SHRIKANT G. MANTRI VS PUNJAB NATIONAL BANK

SHRIKANT G. MANTRI  VS PUNJAB NATIONAL BANK 

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION 
CIVIL APPEAL NO.11397 OF 2016
SHRIKANT G. MANTRI   ...APPELLANT(S)
VERSUS
PUNJAB NATIONAL BANK       .... RESPONDENT(S)
J U D G M E N T  
B.R. GAVAI, J.
1. The   present   appeal   filed   by   the   appellantcomplainant   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 appellant­complainant was not a
consumer   as   envisaged   under   Section   2(1)(d)   of   The
Consumer  Protection  Act,  1986  (hereinafter  referred  to   as
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“the said Act”).   As such, by the impugned judgment and
order,  the complaint  of  the  appellant  has  been dismissed
being not maintainable. 
2. The facts in the present case are not in dispute.  The
bare necessary facts for adjudication of the present appeal
are as under:
3. The appellant­complainant had opened an account
with erstwhile Nedungadi Bank Limited (hereinafter referred
to as “the erstwhile Bank”) in the year 1998.  The appellant is
a stock­broker by profession.  The appellant had applied for
an overdraft facility on 25th  April, 1998, in connection with
his day­to­day share and stock transactions.   It is not in
dispute that the said overdraft facility was sanctioned by the
erstwhile Bank to the appellant­complainant initially for an
amount of Rs.1 crore, for which the appellant­complainant
had pledged certain shares worth more than Rs.1 crore, as
security   as   per   the   margin   requirements   specified   by   the
erstwhile   Bank.     Subsequently,   in   the   year   1999,   the
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appellant­complainant applied for enhancement of the said
overdraft facility.  The said overdraft facility was enhanced by
the erstwhile Bank from Rs.1 crore to Rs. 5 crore, vide its
letter dated 13th December, 1999.    
4. Again,   in   March   2001,   the   appellant­complainant
approached the erstwhile Bank for temporary increase in the
overdraft limit.  The erstwhile Bank, vide its letter dated 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.
5. 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   appellant­complainant   to   pledge
additional shares to regularize the overdraft account.  As an
additional   security,   the   appellant­complainant   pledged
37,50,000 equity shares of face value of Rs.10/­ of unlisted
company Ansal Hotels Ltd. (hereinafter referred to as “the
said shares”) towards the dues of the Bank, vide his letter
dated   30th  March,   2001.     It   is   not   in   dispute   that
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subsequently, consequent to the merger of Ansal Hotels Ltd.
with ITC Ltd., and the bonus and splitting of ITC shares, the
aforesaid   37,50,000   equity   shares   of   Ansal   Hotels   Ltd.
became equivalent to 3,75,000 shares of ITC Ltd.
6. It appears that during 2001, the overdraft account of
the appellant­complainant became irregular and as such, the
erstwhile   Bank   called   upon   the   appellant­complainant   to
regularise   the   overdraft   account.     As   the   appellantcomplainant was unable to regularise the overdraft account,
the erstwhile Bank, vide letter dated 14th  September, 2001,
called   upon   the   appellant­complainant   to   pay   a   sum   of
Rs.600.61 lakhs along with interest thereon.  
7. It   is   the   case   of   the   appellant­complainant   that
though he had advised the erstwhile Bank to sell the pledged
shares in December, 2001, so as to close overdraft account,
the erstwhile Bank chose not to sell the said shares at that
point of time.  It is the case of the appellant­complainant that
the said shares were sold by the erstwhile Bank in November
2002, when the market value of the said pledged shares was
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at the lowest, which resulted in huge loss to the appellantcomplainant.  
8. After selling a part of the pledged shares for a sum of
Rs.2,69,66,215.79, the respondent Bank, the successor­ininterest of the erstwhile Bank, filed a Recovery Petition before
the Debts Recovery Tribunal, Mumbai against the appellantcomplainant 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
respondent­Bank 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 respondent­Bank withdrew the recovery proceedings filed
against the appellant. 
9. It   is   the   case   of   the   appellant   that   since   the
respondent­Bank  failed   to   return   the   said   shares   to   the
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appellant,   he   sent   a   notice   on   14th  June,   2005   to   the
respondent­Bank, seeking release of the said shares.  
10. It appears that the appellant was also working as a
stock­broker of the  respondent­Bank.   With regard to the
transactions with the  appellant  in the capacity as a stockbroker,   the   respondent­Bank   had   initiated   arbitration
proceedings   against   the  appellant  before   the   Arbitration
forum   of   the   Bombay   Stock   Exchange   (‘BSE”   for   short).
According to the appellant, the respondent­Bank failed in the
said arbitration proceedings, which have attained finality. 
11. In this background, the appellant filed a complaint
before the Commission, alleging deficiency in services on the
part of the respondent­Bank.  The main relief claimed in the
said complaint was for a direction to the respondent­Bank to
return 3,75,000 shares of ITC Ltd. (earlier 37,50,000 shares
of Ansal Hotel Ltd.) along with dividend and all accretions
thereon.
