Shrikant G. Mantri vs Punjab National Bank

REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.11397 OF 2016

SHRIKANT G. MANTRI ...APPELLANT(S)

VERSUS

PUNJAB NATIONAL BANK .... RESPONDENT(S)

JUDGMENT

B.R. GAVAI, J.

1. The present appeal filed by the appellant­

complainant challenges the judgment and order dated 1 st

June, 2016, passed by the National Consumer Disputes

Redressal Commission, New Delhi (hereinafter referred to as

“the Commission”) in Consumer Complaint No.55 of 2006,

thereby holding that the appellant­complainant was not a

consumer as envisaged under Section 2(1)(d) of The

Consumer Protection Act, 1986 (hereinafter referred to as 2

“the said Act”). As such, by the impugned judgment and

order, the complaint of the appellant has been dismissed

being not maintainable.

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 appellant­complainant had opened an account

with erstwhile Nedungadi Bank Limited (hereinafter referred

to as “the erstwhile Bank”) in the year 1998. The appellant is

a stock­broker by profession. The appellant had applied for

an overdraft facility on 25th April, 1998, in connection with

his day­to­day share and stock transactions. It is not in

dispute that the said overdraft facility was sanctioned by the

erstwhile Bank to the appellant­complainant initially for an

amount of Rs.1 crore, for which the appellant­complainant

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 3

appellant­complainant 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 appellant­complainant

approached the erstwhile Bank for temporary increase in the

overdraft limit. The erstwhile Bank, vide its letter dated 17 th

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 16 th and 17th March,

2001, called upon the appellant­complainant to pledge

additional shares to regularize the overdraft account. As an

additional security, the appellant­complainant 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 4

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 appellant­complainant became irregular and as such, the

erstwhile Bank called upon the appellant­complainant to

regularise the overdraft account. As the appellant­

complainant was unable to regularise the overdraft account,

the erstwhile Bank, vide letter dated 14 th September, 2001,

called upon the appellant­complainant to pay a sum of

Rs.600.61 lakhs along with interest thereon.

7. It is the case of the appellant­complainant 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 appellant­complainant that

the said shares were sold by the erstwhile Bank in November

2002, when the market value of the said pledged shares was 5

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 successor­in­

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 26 th 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

respondent­Bank issued a ‘No Dues Certificate’ dated 14 th

May, 2005, certifying that no dues were left outstanding

against the overdraft account of the appellant. After the OTS,

the respondent­Bank withdrew the recovery proceedings filed

against the appellant.

9. It is the case of the appellant that since the

respondent­Bank failed to return the said shares to the 6

appellant, he sent a notice on 14 th June, 2005 to the

respondent­Bank, seeking release of the said shares.

10. It appears that the appellant was also working as a

stock­broker of the respondent­Bank. With regard to the

transactions with the appellant in the capacity as a stock­

broker, the respondent­Bank had initiated arbitration

proceedings against the appellant before the Arbitration

forum of the Bombay Stock Exchange (‘BSE” for short).

According to the appellant, the respondent­Bank 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 respondent­Bank. The main relief claimed in the

said complaint was for a direction to the respondent­Bank 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 respondent­Bank raised a preliminary objection

with regard to maintainability of the said complaint, on the 7

ground that the appellant­complainant 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 respondent­Bank 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 appellant­complainant

has approached this Court by way of the present appeal.

14. We have heard Shri Shyam Divan, learned Senior

Counsel appearing on behalf of the appellant and Shri

Dushyant Dave, learned Senior Counsel appearing on behalf

of the respondent.

15. Shri Shyam Divan, learned Senior Counsel appearing

on behalf of the appellant­complainant, submitted that the

appellant had a dual relationship with the respondent­Bank.

In the first capacity, as a consumer, he had taken the

overdraft facility from the respondent­Bank for the purposes

of his self­employment. In the second capacity, he was

working as the stock­broker for the respondent­Bank. The

learned Senior Counsel submitted that with regard to the 8

said relationship, though there were certain disputes, the

claim of the respondent­Bank before the Arbitration Forum of

BSE has been rejected by the BSE Arbitral Tribunal, which

has attained finality.

