SHRIKANT G. MANTRI versus PUNJAB NATIONAL BANK on 22 February 2022

SHRIKANT G. MANTRI

v.

PUNJAB NATIONAL BANK

(Civil Appeal No. 11397 of 2016)

FEBRUARY 22, 2022

[L. NAGESWARA RAO AND B. R. GAVAI, JJ.]

Consumer Protection Act, 1986: ss. 2(1)(d), 2(1)(d)(i),2(1)(d)(ii) – Appellant was a stock-broker by profession – He wasalso acting as stock broker for respondent bank – Appellant tookoverdraft facility from respondent-bank and also soughtenhancement of the same from time to time in furtherance of hisbusiness as stock broker and for enhancing profit – Whether theappellant had availed the services of the respondent for ‘commercialpurpose’ and therefore he was not a consumer as envisaged unders.2(1)(d) of the Act – Held: Ordinarily, “commercial purpose” isunderstood to include manufacturing /industrial activity orbusiness-to-business transactions between commercial entities andthat the purchase of the good or service should have a close anddirect nexus with a profit-generating activity – What is relevant isthe dominant intention or dominant purpose for the transaction andas to whether the same was to facilitate some kind of profitgeneration for the purchaser and/or their beneficiary – The relationsbetween the appellant and the respondent was purely “business tobusiness” relationship – The transactions would clearly come withinthe ambit of ‘commercial purpose’ – Therefore, it cannot be saidthat the services were availed exclusively for the purposes ofearning his livelihood by means of self-employment – Appellant wasnot consumer under s.2(1)(d) of the Act.

Consumer Protection (Amendment) Act, 1993: Object of theAmendment Act – Held: To enable the consumers, who are self-employed, to file complaints before the redressal agencies, wheregoods bought by them exclusively for earning their livelihood, sufferfrom any defect – By the 1993 Amendment Act, insofar as servicesare concerned, wherever the word “hires” was used, the same wassubstituted by the word “hires or avails of” – By the 1993 AmendmentAct, insofar as s. 2(1)(d)(i) is concerned, an Explanation was

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Dismissing the appeal, the Court

HELD:1.1 Section 2(1)(d) of the Consumer ProtectionBAct,1986 is in two parts. Section 2(1)(d)(i) of the said Act dealswith buying of goods. A person who buys any goods for aconsideration which has been paid or promised or partly paid andpartly promised, or under any system of deferred payment wouldbe a consumer within the meaning of Section 2(1)(d)(i) of the saidCAct. It also includes any user of such goods other than the personwho buys such goods for a consideration, which has been paidor promised or partly paid or partly promised, or under any systemof deferred payment, when such use is made with the approval ofsuch person. However, Section 2(1)(d)(i) of the said Act excludesa person who obtains such goods for resale or for any commercialDpurpose. Section 2(1)(d)(ii) of the said Act is with respect to hiringof services. According to it, the term ‘consumer’ means anyperson who hires any services for a consideration, which has beenpaid or promised or partly paid and partly promised, or under anysystem of deferred payment. It also included any beneficiary ofEsuch services other than the person who hires the services as isprovided under Section 2(1)(d)(i) of the said Act. [Paras 24 &25][957-C-F]

1.2. In order to plug the loopholes and enlarge the scopeof areas covered, the legislature brought certain amendments toFthe Act by the Consumer Protection (Amendment) Act, 1993.One of the objects of the said Act was to enable the consumers,who are self- employed, to file complaints before the redressalagencies, where goods bought by them exclusively for earningtheir livelihood, suffer from any defect. By the 1993 AmendmentAct, insofar as services are concerned, wherever the word “hires”Gwas used, the same was substituted by the word “hires or availsof”. By the 1993 Amendment Act, insofar as Section 2(1)(d)(i) isconcerned, an Explanation was provided to the effect that‘commercial purpose’ does not include use by a consumer ofgoods bought and used by him exclusively for the purpose of H

earning his livelihood by means of self-employment. [Paras 27 &28][958-A-B, E-F]

1.3 By the 2002 Amendment Act, the legislature has donetwo things. Firstly, it has kept the commercial transactions, insofaras the services are concerned, beyond the ambit of the term‘consumer’ and brought it in parity with Section 2(1)(d)(i), whereina person, who bought such goods for resale or for any commercialpurpose, was already out of the ambit of the term ‘consumer’.The second thing that the legislature did was that even if a personavailed of the commercial services, if the services availed by himwere exclusively for the purposes of earning his livelihood bymeans of self-employment, he would still be a ‘consumer’ for thepurposes of the said Act. Thus, a person who availed of servicesfor commercial purpose exclusively for the purposes of earninghis livelihood by means of self- employment was kept out of theterm ‘commercial purpose’ and brought into the ambit of‘consumer’, by bringing him on par with similarly circumstancedperson, who bought and used goods exclusively for the purposesof earning his livelihood by means of self-employment. It couldthus be seen that the legislature’s intent is clear. If a personbuys goods for commercial purpose or avails services forcommercial purpose, though ordinarily, he would have been outof 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’, ifpurchase of such goods or availing of such services wasexclusively for the purposes of earning his livelihood by meansof self-employment. [Para 31][960-B-F]

2. The question as to whether a transaction is for acommercial purpose would depend upon the facts andcircumstances of each case. However, ordinarily, “commercialpurpose” is understood to include manufacturing/industrialactivity or business-to-business transactions between commercialentities; that the purchase of the good or service should have aclose and direct nexus with a profit-generating activity; that theidentity of the person making the purchase or the value of thetransaction is not conclusive for determining the question as to AB