12. In the said proceedings, on being served with the
notice, the respondent­Bank raised a preliminary objection
with regard to maintainability of the said complaint, on the
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ground that the appellant­complainant was not a consumer
as   envisaged   under   Section   2(1)(d)   of   the   said   Act.     The
Commission, by the impugned order, held that the appellant
had   availed   the   services   of   the   respondent­Bank   for
‘commercial purpose’ and as such, he was not a consumer as
envisaged under Section 2(1)(d) of the said Act.  
13. Being aggrieved thereby, the  appellant­complainant
has approached this Court by way of the present appeal.   
14. We have heard Shri Shyam Divan, learned Senior
Counsel   appearing   on   behalf   of   the   appellant   and   Shri
Dushyant Dave, learned Senior Counsel appearing on behalf
of the respondent. 
15. Shri Shyam Divan, learned Senior Counsel appearing
on behalf of the appellant­complainant, submitted that the
appellant had a dual relationship with the respondent­Bank.
In   the   first   capacity,   as   a   consumer,   he   had   taken   the
overdraft facility from the respondent­Bank for the purposes
of   his   self­employment.     In   the   second   capacity,   he   was
working as the stock­broker for the respondent­Bank.   The
learned Senior Counsel submitted that with regard to the
8
said  relationship,  though  there  were  certain  disputes,  the
claim of the respondent­Bank before the Arbitration Forum of
BSE has been rejected by the BSE Arbitral Tribunal, which
has attained finality.
16. Shri Divan further submits that it is undisputed that
the said shares were pledged with the respondent­Bank only
as a security towards the overdraft facility. He submits that
from the letter of the respondent­Bank dated 14th May, 2005,
it is   clear  that   there   were   no   dues   outstanding   in   the
overdraft account of the appellant­complainant, which stood
fully   and   finally   settled   through   compromise/OTS.     He
submitted   that   once   the   dues   of   the   respondent­Bank
towards the said overdraft facility stood cleared, there was no
reason for the respondent­Bank to have withheld the said
shares.     He   submitted   that   though   the   arbitration
proceedings   between   the   parties   had   reached   finality,   the
respondent­Bank had illegally withheld the said shares of the
appellant.  He submitted that in spite of repeated requests for
return of the said shares, the same were not returned and as
9
such, the appellant had no option but to file the complaint
under the said Act. 
17. Shri Divan submitted that though Section 2(1)(d)(ii)
of the said Act, excludes a person who avails of such services
for ‘any commercial purpose’, the Explanation thereto, which
could be construed as proviso to proviso, would include even
such a person if it is shown that the services availed by him
were exclusively for the purposes of earning his livelihood by
means of self­employment.  He submitted that the services of
the overdraft facility were taken by the appellant from the
respondent­Bank for the purposes of his business as a stockbroker. He submitted that since the appellant was engaged in
the profession of stock­broker and since the services of the
said   overdraft   facility   were   taken   for   the   appellant’s
profession as a stock­broker, the services rendered by the
respondent­Bank were exclusively for the purposes of earning
his   livelihood.     Learned   Senior   Counsel   submits   that   the
appellant was self­employed as a stock­broker and as such,
the   services   availed   were   exclusively   for   the   purpose   of
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earning his livelihood by means of self­employment.  He relies
on the dictionary meaning of the word ‘livelihood’ as provided
in Black’s Law Dictionary, Ninth Edition. He submits that the
Commission has grossly erred in giving restricted meaning to
the term ‘earning his livelihood by means of self­employment’.
Learned   Senior   Counsel   submits   that   merely   because   a
person has availed the services of the Bank for expanding his
business,   that   cannot   be   a   ground   to   give   a   restricted
meaning to the said term.   Relying on the judgment of this
Court in the case of  Internet  and  Mobile  Association   of
India   vs.   Reserve   Bank   of   India1
,   he   submits   that   the
services of the Bank provide lifeline for any business, trade or
profession.  He submits that in the present era, it is unable
for any person to survive without availing the services of a
Bank.       Learned   Senior   Counsel   submits   that   the
Commission has erred in holding that the appellant is not a
consumer within the meaning of Section 2(1)(d)(ii) of the said
1 (2020) 10 SCC 274
11
Act.  In support of his submissions, he relied on the following
judgments of this Court:
(i) Lilavati   Kirtilal   Mehta   Medical   Trust   vs.
Unique Shanti Developers and others2
;
(ii) Paramount   Digital   Colour   Lab   and   others
vs. AGFA India Private Limited and others3
(iii) Sunil   Kohli   and   another   vs.   Purearth
Infrastructure Limited4
(iv) CBI,   AHD,   Patna   vs.   Braj   Bhushan   Prasad
and others5
.
18. Shri   Dushyant   Dave,   learned   Senior   Counsel
appearing on behalf of the respondent­Bank, on the contrary,
submits that the said Act is a special statute enacted with the
purpose   of   providing   a   speedy   and   simple   redressal   to
consumer disputes.   Shri Dave submits that the said Act
provides   a   summary   procedure   so   that   the   consumer
disputes are settled without undue delay. He submitted that
if the definition of the word ‘consumer’ is expanded, so as to
include in it a person who avails of such services for any
2 (2020) 2 SCC 265
3 (2018) 14 SCC 81
4 (2020) 12 SCC 235
5 (2001) 9 SCC 432
12
commercial purpose, the very purpose of the said Act would
be defeated.     He submits that if any commercial dispute
between the service provider and the availer/recipient of the
service is included in the definition of the word ‘consumer’, it
will give rise to floodgates of complaints.  It is submitted that
if such an interpretation is accepted, apart from the same
being inconsistent with the provisions of Section 2(1)(d)(ii) of
the   said   Act,   it   will   defeat   the   very   purpose   of   providing
speedy justice to the consumers. He, therefore, submits that
no interference is warranted in the finding of the Commission
and the appeal deserves to be dismissed.  