16. Shri Divan further submits that it is undisputed that

the said shares were pledged with the respondent­Bank only

as a security towards the overdraft facility. He submits that

from the letter of the respondent­Bank dated 14 th May, 2005,

it is clear that there were no dues outstanding in the

overdraft account of the appellant­complainant, which stood

fully and finally settled through compromise/OTS. He

submitted that once the dues of the respondent­Bank

towards the said overdraft facility stood cleared, there was no

reason for the respondent­Bank to have withheld the said

shares. He submitted that though the arbitration

proceedings between the parties had reached finality, the

respondent­Bank had illegally withheld the said shares of the

appellant. He submitted that in spite of repeated requests for

return of the said shares, the same were not returned and as 9

such, the appellant had no option but to file the complaint

under the said Act.

17. Shri Divan submitted that though Section 2(1)(d)(ii)

of the said Act, excludes a person who avails of such services

for ‘any commercial purpose’, the Explanation thereto, which

could be construed as proviso to proviso, would include even

such a person if it is shown that the services availed by him

were exclusively for the purposes of earning his livelihood by

means of self­employment. He submitted that the services of

the overdraft facility were taken by the appellant from the

respondent­Bank for the purposes of his business as a stock­

broker. He submitted that since the appellant was engaged in

the profession of stock­broker and since the services of the

said overdraft facility were taken for the appellant’s

profession as a stock­broker, the services rendered by the

respondent­Bank were exclusively for the purposes of earning

his livelihood. Learned Senior Counsel submits that the

appellant was self­employed as a stock­broker and as such,

the services availed were exclusively for the purpose of 10

earning his livelihood by means of self­employment. He relies

on the dictionary meaning of the word ‘livelihood’ as provided

in Black’s Law Dictionary, Ninth Edition. He submits that the

Commission has grossly erred in giving restricted meaning to

the term ‘earning his livelihood by means of self­employment’.

Learned Senior Counsel submits that merely because a

person has availed the services of the Bank for expanding his

business, that cannot be a ground to give a restricted

meaning to the said term. Relying on the judgment of this

Court in the case of Internet and Mobile Association of

India vs. Reserve Bank of India1, he submits that the

services of the Bank provide lifeline for any business, trade or

profession. He submits that in the present era, it is unable

for any person to survive without availing the services of a

Bank. Learned Senior Counsel submits that the

Commission has erred in holding that the appellant is not a

consumer within the meaning of Section 2(1)(d)(ii) of the said

1 (2020) 10 SCC 274 11

Act. In support of his submissions, he relied on the following

judgments of this Court:

(i) Lilavati Kirtilal Mehta Medical Trust vs.

Unique Shanti Developers and others2;

(ii) Paramount Digital Colour Lab and others

vs. AGFA India Private Limited and others3;

(iii) Sunil Kohli and another vs. Purearth

Infrastructure Limited4;

(iv) CBI, AHD, Patna vs. Braj Bhushan Prasad

and others5.

18. Shri Dushyant Dave, learned Senior Counsel

appearing on behalf of the respondent­Bank, on the contrary,

submits that the said Act is a special statute enacted with the

purpose of providing a speedy and simple redressal to

consumer disputes. Shri Dave submits that the said Act

provides a summary procedure so that the consumer

disputes are settled without undue delay. He submitted that

if the definition of the word ‘consumer’ is expanded, so as to

include in it a person who avails of such services for any

2 (2020) 2 SCC 265 3 (2018) 14 SCC 81 4 (2020) 12 SCC 235 5 (2001) 9 SCC 432 12

commercial purpose, the very purpose of the said Act would

be defeated. He submits that if any commercial dispute

between the service provider and the availer/recipient of the

service is included in the definition of the word ‘consumer’, it

will give rise to floodgates of complaints. It is submitted that

if such an interpretation is accepted, apart from the same

being inconsistent with the provisions of Section 2(1)(d)(ii) of

the said Act, it will defeat the very purpose of providing

speedy justice to the consumers. He, therefore, submits that

no interference is warranted in the finding of the Commission

and the appeal deserves to be dismissed.