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Awhether it is for a commercial purpose or not. What is relevant isthe dominant intention or dominant purpose for the transactionand as to whether the same was to facilitate some kind of profitgeneration for the purchaser and/or their beneficiary. If thedominant purpose behind purchasing the good or service was forthe personal use and the consumption of the purchaser and/orBtheir beneficiary, or is otherwise not linked to any commercialactivity, then the question of whether such a purchase was forthe purpose of “generating livelihood by means ofself-employment” need not be looked into. [Para 42][967-D-G]

3. In the present case, the Commission has come to aCfinding that the appellant had opened an account with therespondent-Bank, took overdraft facility to expand his businessprofits, and subsequently from time to time the overdraft facilitywas enhanced so as to further expand his business and increasehis profits. The relations between the appellant and theDrespondent 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 wereavailed “exclusively for the purposes of earning his livelihood”“by means of self-employment”. If the interpretation as soughtto be placed by the appellant is to be accepted, then the ‘businessEto business’ disputes would also have to be construed asconsumer disputes, thereby defeating the very purpose ofproviding speedy and simple redressal to consumer disputes.Therefore there is no error in the findings of the Commission.[Paras 47 and 48][969-B-E]F

Laxmi Engineering Works v. P.S.G. Industrial Institute(1995) 3 SCC 583 : [1995] 3 SCR 174 – relied on.

Internet and Mobile Association of India v. ReserveBank of India (2020) 10 SCC 274 : [2020] SCR 297;GLilavati Kirtilal Mehta Medical Trust v. Unique ShantiDevelopers and Others (2020) 2 SCC 265 : [2019] 14SCR 563; Paramount Digital Colour Lab and Othersv. AGFA India Private Limited and Others (2018) 14SCC 81; Sunil Kohli and Another v. Purearth H

Infrastructure Limited (2020) 12 SCC 235; CBI, AHD,Patna v. Braj Bhushan Prasad and Others (2001) 9SCC 432 : [2001] 3 Suppl. SCR 627; CheemaEngineering Services v. Rajan Singh (1997) 1 SCC 131:[1996] 8 Suppl. SCR 340; Kalpavruksha CharitableTrust v. Toshniwal Brothers (Bombay) Pvt. Ltd. andAnother (2000) 1 SCC 512 : [1999] 3 Suppl. SCR619 – referred to.

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Case Law Reference

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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 11397of 2016.

From the Judgment and Order dated 01.06.2016 of the NationalConsumer Disputes Redressal Commission, New Delhi in ConsumerComplaint No. 55 of 2006.

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Shyam Divan, Sr. Adv., Ms. Nandini Gore, Ms. Sonia Nigam,Ms. Neha Khandelwal, Davesh Bhatia, Ms. Damini Bisht, AdithDeshmukh, M/s Karanjawala & Co., Advs. for the Appellant.

Dushyant Dave, Sr. Adv., Mohit Chaudhary, Ms. Puja Sharma,Kunal Sachdeva, Chowdhary Zulfikar Ali, Balwinder Singh Suri, ParasMithal, Ms. Mahima Ahuja, Nimesh Joshi, Parveen Kumar, Advs. forthe Respondent.

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B. R. GAVAI, J.

1. The present appeal filed by the appellant-complainant challengesthe judgment and order dated 1[st] June, 2016, passed by the NationalConsumer Disputes Redressal Commission, New Delhi (hereinafterBreferred to as “the Commission”) in Consumer Complaint No. 55 of2006, thereby holding that the appellant-complainant was not a consumeras envisaged under Section 2(1)(d) of The Consumer Protection Act,1986 (hereinafter referred to as “the said Act”). As such, by the impugnedjudgment and order, the complaint of the appellant has been dismissedCbeing not maintainable.

2. The facts in the present case are not in dispute. The barenecessary facts for adjudication of the present appeal are as under:

3. The appellant-complainant had opened an account witherstwhile Nedungadi Bank Limited (hereinafter referred to as “theDerstwhile Bank”) in the year 1998. The appellant is a stock-broker byprofession. The appellant had applied for an overdraft facility on25[th] April, 1998, in connection with his day-to-day share and stocktransactions. It is not in dispute that the said overdraft facility wassanctioned by the erstwhile Bank to the appellant-complainant initiallyEfor an amount of Rs.1 crore, for which the appellant-complainant hadpledged certain shares worth more than Rs.1 crore, as security as perthe margin requirements specified by the erstwhile Bank. Subsequently,in the year 1999, the appellant-complainant applied for enhancement ofthe said overdraft facility. The said overdraft facility was enhanced bythe erstwhile Bank from Rs.1 crore to Rs. 5 crore, vide its letter datedF13[th] December, 1999.

4. Again, in March 2001, the appellant-complainant approachedthe erstwhile Bank for temporary increase in the overdraft limit. Theerstwhile Bank, vide its letter dated 17[th] March, 2001, granted the requestof the appellant and temporarily enhanced the overdraft facility fromGRs.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 erstwhileBank, vide its letters dated 16[th] and 17[th] March, 2001, called upon theappellant-complainant to pledge additional shares to regularize theoverdraft account. As an additional security, the appellant-complainantH

pledged 37,50,000 equity shares of face value of Rs.10/- of unlistedcompany Ansal Hotels Ltd. (hereinafter referred to as “the said shares”)towards the dues of the Bank, vide his letter dated 30[th] March, 2001. Itis not in dispute that subsequently, consequent to the merger of AnsalHotels Ltd. with ITC Ltd., and the bonus and splitting of ITC shares, theaforesaid 37,50,000 equity shares of Ansal Hotels Ltd. became equivalentto 3,75,000 shares of ITC Ltd.

