SHRIKANT G. MANTRI v. PUNJAB NATIONAL BANK

SHRIKANT G. MANTRI v. PUNJAB NATIONAL BANK 947 earning his livelihood by means of self-employment. [Paras 27 & 28][958-A-B, E-F] A

1.3 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 his livelihood by means of self-employment, 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 self-employment. 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 self-employment. [Para 31][960-B-F]

The question as to whether a transaction is for a commercial purpose would depend upon the facts and circumstances of each case. However, ordinarily, “commercial purpose” is understood to include manufacturing/industrial activity or business-to-business transactions between commercial entities; that the purchase of the good or service should have a close and direct nexus with a profit-generating activity; that the identity of the person making the purchase or the value of the transaction is not conclusive for determining the question as to B C D E F G H 948 SUPREME COURT REPORTS [2022] 5 S.C.R. 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. 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. [Para 42][967-D-G]

In the present case, the Commission has come to a finding that the appellant had opened an account with the respondent-Bank, took overdraft facility to expand his business profits, and subsequently from time to time the overdraft facility was enhanced so as to further expand his business and increase his profits. The relations between the appellant and the respondent is purely “business to business” relationship. As such, the transactions would clearly come within the ambit of ‘commercial purpose’. It cannot be said that the services were availed “exclusively for the purposes of earning his livelihood” “by means of self-employment”. If the interpretation as sought to be placed by the appellant is to be accepted, then the ‘business to business’ disputes would also have to be construed as consumer disputes, thereby defeating the very purpose of providing speedy and simple redressal to consumer disputes.

The present appeal filed by the appellant-complainant challenges the judgment and order dated 1st 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 appellant-complainant was not a consumer as envisaged under Section 2(1)(d) of The Consumer Protection Act, 1986 (hereinafter referred to as “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 appellant-complainant had opened an account with erstwhile Nedungadi Bank Limited (hereinafter referred to as “the erstwhile Bank”) in the year 1998. The appellant is a stock-broker by profession. The appellant had applied for an overdraft facility on 25th April, 1998, in connection with his day-to-day share and stock transactions. It is not in dispute that the said overdraft facility was sanctioned by the erstwhile Bank to the appellant-complainant initially for an amount of Rs.1 crore, for which the appellant-complainant had pledged certain shares worth more than Rs.1 crore, as security as per the margin requirements specified by the erstwhile Bank. Subsequently, in the year 1999, the appellant-complainant applied for enhancement of the said overdraft facility. The said overdraft facility was enhanced by the erstwhile Bank from Rs.1 crore to Rs. 5 crore, vide its letter dated 13th December, 1999.

Again, in March 2001, the appellant-complainant approached the erstwhile Bank for temporary increase in the overdraft limit. The erstwhile Bank, vide its letter dated 17th March, 2001, granted the request of the appellant and temporarily enhanced the overdraft facility from Rs.5 crore to Rs.6 crore, for a period of one week.

It appears that due to steep fall in the share market, the erstwhile Bank, vide its letters dated 16th and 17th March, 2001, called upon the appellant-complainant to pledge additional shares to regularize the overdraft account. As an additional security, the appellant-complainant B C D E F G H SHRIKANT G. MANTRI v. PUNJAB NATIONAL BANK [B. R. GAVAI, J.] 951 pledged 37,50,000 equity shares of face value of Rs.10/- of unlisted company Ansal Hotels Ltd. (hereinafter referred to as “the said shares”) towards the dues of the Bank, vide his letter dated 30th March, 2001. It is not in dispute that subsequently, consequent to the merger of Ansal Hotels Ltd. with ITC Ltd., and the bonus and splitting of ITC shares, the aforesaid 37,50,000 equity shares of Ansal Hotels Ltd. became equivalent to 3,75,000 shares of ITC Ltd.