19. For   appreciating   the   rival   submissions,   it   will   be
necessary to refer to Section 2(1)(d) of the said Act, as it
exists today, which is as follows: 
“2.Definition.­  (1)   In this Act, unless the
context otherwise requires,­
(a)……………………………………………………
………………………………………
(d) “consumer” means any person who,—
(i)   buys   any   goods   for   a   consideration
which has been paid or promised or
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partly paid and partly promised, or under   any   system   of   deferred   payment
and includes any user of such goods
other than the person who buys such
goods   for   consideration   paid   or
promised   or   partly   paid   or   partly
promised, or under any system of deferred payment when such use is made
with the approval of such person, but
does not include a person who obtains
such goods for resale or for any commercial purpose; or
(ii)   hires or avails of any services for a
consideration which has been paid or
promised   or   partly   paid   and   partly
promised, or under any system of 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 purpose;
Explanation.—For   the   purposes   of   this
clause,   “commercial   purpose”   does   not
include use by a person of goods bought
and used by him and services availed by
him exclusively for the purposes of earning his livelihood by means of self­employment;”
14
20. The short question, therefore, that would have to be
answered in the present case is, as to whether the services
availed by the appellant from the respondent­Bank would fall
within the term ‘commercial purpose’.   The other question
that would also have to be answered is, as to whether such
services   are   exclusively   availed   by   the   appellant   for   the
purposes   of   earning   his   livelihood   by   means   of   selfemployment. 
21. For considering the said issues, we will also have to
examine the object while enacting the said Act as well as the
legislative history as to how Section 2(1)(d) has come in its
present form.  The legislature found that though there were
various provisions contained in various enactments to protect
the   consumers   and   provide   relief   to   them,   yet   it   became
necessary to protect the consumers from the exploitation and
to save them from adulterated and sub­standard goods and
services and to safe guard the interests of the consumers.  In
order to provide for better protection of the interests of the
15
consumer, the Consumer Protection Bill was introduced in
the Parliament.  
22. Perusal of the ‘Statement of Objects and Reasons’ of
the said Act would show that the said Act seeks to provide for
better protection of the interests of consumers and for that
purpose,   to   make   provision   for   the   establishment   of
Consumer Councils and other authorities for the settlement
of consumer disputes and for matters connected therewith.
One of the objects for enacting the said Act was the right to
be heard and to be assured that consumers’ interests will
receive due consideration at appropriate forums. To provide
speedy and simple redressal to consumer disputes, a quasijudicial machinery was sought to be set up at the district,
State and Central levels.   It will be apposite to refer to the
preamble of the said Act, which reads thus:
“An Act to provide for better protection of
the   interests   of   consumers   and   for   that
purpose   to   make   provision   for   the
establishment   of   consumer   councils   and
other   authorities   for   the   settlement   of
consumers’   disputes   and   for   matters
connected therewith.”
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23. The definition of the term ‘consumer’ as contained in
Section 2(1)(d) of the said Act, as it existed in the original
enactment of 1986, reads thus:
“(d) “consumer” means any person who,—
(i)   buys   any   goods   for   a   consideration
which has been paid or promised or
partly paid and partly promised, or under   any   system   of   deferred   payment
and includes any user of such goods
other than the person who buys such
goods   for   consideration   paid   or
promised   or   partly   paid   or   partly
promised, or under any system of deferred payment when such use is made
with the approval of such person, but
does not include a person who obtains
such goods for resale or for any commercial purpose; or
(ii)  hires any services for a consideration
which has been paid or promised or
partly paid and partly promised, or under   any   system   of   deferred   payment
and includes any beneficiary of such
services   other   than   the   person
who hires   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”
17
24. It could thus be seen that Section 2(1)(d) of the said
Act is in two parts.  Section 2(1)(d)(i) of the said Act deals with
buying   of   goods.     A   person   who   buys   any   goods   for   a
consideration which has been paid or promised or partly paid
and   partly   promised,   or   under   any   system   of   deferred
payment would be a consumer within the meaning of Section
2(1)(d)(i) of the said Act.   It also includes any user of such
goods  other than  the  person  who  buys such  goods for a
consideration, which has been paid or promised or partly
paid or partly promised, or under any system of deferred
payment, when such use is made with the approval of such
person.  However, Section 2(1)(d)(i) of the said Act excludes a
person   who   obtains   such   goods   for   resale   or   for   any
commercial purpose.  
25. Section 2(1)(d)(ii) of the said Act is with respect to
hiring of services.  According to it, the term ‘consumer’ means
any person who hires any services for a consideration, which
has   been   paid   or   promised   or   partly   paid   and   partly
promised, or under any system of deferred payment.   It also
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included   any   beneficiary   of   such   services   other   than   the
person who hires the services as is provided under Section
2(1)(d)(i) of the said Act.  