6. It appears that during 2001, the overdraft account of theappellant-complainant became irregular and as such, the erstwhile Bankcalled upon the appellant-complainant to regularise the overdraft account.As the appellant-complainant was unable to regularise the overdraftaccount, the erstwhile Bank, vide letter dated 14[th] September, 2001, calledupon the appellant-complainant to pay a sum of Rs.600.61 lakhs alongwith interest thereon.

7. It is the case of the appellant-complainant that though he hadadvised the erstwhile Bank to sell the pledged shares in December, 2001,so as to close overdraft account, the erstwhile Bank chose not to sell thesaid shares at that point of time. It is the case of the appellant-complainantthat 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 ofRs.2,69,66,215.79, the respondent Bank, the successor-in-interest of theerstwhile Bank, filed a Recovery Petition before the Debts RecoveryTribunal, Mumbai against the appellant-complainant for recovery of thebalance amount due as on 26[th] December, 2002. The said petition wasdecreed by the Debts Recovery Tribunal, Mumbai, vide order dated26[th] May, 2004. However, the matter was settled between the partiesand a ‘One Time Settlement’ (“OTS” for short) was reached betweenthem on payment of Rs. 2 crore. As such, the respondent-Bank issued a‘No Dues Certificate’ dated 14[th] May, 2005, certifying that no dues wereleft outstanding against the overdraft account of the appellant. After theOTS, the respondent-Bank withdrew the recovery proceedings filedagainst the appellant.

9. It is the case of the appellant that since the respondent-Bankfailed to return the said shares to the appellant, he sent a notice on14[th] June, 2005 to the respondent-Bank, seeking release of the said shares.

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A10. It appears that the appellant was also working as a stock-broker of the respondent-Bank. With regard to the transactions with theappellant in the capacity as a stock-broker, the respondent-Bank hadinitiated arbitration proceedings against the appellant before the Arbitrationforum of the Bombay Stock Exchange (‘BSE” for short). According tothe appellant, the respondent-Bank failed in the said arbitrationBproceedings, which have attained finality.

11. In this background, the appellant filed a complaint before theCommission, alleging deficiency in services on the part of the respondent-Bank. The main relief claimed in the said complaint was for a directionto the respondent-Bank to return 3,75,000 shares of ITC Ltd. (earlierC37,50,000 shares of Ansal Hotel Ltd.) along with dividend and allaccretions thereon.

12. In the said proceedings, on being served with the notice, therespondent-Bank raised a preliminary objection with regard tomaintainability of the said complaint, on the ground that the appellant-Dcomplainant was not a consumer as envisaged under Section 2(1)(d) ofthe said Act. The Commission, by the impugned order, held that theappellant had availed the services of the respondent-Bank for‘commercial purpose’ and as such, he was not a consumer as envisagedunder Section 2(1)(d) of the said Act.

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13. Being aggrieved thereby, the appellant-complainant hasapproached this Court by way of the present appeal.

14. We have heard Shri Shyam Divan, learned Senior Counselappearing on behalf of the appellant and Shri Dushyant Dave, learnedSenior Counsel appearing on behalf of the respondent.

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15. Shri Shyam Divan, learned Senior Counsel appearing on behalfof the appellant-complainant, submitted that the appellant had a dualrelationship with the respondent-Bank. In the first capacity, as a consumer,he had taken the overdraft facility from the respondent-Bank for thepurposes of his self-employment. In the second capacity, he was workingGas the stock-broker for the respondent-Bank. The learned Senior Counselsubmitted that with regard to the said relationship, though there werecertain disputes, the claim of the respondent-Bank before the ArbitrationForum of BSE has been rejected by the BSE Arbitral Tribunal, whichhas attained finality.

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16. Shri Divan further submits that it is undisputed that the saidshares were pledged with the respondent-Bank only as a security towardsthe overdraft facility. He submits that from the letter of the respondent-Bank dated 14[th] May, 2005, it is clear that there were no dues outstandingin the overdraft account of the appellant-complainant, which stood fullyand finally settled through compromise/OTS. He submitted that oncethe dues of the respondent-Bank towards the said overdraft facility stoodcleared, there was no reason for the respondent-Bank to have withheldthe said shares. He submitted that though the arbitration proceedingsbetween the parties had reached finality, the respondent-Bank had illegallywithheld the said shares of the appellant. He submitted that in spite ofrepeated requests for return of the said shares, the same were notreturned and as such, the appellant had no option but to file the complaintunder the said Act.

17. Shri Divan submitted that though Section 2(1)(d)(ii) of thesaid Act, excludes a person who avails of such services for ‘anycommercial purpose’, the Explanation thereto, which could be construedas proviso to proviso, would include even such a person if it is shownthat the services availed by him were exclusively for the purposes ofearning his livelihood by means of self-employment. He submitted thatthe services of the overdraft facility were taken by the appellant fromthe respondent-Bank for the purposes of his business as a stock-broker.He submitted that since the appellant was engaged in the profession ofstock-broker and since the services of the said overdraft facility weretaken for the appellant’s profession as a stock-broker, the servicesrendered by the respondent-Bank were exclusively for the purposes ofearning his livelihood. Learned Senior Counsel submits that the appellantwas self-employed as a stock-broker and as such, the services availedwere exclusively for the purpose of earning his livelihood by means ofself-employment. He relies on the dictionary meaning of the word‘livelihood’ as provided in Black’s Law Dictionary, Ninth Edition. Hesubmits that the Commission has grossly erred in giving restricted meaningto the term ‘earning his livelihood by means of self-employment’. LearnedSenior Counsel submits that merely because a person has availed theservices of the Bank for expanding his business, that cannot be a groundto give a restricted meaning to the said term. Relying on the judgment ofthis Court in the case of Internet and Mobile Association of India vs.Reserve Bank of India[1], he submits that the services of the Bank AB

