Sant Rohidas Leather Industries and Charmakar Development Corporation Ltd. vs Vijaya Bank

Held: In normal course, parking of surplus funds by a body corporate with a bank, either for safe custody or to comply with statutory mandate is not reflective of a commercial purpose – More so, because ordinarily all deposits in a Bank earn interest – Hence, it cannot be said that since the deposit earned interest, banking service was availed for a commercial purpose – However, it would be different where deposits are made to leverage a credit facility, or for availing other banking services, for business use – Deposit of the latter kind may amount to availing banking services for a commercial purpose – In the present case, the deposit was by one business entity, the appellant company, with another business entity, the Bank – It was thus, a business-to-business transaction – Admittedly, the Bank had set up a case that FDR was pledged to avail credit facility and the maturity value of the FDR was adjusted against the dues – Though the appellant has denied this loan transaction, this issue is not settled by either a criminal court or a civil court even though a criminal complaint has been made in that regard – Thus, it is not a simple case of not fulfilling contractual obligation qua the deposit but a case where a subsequent contract of pledge is set up which, if accepted, would override the contractual obligation under the FDR – Thus, without determining whether there was fraud played upon the appellant, or forged documents were created for a false pledge/loan, it would not be possible to determine whether the services availed by the appellant from the respondent-Bank were for a commercial purpose or not – NCDRC was justified in dismissing the complaint even though the reasons for such dismissal may not be entirely correct [Paras 26, 27, 33] Consumer Protection Act, 1986 – Whether the nature of allegations made in the complaint were such that they took the claim outside the purview of proceedings under the 1986 Act: Held: The complaint as framed is not maintainable – According to the complaint allegations, the appellant had invested 9 crores by way of a term deposit with the Bank and that the said term deposit was fraudulently hypothecated for availing overdraft without the sanction of the appellant company – When the overdraft against the FDR was brought to the notice of the appellant, a complaint was made with the respondent-bank – The response of the Bank to that complaint is important, inasmuch as the Bank claims that the original of the FDR is with the Bank and the same stands pledged for availing overdraft – Besides, the Bank claimed that the FDR which the appellant claims to be in its possession is a forged document – In the complaint itself, the appellant admitted that this matter was reported to the Economic Offences Wing – Therefore, the main grievance of the appellant appears to be qua adjustment of proceeds of the FDR against the amount outstanding in the overdraft account – Thus, what is clear from the complaint allegations is that the Bank had acknowledged the FDR and had accounted for the interest payable thereon but, instead of releasing the maturity proceeds in favour of the appellant, it had set up a subsequent contract of pledge of that FDR for according overdraft facility to the appellant – According to the appellant this pledge is a fraudulent act and amounts to an offence – In such circumstances, the complaint allegations as they stand cannot be adjudicated upon in a proceeding under the 1986 Act as those allegations could appropriately be addressed in a regular criminal or civil proceeding and hence, the complaint is not maintainable – NCDRC justified in dismissing the complaint even though the reasons recorded for such dismissal may not be entirely correct. [Paras 30, 32, 33] Consumer Protection Act, 1986 – Does not deal with complex factual issues pertaining to criminal or tortious liability: Held: The burden to prove deficiency in service is on the complainant, and deficiency in service is different from criminal or tortious acts of the service provider – Though one of the objects of the 1986 Act is to provide speedy and simple redressal to consumer disputes, its object is not to deal with complex factual issues pertaining to criminal or tortious liability in a summary manner. [Para 30]

Consumer Protection Act, 1986 – Fixed deposit receipt earning interest, whether means that the banking service availed is for a commercial purpose:

Held: No – A bank renders multiple types of service – Accepting cash deposits from customers and paying interest thereon is the most basic of services rendered by a bank, as ordinally all cash deposits yield interest – Therefore, merely because a deposit earns interest, it does not mean that the deposit was made for a commercial purpose because there may be other reasons to deposit the money in a bank and those may have nothing to do with generation of profit – Merely because a fixed deposit receipt earns interest does not mean that the banking service availed is for a commercial purpose – To this extent, the view of NCDRC not agreed with – However, if the deposit is made to leverage credit facilities for augmenting business, it would have a direct nexus with revenue generation/ profits – In such a case, it could be said that the banking service was availed for a commercial purpose – In that scenario, the service recipient may not fall in the category of a consumer unless he brings his case within the four corners of the Explanation to s.2(1)(d) of the 1986 Act. [Paras 21, 22] Consumer Protection Act, 1986 – Whether the purchasing of goods, or availing of services, is for a commercial purpose or not – Determination of:

Held: The identity of the person making the purchase, or the value of the transaction, is not conclusive to determine whether the transaction or activity is for a commercial purpose – What needs to be seen is the dominant intention or dominant purpose of the transaction i.e. whether it is to facilitate some kind of profit generation for the purchaser(s) and/or its/their beneficiary – If it is found that the dominant purpose behind the purchase of goods or services is personal use and consumption by the purchaser, and those are otherwise not linked to any commercial activity, the question whether such purchase is for generating a livelihood by means of self employment need not be addressed – However, where the transaction is for a commercial purpose, it may have to be considered whether it is for generating livelihood by means of self-employment or not – To determine whether the purchasing of goods, or availing of services, is for a commercial purpose or not, one has to look at the dominant object or purpose with which those goods are purchased or services are availed – To ascertain the dominant object, nature of the goods purchased or the services availed also assume importance – Therefore, each case would have to be decided on its own facts – The status of the purchaser or recipient of goods or services, that is, whether it is an individual or a body corporate, is not the determining factor for holding whether the transaction is, or is not, for a commercial purpose – The burden to prove that the goods purchased, or services availed, as the case may be, is for a commercial purpose is on the respondent and not the complainant. [Paras 15, 18, 19]