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

2

“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

3

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

4

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

5

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

6

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

7

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

10

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

13

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.”

16

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

18

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

19

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