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Aprovide lifeline for any business, trade or profession. He submits that inthe present era, it is unable for any person to survive without availing theservices of a Bank. Learned Senior Counsel submits that the Commissionhas erred in holding that the appellant is not a consumer within the meaningof Section 2(1)(d)(ii) of the said Act. In support of his submissions, herelied on the following judgments of this Court:B

(i) Lilavati Kirtilal Mehta Medical Trust vs. Unique ShantiDevelopers and others[2];

(ii) Paramount Digital Colour Lab and others vs. AGFAIndia Private Limited and others[3];C

(iii) Sunil Kohli and another vs. Purearth InfrastructureLimited[4];

(iv) CBI, AHD, Patna vs. Braj Bhushan Prasad and others[5].

18. Shri Dushyant Dave, learned Senior Counsel appearing onDbehalf of the respondent-Bank, on the contrary, submits that the saidAct is a special statute enacted with the purpose of providing a speedyand simple redressal to consumer disputes. Shri Dave submits that thesaid Act provides a summary procedure so that the consumer disputesare settled without undue delay. He submitted that if the definition of theword ‘consumer’ is expanded, so as to include in it a person who availsEof such services for any commercial purpose, the very purpose of thesaid Act would be defeated. He submits that if any commercial disputebetween the service provider and the availer/recipient of the service isincluded in the definition of the word ‘consumer’, it will give rise tofloodgates of complaints. It is submitted that if such an interpretation isFaccepted, apart from the same being inconsistent with the provisions ofSection 2(1)(d)(ii) of the said Act, it will defeat the very purpose ofproviding speedy justice to the consumers. He, therefore, submits thatno interference is warranted in the finding of the Commission and theappeal deserves to be dismissed.

19. For appreciating the rival submissions, it will be necessary toGrefer to Section 2(1)(d) of the said Act, as it exists today, which is asfollows:

2 (2020) 2 SCC 2653 (2018) 14 SCC 814 (2020) 12 SCC 235H5 (2001) 9 SCC 432

“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 paidor promised or partly paid and partly promised, or underany system of deferred payment and includes any user ofsuch goods other than the person who buys such goodsfor consideration paid or promised or partly paid or partlypromised, or under any system of deferred payment whensuch use is made with the approval of such person, butdoes not include a person who obtains such goods for resaleor for any commercial purpose; or

(ii) hires or avails of any services for a consideration whichhas been paid or promised or partly paid and partly promised,or under any system of deferred payment and includesany beneficiary of such services other than the personwho hires or avails of the services for consideration paidor promised, or partly paid and partly promised, or underany system of deferred payment, when such services areavailed of with the approval of the first mentionedperson but does not include a person who avails of suchservices for any commercial purpose; Explanation.—For the purposes of this clause, “commercialpurpose” does not include use by a person of goods boughtand used by him and services availed by him exclusively forthe purposes of earning his livelihood by means of self-employment;”

20. The short question, therefore, that would have to be answeredin the present case is, as to whether the services availed by the appellantfrom the respondent-Bank would fall within the term ‘commercialpurpose’. The other question that would also have to be answered is, asto whether such services are exclusively availed by the appellant for thepurposes of earning his livelihood by means of self-employment.

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A21. For considering the said issues, we will also have to examinethe object while enacting the said Act as well as the legislative history asto how Section 2(1)(d) has come in its present form. The legislaturefound that though there were various provisions contained in variousenactments to protect the consumers and provide relief to them, yet itbecame necessary to protect the consumers from the exploitation and toBsave them from adulterated and sub-standard goods and services and tosafe guard the interests of the consumers. In order to provide for betterprotection of the interests of the consumer, the Consumer ProtectionBill was introduced in the Parliament.

22. Perusal of the ‘Statement of Objects and Reasons’ of the saidCAct would show that the said Act seeks to provide for better protectionof the interests of consumers and for that purpose, to make provision forthe establishment of Consumer Councils and other authorities for thesettlement of consumer disputes and for matters connected therewith.One of the objects for enacting the said Act was the right to be heard Dand to be assured that consumers’ interests will receive due considerationat appropriate forums. To provide speedy and simple redressal toconsumer disputes, a quasi-judicial machinery was sought to be set up atthe district, State and Central levels. It will be apposite to refer to thepreamble of the said Act, which reads thus:

E“An Act to provide for better protection of the interests ofconsumers and for that purpose to make provision for theestablishment of consumer councils and other authorities for thesettlement of consumers’ disputes and for matters connectedtherewith.”