19. For appreciating the rival submissions, it will be

necessary to refer to Section 2(1)(d) of the said Act, as it

exists today, which is as follows:

“2.Definition.­ (1) In this Act, unless the context otherwise requires,­

(a) …………………………………………………… ………………………………………

(d) “consumer” means any person who,—

(i) buys any goods for a consideration which has been paid or promised or 13

partly paid and partly promised, or un­ der 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 de­ ferred 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 com­ mercial 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 de­ ferred payment and includes any bene­ ficiary of such services other than the person who hires or avails of the ser­ vices for consideration paid or promised, or partly paid and partly promised, or under any system of de­ ferred payment, when such services are availed of with the approval of the first mentioned person but does not in­ clude a person who avails of such ser­ vices 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 purposes of earn­ ing his livelihood by means of self­em­ ployment;” 14

20. The short question, therefore, that would have to be

answered in the present case is, as to whether the services

availed by the appellant from the respondent­Bank would fall

within the term ‘commercial purpose’. The other question

that would also have to be answered is, as to whether such

services are exclusively availed by the appellant for the

purposes of earning his livelihood by means of self­

employment.

21. For considering the said issues, we will also have to

examine the object while enacting the said Act as well as the

legislative history as to how Section 2(1)(d) has come in its

present form. The legislature found that though there were

various provisions contained in various enactments to protect

the consumers and provide relief to them, yet it became

necessary to protect the consumers from the exploitation and

to save them from adulterated and sub­standard goods and

services and to safe guard the interests of the consumers. In

order to provide for better protection of the interests of the 15

consumer, the Consumer Protection Bill was introduced in

the Parliament.

22. Perusal of the ‘Statement of Objects and Reasons’ of

the said Act would show that the said Act seeks to provide for

better protection of the interests of consumers and for that

purpose, to make provision for the establishment of

Consumer Councils and other authorities for the settlement

of consumer disputes and for matters connected therewith.

One of the objects for enacting the said Act was the right to

be heard and to be assured that consumers’ interests will

receive due consideration at appropriate forums. To provide

speedy and simple redressal to consumer disputes, a quasi­

judicial machinery was sought to be set up at the district,

State and Central levels. It will be apposite to refer to the

preamble of the said Act, which reads thus:

“An Act to provide for better protection of the interests of consumers and for that purpose to make provision for the establishment of consumer councils and other authorities for the settlement of consumers’ disputes and for matters connected therewith.” 16

23. The definition of the term ‘consumer’ as contained in

Section 2(1)(d) of the said Act, as it existed in the original

enactment of 1986, reads thus:

“(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 un­ der 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 de­ ferred 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 com­ mercial purpose; or

(ii) hires any services for a consideration which has been paid or promised or partly paid and partly promised, or un­ der any system of deferred payment and includes any beneficiary of such services other than the person who hires the services for considera­ tion paid or promised, or partly paid and partly promised, or under any sys­ tem of deferred payment, when such services are availed of with the ap­ proval of the first mentioned person” 17

24. It could thus be seen that Section 2(1)(d) of the said

Act is in two parts. Section 2(1)(d)(i) of the said Act deals with

buying of goods. A person who 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 would be a consumer within the meaning of Section

2(1)(d)(i) of the said Act. It also includes any user of such

goods other than the person who buys such goods for a

consideration, which has been 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. However, Section 2(1)(d)(i) of the said Act excludes a

person who obtains such goods for resale or for any

commercial purpose.

25. Section 2(1)(d)(ii) of the said Act is with respect to

hiring of services. According to it, the term ‘consumer’ means

any person who hires any services for a consideration, which

has been paid or promised or partly paid and partly

promised, or under any system of deferred payment. It also 18

included any beneficiary of such services other than the

person who hires the services as is provided under Section

2(1)(d)(i) of the said Act.

26. It could thus be seen that as per the definition of the

term ‘consumer’, under Section 2(1)(d)(ii) of the said Act, as

enacted originally, even if a person who hires any services for

any commercial purpose, he could still be included in the

definition of the term ‘consumer’. It is relevant to note that

Section 2(1)(d)(i) of the said Act clearly kept a person who

obtains such goods for resale or for any commercial purpose,

out of the ambit of definition of the term ‘consumer’.

However, insofar as hiring of services is concerned, no such

provision was made in the original enactment.

