The Chief Manager Central Bank Of India vs M/S Ad Bureau Advertising Pvt Ltd

2025 INSC 288 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 7438 OF 2023 THE CHIEF MANAGER, CENTRAL BANK

OF INDIA & ORS. …APPELLANTS

VERSUS

M/s AD BUREAU ADVERTISING

PVT. LTD & ANR. …RESPONDENTS

WITH

CIVIL APPEAL NO. OF 2025 (@ DIARY NO. 20192 OF 2024)

M/s AD BUREAU ADVERTISING

PVT. LTD. …APPELLANT

VERSUS

THE CHIEF MANAGER, CENTRAL BANK

OF INDIA & ORS. …RESPONDENTS

Signature Not Verified

Digitally signed by Jayant Kumar Arora Date: 2025.02.28 16:48:59 IST Reason: JUDGMENT

SUDHANSHU DHULIA, J.

1. The question which arises in these two appeals for our

determination is that whether the borrower of a project loan,

falls within the definition of ‘Consumer’ under the provisions of

the Consumer Protection Act, 1986 (hereinafter, ‘the Act’).

2. These statutory appeals arise from the order dated 30.08.2023

passed by the National Consumer Disputes Redressal

Commission, New Delhi (hereinafter, ‘NCDRC’) in Consumer

Complaint No. 23/2021. The appellant before us in Civil

Appeal No. 7483 of 2023 is the Chief Manager, Central Bank of

India and has filed the appeal under Section 23 of the Act,

assailing the finding arrived at by the NCDRC holding that

there was a deficiency in service on part of the appellant and

thus, it is liable to pay compensation to the respondent No. 1,

which is M/s Ad Bureau Pvt. Ltd., (a company engaged in the

business of branding, consulting & advertising).

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3. On the other hand, Civil Appeal (Diary) No. 20192 of 2024 has

been filed by M/s Ad Bureau Pvt. Ltd., challenging the

quantum of compensation awarded by the NCDRC, on the

ground that the same has been awarded inadequately. For the

sake of convenience, we shall refer to the parties as per their

respective status in Civil Appeal No. 7483 of 2023.

4. The NCDRC vide its order dated 30.08.2023 has allowed the

Consumer Complaint filed by respondent No.1 herein and has

directed the appellants1 to pay a compensation of Rs.

75,00,000/­ to respondent No.1 and to issue a certificate

stating that the loan account of respondent No.1 with the

Central Bank of India was settled and no outstanding dues

remained in the said account and also holding that the Bank

had wrongly reported the status of respondent No.1 as a

defaulter to CIBIL2, which caused loss to the respondent No.1

in the market. Additionally, the appellants were also directed

to pay to respondent No.1, litigation costs of Rs. 20,000/­.

5. At the outset, it would be necessary to state the relevant facts.

On 28.04.2014, a Project Loan of Rs. 10 crores was sanctioned 1 Appellant Nos. 1, 2 & 3 are the Chief Manager, Mount Road Branch, Chennai; Field General Manager, Chennai; and the Managing Director & Chief Executive Officer of the Central Bank of India respectively.

2 Credit Information Bureau of India Limited.

3 by the Central Bank of India in favour of respondent No.1,

which is a private limited company carrying on advertising

business. The purpose behind availing this loan was that

respondent No. 1 was to engage in the post­production of a

movie. A property located at old D.No. 61, new D. No. 194, St.

Mary's Road, Abhiramapuram, Chennai, which stood in the

name of the Chairman and Managing Director of respondent

No.1 was pledged as collateral for the loan. After availing the

said loan, respondent No. 1 defaulted in repayment and its

loan account and was classified as NPA 3 on 04.02.2015. When

respondent No.1 failed to repay the amount even after

issuance of Demand Notice by the appellant­bank, a

Possession Notice was issued on 21.05.2015 and pursuant to

the same, symbolic possession of the property pledged as

collateral for the loan was taken in terms of the provisions of

the Securitisation and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002 (hereinafter

referred to as ‘SARFAESI Act’).