23. The definition of the term ‘consumer’ as contained in SectionF2(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 orGpromised or partly paid and partly promised, or under anysystem of deferred payment and includes any user of suchgoods other than the person who buys such goods forconsideration paid or promised or partly paid or partlypromised, or under any system of deferred payment whensuch use is made with the approval of such person, butH

does not include a person who obtains such goods for resaleor for any commercial purpose; or

(ii) hires any services for a consideration which has been paidor promised or partly paid and partly promised, or underany system of deferred payment and includes anybeneficiary of such services other than the person who hiresthe services for consideration paid or promised, or partlypaid and partly promised, or under any system of deferredpayment, when such services are availed of with theapproval of the first mentioned person”

24. It could thus be seen that Section 2(1)(d) of the said Act is intwo 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 paidor promised or partly paid and partly promised, or under any system ofdeferred payment would be a consumer within the meaning of Section2(1)(d)(i) of the said Act. It also includes any user of such goods otherthan the person who buys such goods for a consideration, which hasbeen paid or promised or partly paid or partly promised, or under anysystem of deferred payment, when such use is made with the approvalof such person. However, Section 2(1)(d)(i) of the said Act excludes aperson 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 ofservices. According to it, the term ‘consumer’ means any person whohires any services for a consideration, which has been paid or promisedor partly paid and partly promised, or under any system of deferredpayment. It also included any beneficiary of such services other thanthe 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, hecould still be included in the definition of the term ‘consumer’. It is relevantto note that Section 2(1)(d)(i) of the said Act clearly kept a person whoobtains such goods for resale or for any commercial purpose, out of theambit of definition of the term ‘consumer’. However, insofar as hiringof services is concerned, no such provision was made in the originalenactment.

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A27. The legislature noticed various deficiencies and inadequaciesin the said Act. Therefore, in order to plug these loopholes and enlargethe scope of areas covered, the legislature brought certain amendmentsto the said Act by the Consumer Protection (Amendment) Act, 1993(hereinafter referred to as “1993 Amendment Act”). One of the objectsof the said Act was to enable the consumers, who are self-employed, toBfile complaints before the redressal agencies, where goods bought bythem exclusively for earning their livelihood, suffer from any defect. Bysub-section (5) of Section 2 of the 1993 Amendment Act, the followingamendments were effected to the definition of the term ‘consumer’:

“(5) in clause (d),-C

(A) in sub-clause (ii), for the word “hires”, in both the placeswhere it occurs, the words “hires or avails of” shall be substituted;

(B) after sub-clause (ii), the following Explanation shall beinserted at the end, namely:- D

‘Explanation.- For the purposes of sub-clause (i),“commercial purpose” does not include use by a consumer ofgoods bought and used by him exclusively for the purpose ofearning his livelihood, by means of self-employment’;”

28. It could thus be seen that by the 1993 Amendment Act, insofarEas services are concerned, wherever the word “hires” was used, thesame was substituted by the words “hires or avails of”. By the said 1993Amendment Act, insofar as Section 2(1)(d)(i) is concerned, anExplanation was provided to the effect that ‘commercial purpose’ doesnot include use by a consumer of goods bought and used by him exclusivelyFfor the purpose of earning his livelihood by means of self-employment.It could thus be seen that though the original Act of 1986 excluded aperson from the ambit of definition of the term ‘consumer’ wheneversuch purchases were made for commercial purpose; by the Explanation,which is an exception to an exception, even if a person made purchasesfor ‘commercial purpose’, he was included in the definition of the termG‘consumer’, if such a person bought and used such goods exclusivelyfor earning his livelihood by means of self-employment. The legislativeintent is clear, that though the purchases for commercial purposes areout 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 his livelihood H

by way of self-employment, he would still be entitled to protection underthe said Act.

29. The legislature further noticed several bottlenecks andshortcomings in the implementation of various provisions of the said Actand 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 AmendmentAct”). One of the objects for bringing out the 2002 Amendment Actwas “exclusion of services availed for commercial purposes from thepurview of the consumer disputes redressal agencies”. It could thus beseen 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 commercialpurpose, the said restriction was not found in Section 2(1)(d)(ii) of thesaid Act. As such, in order to bring Section 2(1)(d)(ii) at par with Section2(1)(d)(i), the following amendment was effected to in clause (d):

“(c) in clause (d),-

(i) in sub-clause (ii), the following words shall be inserted at theend, namely:- “but does not include a person who avails of such servicesfor any commercial purpose”;

(ii) for the Explanation, the following Explanation shall besubstituted, namely:- ‘Explanation.—For the purposes of this clause,“commercial purpose” does not include use by a person of goodsbought and used by him and services availed by him exclusivelyfor the purposes of earning his livelihood by means of self-employment’;”

30. It could thus be seen that by the 2002 Amendment Act, thelegislature clearly provided that a person, who avails of such servicesfor any commercial purpose would be beyond the ambit of definition ofthe term ‘consumer’. The Explanation, which is an exception to anexception, which earlier excluded a person from the term ‘commercialpurpose’, if goods were purchased by such a person for the purposes ofearning his livelihood by means of self-employment, was substituted andthe Explanation was made applicable to both clauses (i) and (ii). It can AB

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Athus clearly be seen that by the 2002 Amendment Act, though thelegislature provided that whenever a person avails of services forcommercial purposes, he would not be a consumer; it further clarifiedthat the ‘commercial purpose’ does not include use by a person of goodsbought and used by him and services availed by him exclusively for thepurposes of earning his livelihood by means of self-employment.B

31. It is thus clear that by the 2002 Amendment Act, the legislaturehas 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 aperson, who bought such goods for resale or for any commercial purpose,Cwas already out of the ambit of the term ‘consumer’. The second thingthat the legislature did was that even if a person availed of the commercialservices, if the services availed by him were exclusively for the purposesof earning his livelihood by means of self-employment, he would still bea ‘consumer’ for the purposes of the said Act. Thus, a person whoDavailed of services for commercial purpose exclusively for the purposesof earning his livelihood by means of self-employment was kept out ofthe term ‘commercial purpose’ and brought into the ambit of ‘consumer’,by bringing him on par with similarly circumstanced person, who boughtand used goods exclusively for the purposes of earning his livelihood bymeans of self-employment. It could thus be seen that the legislature’sEintent is clear. If a person buys goods for commercial purpose or availsservices for commercial purpose, though ordinarily, he would have beenout of the ambit of the term ‘consumer’, by virtue of Explanation, whichis now common to both Sections 2(1)(d)(i) and 2(1)(d)(ii), he would stillcome within the ambit of the term ‘consumer’, if purchase of such goods For availing of such services was exclusively for the purposes of earninghis livelihood by means of self-employment. With this legislative historyin background, we will have to consider the present case.