26. It could thus be seen that as per the definition of the
term ‘consumer’, under Section 2(1)(d)(ii) of the said Act, as
enacted originally, even if a person who hires any services for
any commercial purpose, he could still be included in the
definition of the term ‘consumer’.  It is relevant to note that
Section 2(1)(d)(i) of the said Act  clearly kept a person who
obtains such goods for resale or for any commercial purpose,
out   of   the   ambit   of   definition   of   the   term   ‘consumer’.
However, insofar as hiring of services is concerned, no such
provision was made in the original enactment.  
27. The   legislature   noticed   various   deficiencies   and
inadequacies in the said Act.   Therefore, in order to plug
these loopholes and enlarge the scope of areas covered, the
legislature brought certain amendments to the said Act by
the Consumer Protection (Amendment) Act, 1993 (hereinafter
referred to as “1993 Amendment Act”).  One of the objects of
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the  said Act was to  enable the consumers, who  are selfemployed, to file complaints before the redressal agencies,
where goods bought by them exclusively for earning their
livelihood,   suffer   from   any   defect.   By   sub­section   (5)   of
Section   2   of   the   1993   Amendment   Act,   the   following
amendments   were   effected   to   the   definition   of   the   term
‘consumer’:
“(5) in clause (d),­
(A)   in   sub­clause  (ii),   for   the   word
“hires”,   in   both   the   places   where   it
occurs, the words “hires or avails of”
shall be substituted;
(B) after   sub­clause  (ii),   the   following
Explanation shall be inserted at the end,
namely:­
‘Explanation.­ For the purposes of
sub­clause  (i),  “commercial   purpose”
does not include use by a consumer
of   goods   bought   and   used   by   him
exclusively for the purpose of earning
his   livelihood,   by   means   of   selfemployment’;”
28.  It could thus be seen that by the 1993 Amendment
Act, insofar as services are concerned, wherever the word
“hires” was used, the same was substituted by the words
20
“hires or avails of”.  By the said 1993 Amendment Act, insofar
as  Section   2(1)(d)(i)  is   concerned,   an   Explanation   was
provided   to   the   effect   that   ‘commercial   purpose’   does   not
include use by a consumer of goods bought and used by him
exclusively for the purpose of earning his livelihood by means
of self­employment.   It could thus be seen that though the
original Act of 1986 excluded a person from the ambit of
definition of the term ‘consumer’ whenever such purchases
were   made   for   commercial   purpose;   by   the   Explanation,
which is an exception to an exception, even if a person made
purchases for ‘commercial purpose’, he was included in the
definition of the term ‘consumer’, if such a person bought and
used   such   goods   exclusively   for   earning   his   livelihood   by
means of self­employment.  The legislative intent is clear, that
though the purchases for commercial purposes are out of the
ambit of the definition of the term ‘consumer’ in the said Act,
if a person buys and uses such goods exclusively for earning
21
his livelihood by way of self­employment, he would still be
entitled to protection under the said Act. 
29. The   legislature   further   noticed   several   bottlenecks
and shortcomings in the implementation of various provisions
of the said Act and with a view to achieve quicker disposal of
consumer   complaints,   and   to   make   the   said   Act   more
effective   by   removing   various   lacunae,   the   legislature
amended   the   said   Act   by   the   Consumer   Protection
(Amendment) Act, 2002 (hereinafter referred to as “the 2002
Amendment Act”).   One of the objects for bringing out the
2002 Amendment Act was “exclusion of services availed for
commercial   purposes   from   the   purview   of   the   consumer
disputes redressal agencies”.  It could thus be seen that the
legislature noticed the mischief, that though Section 2(1)(d)(i)
of the said Act kept out of its purview the goods purchased
for commercial purpose, the said restriction was not found in
Section 2(1)(d)(ii) of the said Act.  As such, in order to bring
Section 2(1)(d)(ii)  at par with  Section 2(1)(d)(i), the following
amendment was effected to in clause (d):
22
“(c) in clause (d),­
(i) in   sub­clause  (ii),   the   following
words   shall   be  inserted  at   the   end,
namely:­
“but does not include a person who
avails of such services for any commercial
purpose”;
(ii) for   the   Explanation,   the   following
Explanation   shall   be   substituted,
namely:­
‘Explanation.—For   the   purposes   of
this   clause,   “commercial   purpose”   does
not   include   use   by   a   person   of   goods
bought   and   used   by   him   and   services
availed by him exclusively for the purposes of earning his livelihood by means
of self­employment’;”
30. It could thus be seen that by the 2002 Amendment
Act, the legislature clearly provided that a person, who avails
of such services for any commercial purpose would be beyond
the   ambit   of   definition   of   the   term   ‘consumer’.     The
Explanation, which is an exception to an exception, which
earlier excluded a person from the term ‘commercial purpose’,
if goods were purchased by such a person for the purposes of
earning   his   livelihood   by   means   of   self­employment,   was
23
substituted and the Explanation was made applicable to both
clauses (i) and (ii).   It can thus clearly be seen that by the
2002 Amendment Act, though the legislature provided that
whenever a person avails of services for commercial purposes,
he would not be a consumer; it further clarified that the
‘commercial purpose’ does not include use by a person of
goods bought and used by him and services availed by him
exclusively   for   the   purposes   of   earning   his   livelihood   by
means of self­employment.   
