for plying the car as a taxi can be said to be using the typewriter/car for a commercial purpose. The explanation however clarifies that in certain situations, purchase of goods for commercial purpose would not yet take the purchaser out of the definition of ex- pression consumer. If the commercial use is by the purchaser himself for the purpose of earning his livelihood by means of self--employment, such pur- chaser of goods is yet a consumer. In the illustration given above, if the pur- chaser himself works on typewriter or plies the car as a taxi himself, he does not cease to be a consumer. In other words, if the buyer of goods uses them himself, i.e., by self--employment, for earning his livelihood, it would not be treated as a commercial purpose and he does not cease to be a consumer for the purposes of the Act. The explanation reduces the question, what is a commercial purpose, to a ques- tion 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 explana- tion, viz., uses them by himself, ex- clusively for the purpose of earning his livelihood and by means of self-em- ployment make the intention of Parlia- ment abundantly clear, that the goods bought must be used by the buyer him- self, by employing himself for earning his livelihood. A few more illustrations would serve to emphasise what we say. A person who purchases an auto-rickshaw to ply it himself on hire for earning his liveli- hood would be a consumer. Similarly, a purchaser of a truck who purchases it for plying it as a public carrier by himself would be a consumer. A person who pur- chases a lathe machine or other machine to operate it himself for earning his livelihood would be a consumer. (In the above illus- trations, if such buyer takes the assistance of one or two persons to assist/help him in operating the vehicle or machinery, he does not cease to be a consumer.) As against this a person who purchases an auto-rick- shaw, a car or a lathe machine or other machine to be plied or operated exclusively by another person would not be a con- sumer. This is the necessary limitation flowing from the expressions used by him, and by means of self-employ- ment in the explanation. The ambigu- ity in the meaning of the words for the purpose of earning his livelihood is ex- plained and clarified by the other two sets of words.35. It can thus be seen that this Court observed that the National Commission was taking a consistent view that where a person purchases goods with a view to using such goods for carrying on any activity on a large scale for the purpose of earning profit he will not be a consumer within the meaning of Section 2(d)(i) of the Act. This Court observed that in order to obviate any confusion that the expression large scale was not a very precise expression, the Parliament stepped in and added the explanation to Section 2(d)(i) by Ordinance/Amendment Act, 1993. It has been held that that the explanation excludes certain purposes from the purview of the expression commercial purpose. Various examples have been given by this Court as to what would come within the term of self--employment.36. One instance given is that a person who purchases a typewriter and works on the typewriter himself, the purchase would be for the purposes of earning his livelihood by means of self--employment and he would not cease to be a consumer for the purposes of the said Act. Another example given is that, if a person who purchases an auto-rickshaw to ply it himself on hire for earning his livelihood, he would still be a consumer too. This Court held that the question as to whether the transaction is for the commercial purpose or for earning his livelihood by means of self--employment is a question of fact that has to be decided in the facts of each case. It has been held that it is not the value of the goods that matters but the purpose to which the goods so bought, are put to. It has been held that several words used 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 the Parliament abundantly clear, that the goods bought must be used by the buyer himself, for earning his livelihood.39. In the case of Paramount Digital Colour Lab (supra), this Court was considering the case of unemployed graduates, who had started a business of photography in partnership for self--employment and for their livelihood. For the said purpose, they had purchased an advanced photo processing, developing and printing machine. It was the case of the appellants therein that the respondents, despite having the knowledge that the machine was not working properly, had unfairly and carelessly sold the same to the appellants. As such, the appellants were required to file a complaint under the said Act. The State Commission had allowed the complaint. In appeal, the National Commission held that the appellants were not the consumers as envisaged under Section 2(1)(d) of the said Act, since the purchase of the machine was for commercial purpose. Reversing the view taken by the National Commission and upholding the view taken by the State Commission, this Court observed thus:12. In this case, since the appellants have purchased the machine, Section 2(1)(d) of the Act is applicable. Consumer as defined under Section 2(1)(d) of the Act does not in- clude a person who obtains goods for a commercial purpose. The Explanation supplied to Section 2(1)(d) clarifies that commercial purpose does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self--employment. If both these provisions are read together, it leads to the conclusion that if a person purchased the goods for consideration not for any commer- cial purpose, but exclusively for the pur- poses of earning his livelihood by means of self--employment, such purchaser will come within the definition of consumer. If a person purchases the goods for a com- mercial purpose and not for the purposes of earning his livelihood by means of self- employment, such purchaser will not come within the definition of consumer. It is therefore clear, that despite commercial ac- tivity, whether a person would fall within the definition of consumer or not would be a question of fact in every case. Such ques- tion of fact ought to be decided in the facts and circumstances of each case.13. self--employment necessarily includes earning for self. Without earning generally there cannot be self--employment. Thus, if a person buys and uses the machine exclu- sively for the purposes of earning his liveli- hood by means of self--employment, he def- initely comes within the definition of con- sumer. In the matter on hand, the quality of ultimate production by the user of the machine would depend upon the skill of the person who uses the machine. In case of ex- igencies, if a person trains another person to operate the machine so as to produce the final product based on skill and effort in the matter of photography and development, the same cannot take such person out of the definition of consumer.40. This Court, on facts in the said