32. The purpose of the said Act has been succinctly described bythis Court in the case of Laxmi Engineering Works vs. P.S.G.GIndustrial Institute[6], which is as under:

“10. A review of the provisions of the Act discloses that the quasi-judicial bodies/authorities/agencies created by the Act known asDistrict Forums, State Commissions and the National Commission H6 (1995) 3 SCC 583

are not courts though invested with some of the powers of a civilcourt. They are quasi-judicial tribunals brought into existence torender inexpensive and speedy remedies to consumers. It is equallyclear that these forums/commissions were not supposed to supplantbut supplement the existing judicial system. The idea was to providean additional forum providing inexpensive and speedy resolutionof disputes arising between consumers and suppliers of goodsand services. The forum so created is uninhibited by therequirement of court fee or the formal procedures of a court. Anyconsumer can go and file a complaint. Complaint need notnecessarily be filed by the complainant himself; any recognizedconsumers’ association can espouse his cause. Where a largenumber of consumers have a similar complaint, one or more canfile a complaint on behalf of all. Even the Central Governmentand State Governments can act on his/their behalf. The idea wasto help the consumers get justice and fair treatment in the matterof goods and services purchased and availed by them in a marketdominated by large trading and manufacturing bodies. Indeed, theentire Act revolves round the consumer and is designed to protecthis interest. The Act provides for “business-to-consumer” disputesand not for “business-to-business” disputes. This scheme of theAct, in our opinion, is relevant to and helps in interpreting thewords that fall for consideration in this appeal.”

33. It could thus be seen that this Court has clearly held that theidea of enacting the said Act was to help the consumers get justice andfair treatment in the matter of goods and services purchased and availedby them in a market dominated by large trading and manufacturing bodies.It has been held that the entire Act revolves round the consumer and isdesigned to protect his interest. It provides for “business-to-consumer”disputes and not for “business-to-business” disputes. It has been heldthat forums/commissions provided by the said Act are not supposed tosupplant but supplement the existing judicial system. The idea was toprovide an additional forum providing inexpensive and speedy resolutionof disputes arising between consumers and suppliers of goods andservices.

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 Explanationadded by 1993 Amendment Act, observed thus:

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A“11. Now coming back to the definition of the expression‘consumer’ in Section 2(d), a consumer means insofar as isrelevant for the purpose of this appeal, (i) a person who buys anygoods for consideration; it is immaterial whether the considerationis paid or promised, or partly paid and partly promised, or whetherthe payment of consideration is deferred; (ii) a person who usesBsuch goods with the approval of the person who buys such goodsfor consideration; (iii) but does not include a person who buyssuch goods for resale or for any commercial purpose. Theexpression ‘resale’ is clear enough. Controversy has, however,arisen with respect to meaning of the expression “commercialCpurpose”. It is also not defined in the Act. In the absence of adefinition, we have to go by its ordinary meaning.‘Commercial’ denotes “pertaining to commerce” (Chamber’sTwentieth Century Dictionary); it means “connected with, orengaged in commerce; mercantile; having profit as the mainaim” (Collins English Dictionary) whereas the wordD‘commerce’ means “financial transactions especially buyingand selling of merchandise, on a large scale” (Concise OxfordDictionary). The National Commission appears to have beentaking a consistent view that where a person purchases goods“with a view to using such goods for carrying on any activity on aElarge scale for the purpose of earning profit” he will not be a‘consumer’ within the meaning of Section 2(d)(i) of the Act.Broadly affirming the said view and more particularly with a viewto obviate any confusion — the expression “large scale” is not avery precise expression — Parliament stepped in and addedthe explanation to Section 2(d)(i) by Ordinance/AmendmentFAct, 1993. The explanation excludes certain purposes fromthe purview of the expression “commercial purpose” — acase of exception to an exception. Let us elaborate: a personwho buys a typewriter or a car and uses them for his personal useis certainly a consumer but a person who buys a typewriter or aGcar for typing others’ work for consideration or for plying the caras a taxi can be said to be using the typewriter/car for a commercialpurpose. The explanation however clarifies that in certainsituations, purchase of goods for “commercial purpose” wouldnot yet take the purchaser out of the definition of expression‘consumer’. If the commercial use is by the purchaser himself D

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for the purpose of earning his livelihood by means of self-employment, such purchaser of goods is yet a ‘consumer’. Inthe illustration given above, if the purchaser himself works ontypewriter or plies the car as a taxi himself, he does not cease tobe a consumer. In other words, if the buyer of goods uses themhimself, i.e., by self-employment, for earning his livelihood, it wouldnot be treated as a “commercial purpose” and he does not ceaseto be a consumer for the purposes of the Act. The explanationreduces the question, what is a “commercial purpose”, to aquestion of fact to be decided in the facts of each case. It isnot the value of the goods that matters but the purpose towhich the goods bought are put to. The several wordsemployed 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 ofParliament abundantly clear, that the goods bought must beused by the buyer himself, by employing himself for earninghis livelihood. A few more illustrations would serve to emphasisewhat we say. A person who purchases an auto-rickshaw to ply ithimself on hire for earning his livelihood would be a consumer.Similarly, a purchaser of a truck who purchases it for plying it asa public carrier by himself would be a consumer. A person whopurchases a lathe machine or other machine to operate it himselffor earning his livelihood would be a consumer. (In the aboveillustrations, if such buyer takes the assistance of one or twopersons to assist/help him in operating the vehicle or machinery,he does not cease to be a consumer.) As against this a personwho purchases an auto-rickshaw, a car or a lathe machine orother machine to be plied or operated exclusively by another personwould not be a consumer. This is the necessary limitationflowing from the expressions “used by him”, and “by meansof self-employment” in the explanation. The ambiguity in themeaning of the words “for the purpose of earning hislivelihood” is explained and clarified by the other two sets ofwords.”