27. The legislature noticed various deficiencies and

inadequacies in the said Act. Therefore, in order to plug

these loopholes and enlarge the scope of areas covered, the

legislature brought certain amendments to the said Act by

the Consumer Protection (Amendment) Act, 1993 (hereinafter

referred to as “1993 Amendment Act”). One of the objects of 19

the said Act was to enable the consumers, who are self­

employed, to file complaints before the redressal agencies,

where goods bought by them exclusively for earning their

livelihood, suffer from any defect. By sub­section (5) of

Section 2 of the 1993 Amendment Act, the following

amendments were effected to the definition of the term

‘consumer’:

“(5) in clause (d),­

(A) in sub­clause (ii), for the word “hires”, in both the places where it occurs, the words “hires or avails of” shall be substituted;

(B) after sub­clause (ii), the following Explanation shall be inserted at the end, namely:­ ‘Explanation.­ For the purposes of sub­clause (i), “commercial purpose” does not include use by a consumer of goods bought and used by him exclusively for the purpose of earning his livelihood, by means of self­ employment’;”

28. It could thus be seen that by the 1993 Amendment

Act, insofar as services are concerned, wherever the word

“hires” was used, the same was substituted by the words 20

“hires or avails of”. By the said 1993 Amendment Act, insofar

as Section 2(1)(d)(i) is concerned, an Explanation was

provided to the effect that ‘commercial purpose’ does not

include use by a consumer of goods bought and used by him

exclusively for the purpose of earning his livelihood by means

of self­employment. It could thus be seen that though the

original Act of 1986 excluded a person from the ambit of

definition of the term ‘consumer’ whenever such purchases

were made for commercial purpose; by the Explanation,

which is an exception to an exception, even if a person made

purchases for ‘commercial purpose’, he was included in the

definition of the term ‘consumer’, if such a person bought and

used such goods exclusively for earning his livelihood by

means of self­employment. The legislative intent is clear, that

though the purchases for commercial purposes are out of the

ambit of the definition of the term ‘consumer’ in the said Act,

if a person buys and uses such goods exclusively for earning 21

his livelihood by way of self­employment, he would still be

entitled to protection under the said Act.

29. The legislature further noticed several bottlenecks

and shortcomings in the implementation of various provisions

of the said Act and with a view to achieve quicker disposal of

consumer complaints, and to make the said Act more

effective by removing various lacunae, the legislature

amended the said Act by the Consumer Protection

(Amendment) Act, 2002 (hereinafter referred to as “the 2002

Amendment Act”). One of the objects for bringing out the

2002 Amendment Act was “exclusion of services availed for

commercial purposes from the purview of the consumer

disputes redressal agencies”. It could thus be seen that the

legislature noticed the mischief, that though Section 2(1)(d)(i)

of the said Act kept out of its purview the goods purchased

for commercial purpose, the said restriction was not found in

Section 2(1)(d)(ii) of the said Act. As such, in order to bring

Section 2(1)(d)(ii) at par with Section 2(1)(d)(i), the following

amendment was effected to in clause (d):

22

“(c) in clause (d),­

(i) in sub­clause (ii), the following words shall be inserted at the end, namely:­

“but does not include a person who avails of such services for any commercial purpose”;

(ii) for the Explanation, the following Explanation shall be substituted, namely:­ ‘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 pur­ poses of earning his livelihood by means of self­employment’;”

30. It could thus be seen that by the 2002 Amendment

Act, the legislature clearly provided that a person, who avails

of such services for any commercial purpose would be beyond

the ambit of definition of the term ‘consumer’. The

Explanation, which is an exception to an exception, which

earlier excluded a person from the term ‘commercial purpose’,

if goods were purchased by such a person for the purposes of

earning his livelihood by means of self­employment, was 23

substituted and the Explanation was made applicable to both

clauses (i) and (ii). It can thus clearly be seen that by the

2002 Amendment Act, though the legislature provided that

whenever a person avails of services for commercial purposes,

he would not be a consumer; it further clarified that the

‘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 self­employment.

31. It is thus clear that by the 2002 Amendment Act, the

legislature has done two things. Firstly, it has kept the

commercial transactions, insofar as the services are

concerned, beyond the ambit of the term ‘consumer’ and

brought it in parity with Section 2(1)(d)(i), wherein a person,

who bought such goods for resale or for any commercial

purpose, was already out of the ambit of the term ‘consumer’.