6. Thereafter, on 09.10.2015 the Bank filed an application under

Section 19 (1) of Recovery of Debts Due to Banks and

3 Non­Performing Asset.

4 Financial Institutions Act, 1993 (hereinafter referred to as

'RDDBFI Act') before the Debts Recovery Tribunal, Chennai for

recovery of an amount of Rs 4,65,39,715/­. This application

came to be allowed by the Debts Recovery Tribunal, Chennai

vide order dated 05.12.2016 and the Bank was held to be

entitled to recover an amount of Rs.4,65,39,715/­ with interest

@ 12% p.a. till the date of realisation along with costs.

Pursuant thereto, a communication was addressed to the

appellant­bank by respondent No.1 offering a One­Time

Settlement of Rs. 3.56 Crores and the offer was duly accepted

by the appellant­bank.

7. Thereafter, the appellant­bank called upon respondent No.1 to

pay the ‘delayed period interest’ which was computed as Rs.

14.43 lacs. Admittedly, this amount was also paid by

respondent No.1 to the appellant­bank, pursuant to which

‘No­Dues Certificate’ was issued on 13.01.2017 and

20.03.2017 by the appellant­bank towards respondent No.1.

Further, a ‘full­satisfaction memo’ was also filed before the

DRT by the appellant­bank, wherein the factum of payment of

the one­time settlement amount and delayed interest by

respondent No. 1 was accepted by the appellant­bank.

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8. The precise case of the respondent No. 1 before the NCDRC, as

well as before this Court, has been that the appellant­bank

was grossly negligent and deficient in providing banking

services to respondent No. 1 and has consequently caused

monetary damages and a loss of reputation to it. As per the

‘Master Circular on Wilful Defaulters’4 by the Reserve Bank of

India (hereinafter, ‘RBI’), all nationalised banks and financial

institutions have to report information regarding borrower

accounts which are classified as doubtful and loss accounts

with outstanding amount aggregating Rs. 1 Crore and above.

These borrowers are classified and reported as ‘wilful

defaulters’ by the respective banks and financial institutions to

the RBI, which in turn, consolidates the entire information

reported in the form of a list on a yearly basis. The grievance of

respondent No. 1 towards the appellant­bank has been that

the appellant­bank, despite issuing a No­Dues Certificate and

despite filing a Full­Satisfaction Memo before the DRT,

incorrectly reported the name of respondent No. 1 to RBI as a

defaulter with a total outstanding amount of Rs. 4.17 Crores.

4 Circular No. DBOD No. BC/CIS/47/20.16.002/94 dated 23.04.1994.

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9. This incorrect reporting by the appellant­bank not only led to a

significant loss of goodwill and reputation, but it also resulted

in the respondent No. 1 losing an exclusive advertising

tender/license by the Airports Authority of India, which

although, was initially awarded to respondent No. 1 but was

subsequently cancelled for the reason that a Bank Guarantee

was required to be submitted, but the same could not be done,

as when the respondent No.1 approached HDFC Bank for

issuance of the same, the bank refused to do so upon finding

the name of respondent No.1 in the list of wilful defaulters.

10. Aggrieved by the wrongful reporting and the losses which it

faced on account of the same, respondent No. 1 filed

Consumer Complaint No. 23 of 2021 before the NCDRC. Vide

Impugned Order dt. 30.08.2023, NCDRC partly allowed the

complaint, holding that the appellant­bank was deficient in

service and also engaged in an unfair trade practice. It was

observed by the NCDRC that since the wrongful reporting by

the appellant­bank constitutes a serious breach of duty, it is

liable to compensate respondent No. 1 for the losses it has

incurred and accordingly, the NCDRC awarded a

compensation of Rs. 75,00,000/­ to respondent No. 1 which

7 was to be paid jointly and severally by the appellants herein

and also directed them to pay litigation costs of Rs. 20,000/­.

Further, the appellants were directed to issue a certificate in

favour of respondent No. 1, wherein it was to be stated by the

appellant­bank that loan account of respondent No. 1 stood

settled and no outstanding dues remained. The appellant­bank

had to further state that it had been wrongly reporting the

status respondent No. 1 as a ‘defaulter’ from 31.03.2017 till

30.06.2020.

11. We have heard learned counsel for the appellants as well as

Shri M. Abirchand Nahar, who appeared and argued as party­

in­person, on behalf of respondent No. 1 and we have also

heard the learned counsel for respondent No. 2, i.e.

TransUnion CIBIL Limited.