[Emphasis supplied]

35. It can thus be seen that this Court observed that the NationalCommission was taking a consistent view that where a person purchases AB

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Agoods “with a view to using such goods for carrying on any activity on alarge 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 observedthat in order to obviate any confusion that the expression “large scale”was not a very precise expression, the Parliament stepped in and addedthe explanation to Section 2(d)(i) by Ordinance/Amendment Act, 1993.BIt has been held that that the explanation excludes certain purposes fromthe purview of the expression “commercial purpose”. Various exampleshave 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 typewriterCand works on the typewriter himself, the purchase would be for thepurposes of earning his livelihood by means of self-employment and hewould 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 stillDbe a consumer too. This Court held that the question as to whether thetransaction is for the ‘commercial purpose’ or for ‘earning his livelihoodby means of self-employment’ is a question of fact that has to be decidedin the facts of each case. It has been held that it is not the value of thegoods that matters but the purpose to which the goods so bought, are putto. It has been held that several words used in the explanation, viz.,E“uses them by himself”, “exclusively for the purpose of earning hislivelihood” and “by means of self-employment” make the intention ofthe Parliament abundantly clear, that the goods bought must be used bythe buyer himself, for earning his livelihood.

37. In the case of Cheema Engineering Services vs. RajanFSingh[7], this Court held that the manufacture and sale of bricks in acommercial way may also be to earn livelihood. As such, the question asto whether the complainant used the machinery for the manufacture ofbricks alone or with members of his family and as to whether the samewas for earning his livelihood, were the questions of fact to be decidedGon the basis of evidence.

38. In the case of Kalpavruksha Charitable Trust vs. ToshniwalBrothers (Bombay) Pvt. Ltd. and another[8], this Court considered thequestion as to whether the machines purchased by the Charitable Trust 7 (1997) 1 SCC 131H8 (2000) 1 SCC 512

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 Trustwas not carrying out a profit-making activity and as such, the purchaseof diagnostic machines would not come within the ambit of the term‘commercial purpose’. It was, therefore, sought to be urged that it wouldfall within the definition of the term ‘consumer’. This Court held that thefinding of the National Commission that the machinery was installed forcommercial purpose and as such, the Trust was not a ‘consumer’ withinthe meaning of the said Act, required no interference.

39. In the case of Paramount Digital Colour Lab (supra), thisCourt was considering the case of unemployed graduates, who had starteda business of photography in partnership for self-employment and fortheir livelihood. For the said purpose, they had purchased an advancedphoto processing, developing and printing machine. It was the case ofthe appellants therein that the respondents, despite having the knowledgethat the machine was not working properly, had unfairly and carelesslysold the same to the appellants. As such, the appellants were required tofile a complaint under the said Act. The State Commission had allowedthe complaint. In appeal, the National Commission held that the appellantswere not the consumers as envisaged under Section 2(1)(d) of the saidAct, since the purchase of the machine was for commercial purpose.Reversing the view taken by the National Commission and upholdingthe 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 definedunder Section 2(1)(d) of the Act does not include a person whoobtains goods for a “commercial purpose”. The Explanationsupplied to Section 2(1)(d) clarifies that “commercial purpose”does not include use by a person of goods bought and used by himand services availed by him exclusively for the purposes of earninghis livelihood by means of “self-employment”. If both theseprovisions are read together, it leads to the conclusion that if aperson purchased the goods for consideration not for anycommercial purpose, but exclusively for the purposes of earninghis livelihood by means of “self-employment”, such purchaser willcome within the definition of “consumer”. If a person purchasesthe goods for a “commercial purpose” and not for the purposes ofearning his livelihood by means of “self-employment”, such A

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purchaser will not come within the definition of “consumer”. It istherefore clear, that despite “commercial activity”, whether aperson would fall within the definition of “consumer” or not wouldbe a question of fact in every case. Such question of fact ought tobe decided in the facts and circumstances of each case.

B13. ”Self-employment” necessarily includes earning for self.Without earning generally there cannot be “self-employment”.Thus, if a person buys and uses the machine exclusively for thepurposes of earning his livelihood by means of “self-employment”,he definitely comes within the definition of “consumer”. In thematter on hand, the quality of ultimate production by the user ofCthe machine would depend upon the skill of the person who uses

the machine. In case of exigencies, if a person trains anotherperson to operate the machine so as to produce the final productbased on skill and effort in the matter of photography anddevelopment, the same cannot take such person out of the definitionDof “consumer”.”

40. This Court, on facts in the said case, found that the appellantstherein were unemployed graduates and had bought the said machinefor their own utility, personal handling and for their small venture, whichthey had embarked upon to make a livelihood. This Court further foundEthat this was distinct from large-scale manufacturing or processing activitycarried on for huge profits. It was, therefore, held that the appellantstherein would be consumers within the meaning of Section 2(1)(d) ofthe said Act.