The second thing that the legislature did was that even if a

person availed of the commercial services, if the services

availed by him were exclusively for the purposes of earning 24

his livelihood by means of self­employment, he would still be

a ‘consumer’ for the purposes of the said Act. Thus, a person

who availed of services for commercial purpose exclusively for

the purposes of earning his livelihood by means of self­

employment was kept out of the term ‘commercial purpose’

and brought into the ambit of ‘consumer’, by bringing him on

par with similarly circumstanced person, who bought and

used goods exclusively for the purposes of earning his

livelihood by means of self­employment. It could thus be

seen that the legislature’s intent is clear. If a person buys

goods for commercial purpose or avails services for

commercial purpose, though ordinarily, he would have been

out of the ambit of the term ‘consumer’, by virtue of

Explanation, which is now common to both Sections 2(1)(d)(i)

and 2(1)(d)(ii), he would still come within the ambit of the

term ‘consumer’, if purchase of such goods or availing of such

services was exclusively for the purposes of earning his

livelihood by means of self­employment. With this legislative 25

history in background, we will have to consider the present

case.

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 Institute6, which is as under:

“10. A review of the provisions of the Act discloses that the quasi­judicial 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 quasi­judi­ 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 6 (1995) 3 SCC 583 26

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 “business­to­consumer” disputes and not for “business­to­business” 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 “business­to­consumer” disputes and not for

“business­to­business” disputes. It has been held that 27

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 28

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 ber's 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:

29 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 self­employment, 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 self­employment, 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 30

livelihood” and “by means of self­em­ 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 auto­rickshaw 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 auto­rick­ 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 self­employ­ 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.” [Emphasis supplied] 31

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 ‘self­employment’.

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 self­employment and he would not cease to be a ‘consumer’ 32

for the purposes of the said Act. Another example given is

that, if a person who purchases an auto­rickshaw 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 self­employment’ 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.

37. In the case of Cheema Engineering Services vs.

Rajan Singh7, this Court held that the manufacture and sale

of bricks in a commercial way may also be to earn livelihood.

7 (1997) 1 SCC 131 33

As such, the question as to whether the complainant used

the machinery for the manufacture of bricks alone or with

members of his family and as to whether the same was for

earning his livelihood, were the questions of fact to be decided

on the basis of evidence.

38. In the case of Kalpavruksha Charitable Trust vs.

Toshniwal Brothers (Bombay) Pvt. Ltd. and another8, this

Court considered the question as to whether the machines

purchased by the Charitable Trust for use in the Diagnostic

Centre were meant for ‘commercial purpose’ or not. It was

sought to be urged on behalf of the Trust that the Trust was

not carrying out a profit­making activity and as such, the

purchase of diagnostic machines would not come within the

ambit of the term ‘commercial purpose’. It was, therefore,

sought to be urged that it would fall within the definition of

the term ‘consumer’. This Court held that the finding of the

National Commission that the machinery was installed for

commercial purpose and as such, the Trust was not a

8 (2000) 1 SCC 512 34

‘consumer’ within the meaning of the said Act, required no

interference.

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 self­employment 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: 35

“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 “self­employment”. 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 “self­employment”, 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. “Self­employment” necessarily includes earning for self. Without earning generally there cannot be “self­employment”. Thus, if 36

a person buys and uses the machine exclu­ sively for the purposes of earning his liveli­ hood by means of “self­employment”, 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 large­scale 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.

37

41. Shri Shyam Divan, learned Senior Counsel appearing

on behalf of the appellant, strongly relied on the judgment of

this Court in 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 business­to­busi­ ness transactions between commercial enti­ ties.

19.2. The purchase of the good or service should have a close and direct nexus with a profit­generating 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 38

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 self­employment” 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

business­to­business transactions between commercial

entities; that the purchase of the good or service should have

a close and direct nexus with a profit­generating activity; that

the identity of the person making the purchase or the value of

the transaction is not conclusive for determining the question 39

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 40

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 self­employment. 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 41

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 respondent­Bank. It is also not in dispute

that he was also acting as a stock­broker 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 self­employment” will have to be given its 42

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 self­employment.

47. In the present case, the Commission has come to a

finding that the appellant had opened an account with the

respondent­Bank, 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 43

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.

49. In the result, the appeal is dismissed. There shall be

no order as to costs. All pending applications, if any, shall

stand disposed of.

…............................J. [L. NAGESWARA RAO] 44

......................J. [B.R. GAVAI]

NEW DELHI;

FEBRUARY 22, 2022