12. At the outset, it has been submitted by the learned counsel

for the appellants that the order dated 30.08.2023 of the

NCDRC is not sustainable in law, as it was passed without

first adjudicating whether the respondent No. 1 falls within the

definition of consumer in terms of Section 2 (1) (d) (ii) of the

Act. It has been further submitted by the learned counsel for

the appellants as well as learned counsel for respondent No. 2

8 that respondent No. 1 does not come within the definition of

‘consumer’ under Section 2 (1) (d) (ii) of the Act since the

service availed (sanction of project loan) by respondent No. 1

from the appellant­bank was purely for a commercial purpose

and it was a loan transaction between two business entities. In

other words, it was business­to­business transaction as

opposed to a business­to­consumer transaction. This is the

first limb of the argument. The second limb, which is a

continuation of the first, is that this service was availed by

respondent No.1 with the ‘dominant intention’ of generating

profits and the main purpose behind the loan transaction was

to increase/generate additional revenue for the company. In

support of this argument, learned counsel(s) have relied upon

two decisions of this Court in National Insurance Company

Limited vs. Harsolia Motors & Ors. (2023) 8 SCC 362 &

Lilavati Kirtilal Mehta Medical Trust vs. Unique Shanti

Developers, (2020) 2 SCC 265.

13. Before dealing with the rival submissions advanced on

behalf of the respondent No. 1, we consider it necessary to

9 refer to Section 2 (1) (d) (ii) of the Act, which is reproduced as

under:

(d) "consumer" means any person who—

(i) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

(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 purposes;

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 earning his livelihood by means of self­employment;

(emphasis provided)

14. A plain reading of the above makes it clear that where a

service is availed, for any “commercial purpose” then the

person who has availed such a service is not a “consumer” for

purposes of the Act. All the same, this is subject to a caveat

which is provided by the Explanation to Section 2 (1) (d) of the

Act. The explanation clarifies that when the person uses the

10 goods bought, or avails any service for the sole purpose of

earning his livelihood, by means of self­employment, then such

a person would not be excluded from the definition of

‘consumer’ under the Act.

15. As a counter to the submission of the appellants that

respondent No.1 is not a ‘consumer’ on account of fact that the

it had availed the loan facility, with the purpose of generating

profits for its business, respondent No. 1 would argue that it is

squarely covered by the Explanation to Section 2 (1) (d) of the

Act and that loan was availed by it only for ‘self­use’. This

argument was also put forth by respondent No. 1 before the

NCDRC, where it claimed that loan amount of Rs. 10 crores

was used by it to engage itself in the post­production of a

movie titled “Kochadaiiyaan” and to see to it that the name of

respondent No.1 is displayed on the movie title, the posters of

the movie as well as the advertisements of the movie. In other

words, it was a self­branding exercise, the sole purpose being

building a brand name for respondent No.1, in order to earn

livelihood and thus, there is no nexus to generation of profits.

16. We are not convinced by this argument put forth on behalf

of respondent No. 1 for the simple reason that even if partly, it

11 may be true that the loan was availed for a self­branding

exercise, the dominant purpose behind brand­building itself is

to attract more customers and consequently generate profits or

increase revenue for the business. A bald averment that

company engaged itself in the post­production of the movie

solely for the purposes of brand­building does not alter the

fundamental nature of the transaction, i.e. the availing of

credit facility from the appellant­bank, which was purely a

business­to­business transaction, entered into for a

commercial purpose. Post­production of a film involves

multiple activities, which finally gives shape and presentation

to a film, which is a commercial venture.

17. In Lilavati Kirtilal Mehta Medical Trust vs. Unique

Shanti Developers, (2020) 2 SCC 265, this Court has

observed that no strait­jacket formula can be laid down for

determining whether an activity or transaction is for a

commercial purpose and has laid down certain principles

which are to be kept in mind. The relevant excerpt is

reproduced hereunder:

“19. To summarise from the above discussion, though a strait jacket formula cannot be adopted in every case, the following broad

12 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 tobusiness transactions between commercial entities.

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 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 profit­generation for the purchaser or their beneficiary.” (emphasis provided)

18. We are cognisant of the fact that respondent No.1 would not

be excluded from the definition of consumer merely on account

of the fact that it is a commercial entity/enterprise. But what

has weighed with us in coming to the conclusion that in the

instant case, respondent No.1 cannot be said to be a

‘consumer’ is the fact that the transaction in question i.e.

obtaining a project loan did have a close nexus with a profit­

generating activity and in fact, the dominant purpose for

13 getting this loan sanctioned was to generate profits upon

successful post­production of the movie titled “Kochadaiyaan”.