31. It is thus clear that by the 2002 Amendment Act, the
legislature   has   done   two  things.    Firstly,   it   has   kept   the
commercial   transactions,   insofar   as   the   services   are
concerned,   beyond   the   ambit   of   the   term   ‘consumer’   and
brought it in parity with Section 2(1)(d)(i), wherein a person,
who   bought   such   goods   for   resale  or   for   any  commercial
purpose, was already out of the ambit of the term ‘consumer’.
The second thing that the legislature did was that even if a
person   availed   of   the   commercial   services,   if   the   services
availed by him were exclusively for the purposes of earning
24
his livelihood by means of self­employment, he would still be
a ‘consumer’ for the purposes of the said Act.  Thus, a person
who availed of services for commercial purpose exclusively for
the   purposes   of   earning   his   livelihood   by   means   of   selfemployment was kept out of the term ‘commercial purpose’
and brought into the ambit of ‘consumer’, by bringing him on
par with similarly circumstanced person, who bought and
used   goods   exclusively   for   the   purposes   of   earning   his
livelihood by means of self­employment.   It could thus be
seen that the legislature’s intent is clear.   If a person buys
goods   for   commercial   purpose   or   avails   services   for
commercial purpose, though ordinarily, he would have been
out   of   the   ambit   of   the   term   ‘consumer’,   by   virtue   of
Explanation, which is now common to both Sections 2(1)(d)(i)
and 2(1)(d)(ii), he would still come within the ambit of the
term ‘consumer’, if purchase of such goods or availing of such
services   was   exclusively   for   the   purposes   of   earning   his
livelihood by means of self­employment.  With this legislative
25
history in background, we will have to consider the present
case. 
32. The   purpose   of   the   said   Act   has   been   succinctly
described by this Court in the case of  Laxmi  Engineering
Works vs. P.S.G. Industrial Institute6
, which is as under:
“10. A review of the provisions of the Act
discloses that the quasi­judicial bodies/authorities/agencies   created   by   the   Act
known as District Forums, State Commissions and the National Commission are not
courts though invested with some of the
powers of a civil court. They are quasi­judicial tribunals brought into existence to render   inexpensive   and   speedy   remedies   to
consumers. It is equally clear that these forums/commissions were not supposed to
supplant but supplement the existing judicial system. The idea was to provide an additional   forum   providing   inexpensive   and
speedy   resolution   of   disputes   arising   between   consumers and suppliers   of   goods
and services. The forum so created is uninhibited by the requirement of court fee or
the formal procedures of a court. Any consumer can go and file a complaint. Complaint need not necessarily be filed by the
complainant himself; any recognized consumers' association can espouse his cause.
Where a large number of consumers have a
6 (1995) 3 SCC 583
26
similar complaint, one or more can file a
complaint on behalf of all. Even the Central
Government   and   State   Governments   can
act on his/their behalf. The idea was to
help   the   consumers   get   justice   and   fair
treatment in the matter of goods and services purchased and availed by them in a
market   dominated   by   large   trading   and
manufacturing   bodies.   Indeed,   the   entire
Act revolves round the consumer and is designed to protect his interest. The Act provides for “business­to­consumer” disputes
and   not   for   “business­to­business”   disputes. This scheme of the Act, in our opinion, is relevant to and helps in interpreting
the words that fall for consideration in this
appeal.”
33. It could thus be seen that this Court has clearly held
that   the   idea   of   enacting   the   said   Act   was   to   help  the
consumers get justice and fair treatment in the matter of
goods   and   services   purchased   and   availed   by   them   in   a
market   dominated   by   large   trading   and   manufacturing
bodies.  It has been held that the entire Act revolves round
the   consumer   and   is   designed   to   protect   his   interest.   It
provides   for   “business­to­consumer”   disputes   and   not   for
“business­to­business”   disputes.       It   has   been   held   that
27
forums/commissions   provided   by   the   said   Act   are   not
supposed to supplant but supplement the existing judicial
system.   The   idea   was   to   provide   an   additional   forum
providing   inexpensive   and   speedy   resolution   of   disputes
arising   between   consumers and suppliers   of   goods   and
services. 
