Supreme Court Allows Appeal of Company in Consumer Protection Case and Remands to NCDRC for Merits Decision. The Court held that deposit of surplus funds in a fixed deposit by a company does not automatically constitute commercial purpose under Section 2(1)(d) of Consumer Protection Act, 1986, requiring examination of dominant intention, and allegations of fraud do not oust consumer forum jurisdiction if deficiency in service is alleged.

Nature of Litigation: Consumer complaint alleging deficiency in banking service

Remedy Sought

Appellant sought direction to bank to pay principal amount of Rs. 9 Crores with interest at 9.75% per annum from 28.02.2014 along with compensation and costs

Filing Reason

Bank sanctioned loan/overdraft against fixed deposit without authorization, and appellant alleged deficiency in service

Previous Decisions

NCDRC dismissed consumer complaint on 13.03.2023, holding appellant not a consumer under Section 2(1)(d) of Consumer Protection Act, 1986

Issues

Whether the appellant, a body corporate, while availing services of the Bank to deposit its surplus funds in an interest-bearing term deposit, could be considered a consumer as defined in Section 2(1)(d) of the Consumer Protection Act, 1986? Whether the nature of allegations made in the complaint were such that they took the claim outside the purview of proceedings under the Consumer Protection Act, 1986?

Submissions/Arguments

Appellant submitted it is an undertaking of State of Maharashtra, deposit in bank does not reflect commercial purpose, parking surplus funds is not commercial activity, no direct nexus between services availed and profit generation, and a company can be a consumer. Respondent submitted investment was to augment profits, thus banking services availed for commercial purpose, and allegations of fraud/forgery require civil or criminal proceedings, not summary proceedings under Consumer Protection Act, 1986.

Ratio Decidendi

The identity of the person or value of transaction is not conclusive to determine if a transaction is for commercial purpose under Section 2(1)(d) of Consumer Protection Act, 1986; the dominant intention or purpose must be examined. Allegations of fraud do not automatically oust the jurisdiction of consumer forums if deficiency in service is alleged, unless complex factual disputes require elaborate evidence.

Judgment Excerpts

Section 2(1)(d) - “Consumer” means any person who, — (i) 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 than 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 (ii) 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; 19. To summarize from the above discussion, though a straightjacket formula cannot be adopted in every case, the following broad principles can be culled out for determining 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 purpose ” is understood to include manufacturing/ industrial activity or business - to - business transactions between commercial entities. 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 purpose 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 purchase was for the purpose of ‘generating livelihood by means of self - employment’ need not be looked into.”

Procedural History

Appellant filed consumer complaint with NCDRC; NCDRC dismissed complaint on 13.03.2023; appellant filed appeal to Supreme Court; Supreme Court heard appeal and remanded matter to NCDRC for decision on merits.