case, found that the appellants therein were unemployed graduates and had bought the said machine for their own utility, personal handling and for their small venture, which they had embarked upon to make a livelihood. This Court further found that this was distinct from large--scale manufacturing or processing activity carried on for huge profits. It was, therefore, held that the appellants therein would be consumers within the meaning of Section 2(1)(d) of the said Act.the case of Lilavati Kirtilal Mehta Medical Trust (supra),wherein this Court after considering the earlier judgments held thus:19. To summarise from the above discus- sion, though a strait jacket formula cannot be adopted in every case, the following broad principles can be culled out for deter- mining whether an activity or transaction is for a commercial purpose:19.1. The question of whether a transaction is for a commercial purpose would depend upon the facts and circumstances of each case. However, ordinarily, commercial pur- pose is understood to include manufactur- ing/industrial activity or business-to-busi- ness transactions between commercial enti- ties.19.2. The purchase of the good or service should have a close and direct nexus with a profit-generating activity.19.3. 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.19.4. If it is found that the dominant pur- pose behind purchasing the good 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 pur- chase was for the purpose of generating livelihood by means of self--employment need not be looked into.42. It is thus clear, that this Court has held that the question, as to 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; that the purchase of the good or service should have a close and direct nexus with a profit-generating activity; that the identity of the person making the purchase or the value of the transaction is not conclusive for determining the question as to whether it is for a commercial purpose or not. What is relevant is the dominant intention or dominant purpose for the transaction and as to whether the same was to facilitate some kind of profit generation for the purchaser and/or their beneficiary. It has further been held that if the dominant purpose behind purchasing the good or service was for the personal use and the consumption of the purchaser and/or their beneficiary, or is otherwise not linked to any commercial activity, then the question of whether such a purchase was for the purpose of generating livelihood by means of self- employment need not be looked into.43. On facts, it was held that the purchase of flats by the appellant therein had no direct nexus with the profit generating activities. The flats were not occupied for undertaking any medical/diagnostic facilities within the hospital but for accommodating the nurses employed by the hospital. It was further held that the flats are being provided to the nurses without any rent and that the appellant therein was not generating any surplus from occupying the flats or engaging in buying and selling of flats.44. Insofar as the judgment of this Court in the case of Sunil Kohli (supra), relied upon by the appellant, is concerned, this Court on the basis of the evidence, clearly found that the complainants wanted to dispose of property in Denmark and wanted to come down to Delhi to start a business. It has further been found that for this purpose, the premises in question were booked. As such, the said case was a case wherein the commercial premises were booked by the appellants therein, who had left their employment in Denmark and purchased the premises only for the purposes of starting their business for earning their livelihood by way of self--employment. Therefore, the said case was a case wherein the appellants therein had availed of the services exclusively for earning their livelihood by means of self- employment.45. It could thus be seen, that when a person avails a service for a commercial purpose, to come within the meaning of consumer as defined in the said Act, he will have to establish that the services were availed exclusively for the purposes of earning his livelihood by means of self- employment. There cannot be any straitjacket formula and such a question will have to be decided in the facts of each case, depending upon the evidence placed on record.46. In the present matter, it is not in dispute that the appellant was already engaged in the profession of stock- broker, much before he availed of service of the overdraft facility from the respondent--Bank. It is also not in dispute that he was also acting as a stock--broker for the respondent- Bank. It is also not in dispute that the appellant took the overdraft facility and also sought enhancement of the same from time to time in furtherance of his business as a stock- broker and for the purpose of enhancing the profits therein. As already held by this Court in the case of Laxmi Engineering Works (supra), the terms services availed by him, exclusively for the purpose of earning his livelihood and by means of self--employment will have to be given its meaning, as intended by the legislature. The said terms will have to be construed in context with the purpose for which the said Act is enacted. We have elaborately discussed the legislative history as to how Section 2(1)(d) of the said Act has come in its present form from the original form. The amendments incorporated by the 1993 Amendment Act as well as by the 2002 Amendment Act would clearly show that the legislative intent is to keep the commercial transactions out of the purview of the said Act and at the same time, to give benefit of the said Act to a person who enters into such commercial transactions, when he uses such goods or avails such services exclusively for the purposes of earning his livelihood by means of self--employment.47. In the present case, the Commission has come to a finding that the appellant had opened an account with the respondent--Bank, took overdraft facility to expand his business profits, and subsequently from time to time the overdraft facility was enhanced so as to further expand his business and increase his profits. The relations between the appellant and the respondent is purely business to business relationship. As such, the transactions would clearly come within the ambit of commercial purpose. It cannot be said that the services were availed exclusively for the purposes of earning his livelihood by means of self- employment. If the interpretation as sought to be placed by the appellant is to be accepted, then the business to business disputes would also have to be construed as consumer disputes, thereby defeating the very purpose of providing speedy and simple redressal to consumer disputes.48. We, therefore, find no error with the findings of the Commission. In any case, the Commission has already granted liberty to the appellant to avail of his remedy by approaching the appropriate forum, having jurisdiction.