34. In the case of  Laxmi   Engineering  Works  (supra),
this Court, while considering the scope of the definition of the
expression ‘consumer’ with relation to Section 2(1)(d)(i) of the
said Act and the Explanation added by 1993 Amendment Act,
observed thus:
“11. Now coming back to the definition of
the expression ‘consumer’ in Section 2(d), a
consumer means insofar as is relevant for
the purpose of this appeal, (i) a person who
buys any goods for consideration; it is immaterial whether the consideration is paid
or   promised,   or   partly   paid   and   partly
promised, or whether the payment of consideration   is   deferred;   (ii)   a   person   who
uses such goods with the approval of the
person who buys such goods for consideration; (iii) but does not include a person who
buys such goods for resale or for any commercial purpose. The expression ‘resale’ is
28
clear enough. Controversy has, however,
arisen  with   respect   to  meaning  of   the
expression   “commercial  purpose”.   It   is
also  not  defined   in  the  Act.   In  the  absence of a definition, we have to go by
its  ordinary  meaning.   ‘Commercial’  denotes  “pertaining  to  commerce”  (Chamber's   Twentieth   Century   Dictionary);   it
means   “connected  with,  or  engaged   in
commerce; mercantile; having profit as
the  main   aim”   (Collins   English   Dictionary)   whereas   the   word   ‘commerce’
means   “financial   transactions   especially   buying   and   selling   of   merchandise,  on a large scale”  (Concise Oxford
Dictionary). The National Commission appears to have been taking a consistent view
that where a person purchases goods “with
a view to using such goods for carrying on
any activity on a large scale for the purpose
of   earning   profit”   he   will   not   be   a   ‘consumer’ within the meaning of Section 2(d)(i)
of the Act. Broadly affirming the said view
and more particularly with a view to obviate any confusion — the expression “large
scale” is not a very precise expression —
Parliament   stepped   in   and   added   the
explanation   to   Section   2(d)(i)   by   Ordinance/Amendment   Act,   1993.   The   explanation   excludes   certain   purposes
from   the   purview   of   the   expression
“commercial  purpose”  —  a   case   of   exception to an exception. Let us elaborate:
29
a person who buys a typewriter or a car
and uses them for his personal use is certainly a consumer but a person who buys a
typewriter or a car for typing others' work
for consideration or for plying the car as a
taxi   can   be   said   to   be   using   the
typewriter/car  for   a   commercial   purpose.
The explanation however clarifies that  in
certain   situations,   purchase   of   goods   for
“commercial purpose” would not yet take
the purchaser out of the definition of expression   ‘consumer’.  If   the   commercial
use is by the purchaser himself for the
purpose   of   earning   his   livelihood   by
means   of   self­employment,   such   purchaser  of  goods  is  yet  a   ‘consumer’. In
the   illustration   given   above,   if   the   purchaser himself works on typewriter or plies
the car as a taxi himself, he does not cease
to be a consumer. In other words, if the
buyer of goods uses them himself, i.e., by
self­employment, for earning his livelihood,
it would not be treated as a “commercial
purpose” and he does not cease to be a
consumer for the purposes of the Act. The
explanation reduces the question, what
is   a   “commercial   purpose”,   to   a   question of fact to be decided in the facts of
each   case.   It   is   not   the   value   of   the
goods  that  matters  but  the  purpose  to
which the goods bought are put to. The
several words employed in the explanation,   viz.,   “uses  them  by  himself”,   “exclusively for the purpose of earning his
30
livelihood”   and   “by   means   of   self­employment” make the intention of Parliament  abundantly  clear,  that  the  goods
bought must be used by the buyer himself,  by   employing  himself   for   earning
his   livelihood.  A   few   more   illustrations
would serve to emphasise what we say. A
person who purchases an auto­rickshaw to
ply it himself on hire for earning his livelihood   would   be   a   consumer.   Similarly,   a
purchaser of a truck who purchases it for
plying   it   as   a   public   carrier   by   himself
would be a consumer. A person who purchases a lathe machine or other machine to
operate it himself for earning his livelihood
would be a consumer. (In the above illustrations, if such buyer takes the assistance
of one or two persons to assist/help him in
operating the vehicle or machinery, he does
not cease to be a consumer.) As against
this a person who purchases an auto­rickshaw, a car or a lathe machine or other
machine to be plied or operated exclusively
by   another   person   would   not   be   a   consumer. This is the necessary limitation
flowing   from   the   expressions   “used  by
him”,   and   “by   means   of   self­employment”   in  the  explanation.  The  ambiguity in the meaning of the words “for the
purpose of earning his livelihood” is explained  and  clarified  by  the  other  two
sets of words.”
[Emphasis supplied]
31
35. It can thus be seen that this Court observed that the
National Commission was taking a consistent view that where
a person purchases goods “with a view to using such goods
for carrying on any activity on a large scale for the purpose of
earning profit” he will not be a ‘consumer’ within the meaning
of Section 2(d)(i) of the Act. This Court observed that in order
to obviate any confusion that the expression “large scale” was
not a very precise expression, the Parliament stepped in and
added   the   explanation   to   Section   2(d)(i)   by
Ordinance/Amendment Act, 1993. It has been held that that
the explanation excludes certain purposes from the purview
of the expression “commercial purpose”.   Various examples
have been given by this Court as to what would come within
the term of ‘self­employment’.   
36. One instance given is that a person who purchases a
typewriter and works on the typewriter himself, the purchase
would be for the purposes of earning his livelihood by means
of self­employment and he would not cease to be a ‘consumer’
32
for the purposes of the said Act. Another example given is
that, if a person who purchases an auto­rickshaw to ply it
himself on hire for earning his livelihood, he would still be a
consumer   too.     This   Court   held   that   the   question   as   to
whether the transaction is for the ‘commercial purpose’ or for
‘earning   his   livelihood   by   means   of   self­employment’   is   a
question of fact that has to be decided in the facts of each
case.  It has been held that it is not the value of the goods
that matters but the purpose to which the goods so bought,
are put to. It has been held that several words used in the
explanation, viz., “uses them by himself”, “exclusively for the
purpose of earning his livelihood” and  “by means  of  selfemployment”   make   the   intention   of   the   Parliament
abundantly clear, that the goods bought must be used by the
buyer himself, for earning his livelihood. 