19. We may also refer to the decision of this Court in Shrikant

G. Mantri vs. Punjab National Bank (2022) 5 SCC 42. The

facts of this case were that the appellant therein was a stock­

broker who availed an over­draft facility from the respondent­

bank, the purpose of which was to facilitate his daily

transactions in the stock and share market. As collateral for

the overdraft facility, the appellant therein had pledged his

shares, which were not returned to him despite the matter

being settled between the parties through a one­time

settlement. Alleging deficiency in service by the respondent­

bank, the appellant approached the NCDRC which dismissed

the complainant on the grounds of maintainability, holding

that he is not a consumer under the provisions of this Act.

When the matter came up before this Court, it was the

appellant’s case that he had availed the overdraft facility for

his ‘self­employment’. This Court found no merit in this

argument and held that the overdraft facility was taken by the

appellant therein to expand his business profits and the

relationship between the appellant and respondent­bank

14 would purely be a ‘business­to­business’ relationship and

therefore, the transaction would clearly come within the ambit

of the term “commercial purpose”.

20. Further, in National Insurance Company Limited vs.

Harsolia Motors & Ors. (2023) 8 SCC 362, this Court has

laid down the determining factors which have to be kept in

mind while considering whether a service is availed for a

commercial purpose or not. The relevant excerpt is reproduced

hereunder:

“39. Applying the aforesaid test, two things are culled out : (i) whether the goods are purchased for resale or for commercial purpose; or (ii) whether the services are availed for any commercial purpose. The two­fold classification is commercial purpose and non­ commercial purpose. If the goods are purchased for resale or for commercial purpose, then such consumer would be excluded from the coverage of the 1986 Act. For example, if a manufacturer who is producing product A, for such production he may be required to purchase articles which may be raw material, then purchase of such articles would be for commercial purpose. As against this, if the same manufacturer purchases a refrigerator, television or air­ conditioner for his use at his residence or even for his office has no direct or indirect nexus to generate profits, it cannot be held to be for commercial purpose and for aforestated reason he is qualified to approach the Consumer Forum under the 1986 Act.

15 40. Similarly, a hospital which hires services of a medical practitioner, it would be a commercial purpose, but if a person avails such services for his ailment, it would be held to be a non­commercial purpose. Taking a wide meaning of the words “for any commercial purpose”, it would mean that the goods purchased or services hired should be used in any activity directly intended to generate profit. Profit is the main aim of commercial purpose, but in a case where goods purchased or services hired is an activity, which is not directly intended to generate profit, it would not be a commercial purpose.” (emphasis provided)

21. From an analysis of the afore­mentioned decisions, it is

quite clear that what is to be seen here is that whether the

dominant intention or dominant purpose for the transaction

was to facilitate some kind of profit generation for the person

who has availed the service. Therefore, it is our considered

opinion that the respondent No.1 is not a ‘consumer’ in terms

of Section 2 (1) (d) (ii) of the Act.

22. In view of the aforesaid, we find merit in this appeal and

accordingly set aside the order dated 30.08.2023 passed by

the NCDRC. The Civil Appeal stands allowed, accordingly.

Pending applications, if any, shall stand disposed of.

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23. However, we deem it necessary to add that we have only

dealt with the issue of maintainability of the Consumer

Complaint filed by respondent No.1 before the NCDRC, and we

have allowed this appeal only on the ground of lack of

jurisdiction of NCDRC. We have not expressed any opinion on

the merits of the dispute between the parties herein. We also

clarify that this judgment shall not come in the way of

respondent No.1 to pursue appropriate remedies in accordance

with law.

Civil Appeal No. of 2025 (@ Diary No.20192 OF 2024)

24. Delay condoned.

25. In view of the aforesaid, we see absolutely no scope for our

interference with the order dated 30.08.2023 of the NCDRC as

regards the quantum of compensation awarded.

26. The civil appeal stands dismissed, accordingly.

27. Pending application(s), if any shall stand disposed of.

……....................................J. [SUDHANSHU DHULIA]

……....................................J. [PRASHANT KUMAR MISHRA]

New Delhi, February 28, 2025.

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