41. Shri Shyam Divan, learned Senior Counsel appearing on behalfFof the appellant, strongly relied on the judgment of this Court in the caseof Lilavati Kirtilal Mehta Medical Trust (supra), wherein this Courtafter considering the earlier judgments held thus:

“19. To summarise from the above discussion, though a strait jacketformula cannot be adopted in every case, the following broadGprinciples can be culled out for determining whether an activity ortransaction is “for a commercial purpose”:

19.1. The question of whether a transaction is for a commercialpurpose would depend upon the facts and circumstances of eachcase. However, ordinarily, “commercial purpose” is understoodto include manufacturing/industrial activity or business-to-businessHtransactions between commercial entities.

19.2. The purchase of the good or service should have a closeand direct nexus with a profit-generating activity.

19.3. The identity of the person making the purchase or the valueof the transaction is not conclusive to the question of whether it isfor a commercial purpose. It has to be seen whether the dominantintention or dominant purpose for the transaction was to facilitatesome kind of profit generation for the purchaser and/or theirbeneficiary.

19.4. If it is found that the dominant purpose behind purchasingthe good or service was for the personal use and consumption ofthe purchaser and/or their beneficiary, or is otherwise not linkedto any commercial activity, the question of whether such apurchase was for the purpose of “generating livelihood by meansof self-employment” need not be looked into.”

42. It is thus clear, that this Court has held that the question, as towhether a transaction is for a commercial purpose would depend uponthe facts and circumstances of each case. However, ordinarily,“commercial purpose” is understood to include manufacturing/industrialactivity or business-to-business transactions between commercial entities;that the purchase of the good or service should have a close and directnexus with a profit-generating activity; that the identity of the personmaking the purchase or the value of the transaction is not conclusive fordetermining the question as to whether it is for a commercial purpose ornot. What is relevant is the dominant intention or dominant purpose forthe transaction and as to whether the same was to facilitate some kindof profit generation for the purchaser and/or their beneficiary. It hasfurther been held that if the dominant purpose behind purchasing thegood or service was for the personal use and the consumption of thepurchaser and/or their beneficiary, or is otherwise not linked to anycommercial activity, then the question of whether such a purchase wasfor 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 appellanttherein had no direct nexus with the profit generating activities. Theflats were not occupied for undertaking any medical/diagnostic facilitieswithin the hospital but for accommodating the nurses employed by thehospital. It was further held that the flats are being provided to the nurses AB

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Awithout any rent and that the appellant therein was not generating anysurplus from occupying the flats or engaging in buying and selling offlats.

44. Insofar as the judgment of this Court in the case of SunilKohli (supra), relied upon by the appellant, is concerned, this Court onBthe basis of the evidence, clearly found that the complainants wanted todispose of property in Denmark and wanted to come down to Delhi tostart a business. It has further been found that for this purpose, thepremises in question were booked. As such, the said case was a casewherein the commercial premises were booked by the appellants therein,who had left their employment in Denmark and purchased the premisesConly for the purposes of starting their business for earning their livelihoodby way of self-employment. Therefore, the said case was a case whereinthe appellants therein had availed of the services exclusively for earningtheir livelihood by means of self-employment.

45. It could thus be seen, that when a person avails a service forDa commercial purpose, to come within the meaning of ‘consumer’ asdefined in the said Act, he will have to establish that the services wereavailed exclusively for the purposes of earning his livelihood by meansof self-employment. There cannot be any straitjacket formula and sucha question will have to be decided in the facts of each case, dependingEupon the evidence placed on record.

46. In the present matter, it is not in dispute that the appellant wasalready engaged in the profession of stock-broker, much before he availedof service of the overdraft facility from the respondent-Bank. It is alsonot in dispute that he was also acting as a stock-broker for the respondent-FBank. It is also not in dispute that the appellant took the overdraft facilityand also sought enhancement of the same from time to time in furtheranceof his business as a stock-broker and for the purpose of enhancing theprofits therein. As already held by this Court in the case of LaxmiEngineering Works (supra), the terms “services availed by him”,“exclusively for the purpose of earning his livelihood” and “by means ofGself-employment” will have to be given its meaning, as intended by thelegislature. The said terms will have to be construed in context with thepurpose for which the said Act is enacted. We have elaborately discussedthe legislative history as to how Section 2(1)(d) of the said Act hascome in its present form from the original form. The amendmentsHincorporated by the 1993 Amendment Act as well as by the 2002

Amendment Act would clearly show that the legislative intent is to keepthe commercial transactions out of the purview of the said Act and atthe same time, to give benefit of the said Act to a person who enters intosuch commercial transactions, when he uses such goods or avails suchservices exclusively for the purposes of earning his livelihood by meansof self-employment.

47. In the present case, the Commission has come to a findingthat the appellant had opened an account with the respondent-Bank,took overdraft facility to expand his business profits, and subsequentlyfrom time to time the overdraft facility was enhanced so as to furtherexpand his business and increase his profits. The relations between theappellant 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 ofself-employment”. If the interpretation as sought to be placed by theappellant is to be accepted, then the ‘business to business’ disputes wouldalso have to be construed as consumer disputes, thereby defeating thevery purpose of providing speedy and simple redressal to consumerdisputes.

48. We, therefore, find no error with the findings of the Commission.In any case, the Commission has already granted liberty to the appellantto avail of his remedy by approaching the appropriate forum, havingjurisdiction.

49. In the result, the appeal is dismissed. There shall be no orderas to costs. All pending applications, if any, shall stand disposed of.

Bibhuti Bhushan Bose(Assisted by : Neha Sharma, LCRA)

Appeal dismissed.

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