37. In the case of  Cheema   Engineering   Services   vs.
Rajan Singh7
, this Court held that the manufacture and sale
of bricks in a commercial way may also be to earn livelihood.
7 (1997) 1 SCC 131
33
As such, the question as to whether the complainant used
the machinery for the manufacture of bricks alone or with
members of his family and as to whether the same was for
earning his livelihood, were the questions of fact to be decided
on the basis of evidence.  
38. In the case of Kalpavruksha Charitable Trust vs.
Toshniwal Brothers (Bombay) Pvt. Ltd. and another8
, this
Court  considered the question as to whether the machines
purchased by the Charitable Trust for use in the Diagnostic
Centre were meant for ‘commercial purpose’ or not. It was
sought to be urged on behalf of the Trust that the Trust was
not carrying out a profit­making activity and as such, the
purchase of diagnostic machines would not come within the
ambit of the term ‘commercial purpose’.   It was, therefore,
sought to be urged that it would fall within the definition of
the term ‘consumer’.   This Court held that the finding of the
National Commission that the machinery was installed for
commercial   purpose   and   as   such,   the   Trust   was   not   a
8 (2000) 1 SCC 512
34
‘consumer’ within the meaning of the said Act, required no
interference.  
39. In   the   case   of  Paramount   Digital   Colour   Lab
(supra), this Court was considering the case of unemployed
graduates, who had started  a business of photography in
partnership for self­employment and for their livelihood. For
the said purpose, they had purchased an advanced photo
processing, developing and printing machine.  It was the case
of the appellants therein that the respondents, despite having
the knowledge that the machine was not working properly,
had unfairly and carelessly sold the same to the appellants.
As such, the appellants were required to file a complaint
under the said Act.  The State Commission had allowed the
complaint. In appeal, the National Commission held that the
appellants   were   not   the   consumers   as   envisaged   under
Section 2(1)(d) of the said Act, since the purchase of the
machine was for commercial purpose.   Reversing the view
taken by the National Commission and upholding the view
taken by the State Commission, this Court observed thus:
35
“12. In this case, since the appellants have
purchased the machine, Section 2(1)(d) of
the Act is applicable. “Consumer” as defined
under Section 2(1)(d) of the Act does not include   a   person   who   obtains   goods   for   a
“commercial   purpose”.   The   Explanation
supplied   to   Section   2(1)(d)   clarifies   that
“commercial purpose” does not include use
by a person of goods bought and used by
him and services availed by him exclusively
for the purposes of earning his livelihood by
means of “self­employment”. If both these
provisions are read together, it leads to the
conclusion that if a person purchased the
goods for consideration not for any commercial   purpose,   but   exclusively  for   the  purposes of earning his livelihood by means of
“self­employment”,   such   purchaser   will
come within the definition of “consumer”. If
a person purchases the goods for a “commercial purpose” and not for the purposes
of earning his livelihood by means of “selfemployment”, such purchaser will not come
within   the   definition   of   “consumer”.   It   is
therefore clear, that despite “commercial activity”, whether a person would fall within
the definition of “consumer” or not would be
a question of fact in every case. Such question of fact ought to be decided in the facts
and circumstances of each case.
13. “Self­employment”   necessarily   includes
earning for self. Without earning generally
there cannot be “self­employment”. Thus, if
36
a person buys and uses the machine exclusively for the purposes of earning his livelihood by means of “self­employment”, he definitely comes within the definition of “consumer”. In the matter on hand, the quality
of ultimate production by the user of the
machine would depend upon the skill of the
person who uses the machine. In case of exigencies, if a person trains another person
to operate the machine so as to produce the
final product based on skill and effort in the
matter of photography and development, the
same cannot take such person out of the
definition of “consumer”.”
40. This Court, on facts in the said case, found that the
appellants   therein   were   unemployed   graduates   and   had
bought   the   said   machine   for   their   own   utility,  personal
handling   and   for   their   small   venture,   which   they   had
embarked upon to make a livelihood.     This Court further
found that this was distinct from large­scale manufacturing
or   processing   activity   carried   on   for   huge   profits.   It   was,
therefore,   held   that   the   appellants  therein  would   be
consumers within the meaning of Section 2(1)(d) of the said
Act.
37
41. Shri Shyam Divan, learned Senior Counsel appearing
on behalf of the appellant, strongly relied on the judgment of
this Court in the case of  Lilavati  Kirtilal  Mehta  Medical
Trust (supra), wherein this Court after considering the earlier
judgments held thus:
“19. To summarise from the above discussion, though a strait jacket formula cannot
be   adopted   in   every   case,   the   following
broad 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 business­to­business 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
38
is for a commercial purpose. It has to be
seen   whether   the   dominant   intention   or
dominant purpose for the transaction was
to facilitate some kind of profit generation
for the purchaser and/or their beneficiary.
19.4. If it is found that the dominant purpose behind purchasing the good or service
was for the personal use and consumption
of the purchaser and/or their beneficiary, or
is otherwise not linked to any commercial
activity, the question of whether such a purchase   was   for   the   purpose   of   “generating
livelihood   by   means   of   self­employment”
need not be looked into.”
42. It is thus clear, that this Court has held that the
question, as to  whether a transaction is for a commercial
purpose would depend upon the facts and circumstances of
each   case.   However, ordinarily,   “commercial   purpose”   is
understood to include manufacturing/industrial activity or
business­to­business   transactions   between   commercial
entities; that the purchase of the good or service should have
a close and direct nexus with a profit­generating activity; that
the identity of the person making the purchase or the value of
the transaction is not conclusive for determining the question
39
as to whether it is for a commercial purpose or not.   What is
relevant is the dominant intention or dominant purpose for
the transaction and as to whether the same was to facilitate
some kind of profit generation for the purchaser and/or their
beneficiary.   It has further been held that if the dominant
purpose behind purchasing the good or service was for the
personal use and the consumption of the purchaser and/or
their beneficiary, or is otherwise not linked to any commercial
activity, then the question of whether such a purchase was
for the purpose of “generating livelihood by means of selfemployment” need not be looked into.  
43. On facts, it was held that the purchase of flats by the
appellant   therein   had   no   direct   nexus   with   the   profit
generating   activities.    The   flats   were   not   occupied   for
undertaking   any   medical/diagnostic   facilities   within   the
hospital but for accommodating the nurses employed by the
hospital.   It was further held that the flats are being provided
to the nurses without any rent and that the appellant therein
40
was not generating any surplus from occupying the flats or
engaging in buying and selling of flats.
44. Insofar as the judgment of this Court in the case of
Sunil   Kohli  (supra),   relied   upon   by   the   appellant,   is
concerned, this Court on the basis of the evidence, clearly
found that the complainants wanted to dispose of property in
Denmark   and   wanted   to   come   down   to   Delhi   to   start   a
business. It has further been found that for this purpose, the
premises in question were booked. As such, the said case was
a case wherein the commercial premises were booked by the
appellants  therein,   who   had   left   their   employment   in
Denmark and purchased the premises only for the purposes
of starting their business for earning their livelihood by way
of   self­employment.     Therefore,   the   said   case   was   a   case
wherein the appellants  therein  had availed of the services
exclusively   for   earning   their   livelihood   by   means   of   selfemployment.  
45. It could thus be seen, that when a person avails a
service for a commercial purpose, to come within the meaning
41
of  ‘consumer’  as defined  in  the said Act,  he will  have to
establish that the services were availed exclusively for the
purposes   of   earning   his   livelihood   by   means   of   selfemployment.  There cannot be any straitjacket formula and
such a question will have to be decided in the facts of each
case, depending upon the evidence placed on record. 
46. In the present matter, it is not in dispute that the
appellant was already engaged in the profession of stockbroker, much before he availed of service of the  overdraft
facility from the respondent­Bank.  It is also not in dispute
that he was also acting as a stock­broker for the respondentBank. It is also not in dispute that the appellant took the
overdraft facility  and also sought enhancement of the same
from time to time in furtherance of his business as a stockbroker and for the purpose of enhancing the profits therein.
As   already   held   by   this   Court   in   the   case   of  Laxmi
Engineering  Works  (supra), the terms “services availed by
him”, “exclusively for the purpose of earning his livelihood”
and “by means of self­employment” will have to be given its
42
meaning, as intended by the legislature.  The said terms will
have to be construed in context with the purpose for which
the said Act is enacted.  We have elaborately discussed the
legislative history as to   how Section 2(1)(d) of the said Act
has come in its present form from the original form.   The
amendments incorporated by the 1993 Amendment Act as
well as by the 2002 Amendment Act would clearly show that
the legislative intent is to keep the commercial transactions
out of the purview of the said Act and at the same time, to
give benefit of the said Act to a person who enters into such
commercial transactions, when he uses such goods or avails
such   services   exclusively   for   the   purposes   of   earning   his
livelihood by means of self­employment.  
47. In the present case, the Commission has come to a
finding that the appellant had opened an account with the
respondent­Bank,   took  overdraft   facility  to   expand   his
business  profits,  and  subsequently  from time  to  time  the
overdraft facility  was enhanced so as to further expand his
business and increase his profits.  The relations between the
43
appellant   and   the   respondent   is   purely   “business   to
business”   relationship.     As   such,   the   transactions   would
clearly come within the ambit of ‘commercial purpose’.   It
cannot be said that the services were availed “exclusively for
the purposes of earning his livelihood” “by means of selfemployment”.   If the interpretation as sought to be placed by
the   appellant   is   to   be   accepted,   then   the   ‘business   to
business’   disputes   would   also   have   to   be   construed   as
consumer  disputes,  thereby  defeating  the  very purpose  of
providing speedy and simple redressal to consumer disputes. 
48. We, therefore, find no error with the findings of the
Commission.   In   any   case,   the   Commission   has   already
granted liberty to the appellant to avail of his remedy by
approaching the appropriate forum, having jurisdiction. 
49. In the result, the appeal is dismissed.  There shall be
no order as to costs.  All pending applications, if any, shall
stand disposed of. 
…............................J.
                             [L. NAGESWARA RAO]
44
......................J.       
                                                  [B.R. GAVAI]
NEW DELHI;
FEBRUARY 22, 2022

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

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