It appears that during 2001, the overdraft account of the appellant-complainant became irregular and as such, the erstwhile Bank called upon the appellant-complainant to regularise the overdraft account. As the appellant-complainant was unable to regularise the overdraft account, the erstwhile Bank, vide letter dated 14th September, 2001, called upon the appellant-complainant to pay a sum of Rs.600.61 lakhs along with interest thereon.

It is the case of the appellant-complainant that though he had advised the erstwhile Bank to sell the pledged shares in December, 2001, so as to close overdraft account, the erstwhile Bank chose not to sell the said shares at that point of time. It is the case of the appellant-complainant that the said shares were sold by the erstwhile Bank in November 2002, when the market value of the said pledged shares was at the lowest, which resulted in huge loss to the appellant-complainant.

After selling a part of the pledged shares for a sum of Rs.2,69,66,215.79, the respondent Bank, the successor-in-interest of the erstwhile Bank, filed a Recovery Petition before the Debts Recovery Tribunal, Mumbai against the appellant-complainant for recovery of the balance amount due as on 26th December, 2002. The said petition was decreed by the Debts Recovery Tribunal, Mumbai, vide order dated 26th May, 2004. However, the matter was settled between the parties and a ‘One Time Settlement’ (“OTS” for short) was reached between them on payment of Rs. 2 crore. As such, the respondent-Bank issued a ‘No Dues Certificate’ dated 14th May, 2005, certifying that no dues were left outstanding against the overdraft account of the appellant. After the OTS, the respondent-Bank withdrew the recovery proceedings filed against the appellant.

It is the case of the appellant that since the respondent-Bank failed to return the said shares to the appellant, he sent a notice on 14th June, 2005 to the respondent-Bank, seeking release of the said shares. A B C D E F G H 952 SUPREME COURT REPORTS [2022] 5 S.C.R.

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

In this background, the appellant filed a complaint before the Commission, alleging deficiency in services on the part of the respondent- Bank. The main relief claimed in the said complaint was for a direction to the respondent-Bank to return 3,75,000 shares of ITC Ltd. (earlier 37,50,000 shares of Ansal Hotel Ltd.) along with dividend and all accretions thereon.

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

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

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.

Shri Shyam Divan, learned Senior Counsel appearing on behalf of the appellant-complainant, submitted that the appellant had a dual relationship with the respondent-Bank. In the first capacity, as a consumer, he had taken the overdraft facility from the respondent-Bank for the purposes of his self-employment. In the second capacity, he was working as the stock-broker for the respondent-Bank. The learned Senior Counsel submitted that with regard to the said relationship, though there were certain disputes, the claim of the respondent-Bank before the Arbitration Forum of BSE has been rejected by the BSE Arbitral Tribunal, which has attained finality. A B C D E F G H SHRIKANT G. MANTRI v. PUNJAB NATIONAL BANK [B. R. GAVAI, J.] 953

Shri Divan further submits that it is undisputed that the said shares were pledged with the respondent-Bank only as a security towards the overdraft facility. He submits that from the letter of the respondent- Bank dated 14th May, 2005, it is clear that there were no dues outstanding in the overdraft account of the appellant-complainant, which stood fully and finally settled through compromise/OTS. He submitted that once the dues of the respondent-Bank towards the said overdraft facility stood cleared, there was no reason for the respondent-Bank to have withheld the said shares. He submitted that though the arbitration proceedings between the parties had reached finality, the respondent-Bank 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 such, the appellant had no option but to file the complaint under the said Act.

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 self-employment. He submitted that the services of the overdraft facility were taken by the appellant from the respondent-Bank for the purposes of his business as a stock-broker. He submitted that since the appellant was engaged in the profession of stock-broker and since the services of the said overdraft facility were taken for the appellant’s profession as a stock-broker, the services rendered by the respondent-Bank were exclusively for the purposes of earning his livelihood. Learned Senior Counsel submits that the appellant was self-employed as a stock-broker and as such, the services availed were exclusively for the purpose of earning his livelihood by means of self-employment.

Shri Dushyant Dave, learned Senior Counsel appearing on behalf of the respondent-Bank, 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 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.

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: