National Consumer Disputes Redressal
Richi Rich Agro Foods Pvt. Ltd. vs State Bank Of India & 3 Ors. on 22 July, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 447 OF 2015 1. RICHI RICH AGRO FOODS PVT. LTD. ...........Complainant(s) Versus 1. STATE BANK OF INDIA & 3 ORS. ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER HON'BLE DR. B.C. GUPTA, MEMBER
For the Complainant : Dr. Sumant Bhardwaj, Advocate For the Opp.Party : STATE BANK OF INDIA & 3 ORS.
Dated : 22 Jul 2015 ORDER
JUSTICE V.K. JAIN, PRESIDING MEMBER
The complainant received an order for supply of 6000 MT of rice to a buyer in Qatar. To facilitate the transaction, a Letter of Credit was opened by the opposite party No.4 Abu Dhabi Islamic Bank to the extent of US $ 970,2000.00, the beneficiary of the said Letter of Credit being the complainant company. The said LC was to be active only after receipt of Performance Bond for 10% of the LC value i.e. US $ 970,200 from the beneficiary i.e. the complainant company. On 05.02.2004, State Bank of India, Karnal Branch sent the Proforma of the Performance Guarantee to Qatar National Bank, Doha. It appears that a communication (MT 799) dated 05.02.2014 was sent by Qatar National Bank to State Bank of India, Karnal. Responding to the said communication, on 06.02.2014, State Bank of India, Karnal confirmed the amount of the bank guarantee and the counter guarantee and undertook to pay upto US $ 970,000 to Qatar National Bank, Doha on first demand made by them under their counter guarantee No.0066514 FG0000001, along with charges and expenses, indemnify the said bank on account of any loss or damage, resulting from issuing their bond, notwithstanding any objection and defence by a third party. The counter bank guarantee furnished by the State Bank of India, Karnal was to remain valid for thirty days beyond the expiry date of their guarantee i.e. 14.04.2014.
2. The performance guarantee was then executed by the complainant in favour of the Abu Dhabi Islamic Bank on 09.02.2014 through Qatar National Bank, to the extent of US $ 970,200. Vide its letter dated 09.02.2014, the buyer sought amendment of the performance guarantee submitted by the complainant. Thereupon, State Bank of India, Karnal, vide its communication dated 12.02.2014, carried out requisite amendments in the said performance guarantee. Abu Dhabi Islamic Bank was informed by Qatar National Bank on 13.03.2014 about the amendment of the performance guarantee.
3. On 02.04.2014, State Bank of India, Karnal was informed by Qatar National Bank about the lodgement of the claim by the guarantee beneficiary Abu Dhabi Islamic Bank vide their letter dated 31.03.2014, claiming full amount of the said guarantee. The Qatar National Bank confirmed that the claim of the beneficiary was strictly in compliance of the guarantee terms and conditions and it requested State Bank of India, Karnal to credit an amount of US $ 970,367 to its account with JP Morgan Chase Bank. The said claim was repeated by Qatar National Bank on 04.4.2014. They also informed to State Bank of India, Karnal that the beneficiary had denied the extension and therefore, they were repeating their requests for encashment of the guarantee.
4. On 15.4.2014, State Bank of India, Karnal asked Qatar National Bank to furnish Central Tender Committee Notification, stating the non-compliance of the supplied quantity or specifications as per guarantee terms and conditions. They also undertook to pay the amount immediately on receipt of the said certificate. Another message was sent by them to Qatar National Bank on 16.4.2014, expressing their readiness to pay the amount, subject to presentation of the Central Tender Committee notification. Since no such notification was received from Qatar National Bank, State Bank of India, Karnal maintained that the claim could be honoured only after receiving the said notification. On 01.5.2014, an undertaking was given by the complainant to State Bank of India, Karnal, undertaking to deposit the amount of a valid claim of the beneficiary with the said bank if received with the supporting documents.
5. Instructions were thereafter received by Shahbad Markanda Branch of State Bank of India from its Corporate Centre through Karnal Branch, advising it to remit funds amounting to Rs.6,02,00,000/- to SME Karnal. It appears that the aforesaid payment was made by State Bank of India on the ground that the guarantee furnished by them was unconditional. The said branch remitted the aforesaid fund to SME Karnal by debiting it in the account of the complainant, which was requested to make good the deficiency in the account, in terms of the undertaking given by it. In the meanwhile, the beneficiary vide its letter dated 20.4.2014, informed Qatar National Bank that though they were not obliged to bring any letter from the CTC they had actually brought the letter stating that the supplied quantity was only 143,067 bags out of contracted quantity of 1,50,000 bags and therefore, the supplier had not fulfilled its commitment in supplying the material in the agreed time and quantity.
6. Being aggrieved form the amount in question being debited to its account, and alleging deficiency on the part of the opposite parties, the complainant is before this Commission, seeking the following reliefs:
a) To quash and set aside the impugned order dated 23.6.2014 passed by State Bank of India in the case of Richi Rich Agro Foods Pvt. Ltd.;
b) To release the amount of Rs. six crore with interest to the complainant;
c) To award costs of the proceeding throughout to the complainant and against respondent No.1 and
d) Pass such other or further order/orders or direction/directions as this Hon'ble Court may deem fit and proper in the facts and circumstances of the case.
7. When this complaint came up for consideration, we requested the learned counsel for the complainant to submit arguments on the question as to whether the complainant company is a 'consumer' within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986. We have heard the learned counsel for the complainant on the said issue.
8. Section 2(1)(d) of the Act to the extent it is relevant provides that though consumer means any person who hires or avails of any services for a consideration, it does not include a person who avails of such services for any commercial purpose. The explanation attached below the aforesaid clause, to the extent it is relevant, stipulates that commercial purpose does not include use by a person, of the services availed by him, exclusively for the purpose of earning his livelihood by means of self-employment.
9. The complainant had hired or availed the services of the bank for the purpose of furnishing a bank guarantee. The said bank guarantee was furnished in order to complete the transaction of sale of the rice by the complainant to the overseas buyer. It is therefore, obvious that the complainant had hired or availed the services of the bank for undertaking a commercial activity, which was intended to generate profit for it, by sale of rice. Therefore, it can hardly be disputed that the said services were hired or availed for a commercial purpose. The services were hired/availed after amendment of Section 2(1)(d) of the Consumer Protection Act w.e.f. 15.03.2003. Therefore, the complainant is not a consumer, as defined in the Act.
10. The next question which comes up for consideration is as to whether the complainant-company falls within the scope of the explanation attached below Section 2(1)(d) of the Consumer Protection Act. In our view, use of the expression "exclusively for the purpose of earning his livelihood by means of self-employment" ,in the explanation leaves no reasonable doubt that the aforesaid provision is made only for a natural person and not for a juristic person such as a company. The aforesaid explanation applies in the case of an individual who is not employed in any business, profession or service and seeks to earn his livelihood by means of self-employment, using or availing the services in question. Therefore, it cannot be said that the complainant company was earning its livelihood by means of self-employment by utilizing the credit limit sanctioned by the bank for the purpose of enabling it to trade in foreign currencies.
11. In Subhash Motilal Shah & Ors. Vs. Malegaon Merchants Co.-op Bank Ltd., R.P.No.2571 of 2012 decided on 12-02-2013, the petitioner which had a current account with the bank had alleged deficiency in service on the part of the bank. The State Commission dismissed the complaint, holding inter alia as under:
"Admittedly, since Rainbow Corporation is a firm of Ajay Subhash Shah (HUF), i.e., juristic person, there arise no question of self-employment so as to cover the case under explanation to section 2(1)(d)(ii) of the Consumer Protection Act, 1986 ('Act' for brevity). It is a case relating to an action related with services given while operating the Current Account of Appellant Rainbow Corporation which was admittedly opened and used for business purpose, of the business of 'commission agent' and business of 'yarn sale'. Therefore, since the account itself is connected and related to the business transactions and such banking activity is required for the functioning of a given business enterprise of the appellant/complainant, services hired for that purpose would fall within the category of hiring services for commercial purpose. A useful reference can be made to free dictionary by FARLEX (on Internet) which defines the 'Business Activity' as the activity undertaken as a part of commercial enterprise. Further, reference can be made to an article available on the internet Website Wise Geek (copyright protected 2003-12 by Conjecture Corporation) and which is written by Alexis. W, edited by Heater Bailey. Under the circumstances, prima facie appellant/complainant Rainbow Corporation cannot be a consumer within the meaning of Section 2(1)(d)(ii) of the Act".
Being aggrieved from the order of the State Commission, the complainant in the said case approached this Commission by way of a revision petition and it was contended by the complainant that considering the aims and objectives behind enactment of the Act, the expression 'consumer' and 'service' as defined under the Act should be construed in a comprehensive manner so as to include the services of commercial and trade oriented nature. In other words, the contention was that any person who hires services for consideration shall be deemed to be a consumer, even if the services were obtained in connection with a commercial activity. However, relying upon the amendment made in the Act with effect from 15-03-2003 the revision petition was dismissed by this Commission thereby upholding the view taken by the State Commission.
12. In M/s. Sam Fine O Chem Limited Vs. Union Bank of India, C.C.No.39 of 2013, decided on 12-04-2013, the complainant had availed credit facility from Union Bank of India. Alleging deficiency in the services provided by the bank he preferred a complaint before this Commission. Rejecting the complaint this Commission inter alia noted that the complainant had availed the credit facility service of the bank for expansion of its manufacturing activity which was a commercial purpose and, therefore, the complainant did not fall within the definition of 'consumer' given in Section 2(1)(d) of the Act.
In CC No.11 of 2007, Samkit Art & Craft Pvt. Ltd. Vs. State Bank of India & Ors., decided on 14-10-2014, the complainant which was engaged in the business of export had obtained cash credit limit and term loan facility from the State Bank of India. He filed a complaint alleging deficiency on the part of the bank in the services rendered to him. It was held by this Commission that obtaining cash credit facility for the purpose of export of goods was a commercial purpose and, therefore, the complainant company was not a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act.
13. Learned counsel for the complainant has referred to the decision of the Hon'ble Supreme Court in Standard Chartered Bank Ltd. Vs. Dr. B.N. Raman (2006) 5 SCC 727 and to the decision of this Commission in Harsolia Motors Vs. National Insurance Co. Ltd. I (2005) CPJ 27 (NC). However, neither of these judgments would apply to the present case. In Dr. B.N. Raman(supra), the complainant/respondent who was a Non-Resident Indian had opened a Foreign Currency Non-Resident Account with the bank and unauthorized withdrawal was made from his account. The deposit in the account was made on 17.08.1979 and the unauthorized withdrawal was communicated to him in the year 1992 when he returned to India. It was on these facts that the Hon'ble Supreme Court held that banking was a commercial function and the intention of the Act was to protect consumers of the services rendered by the Banks. Reference in this regard was made to an earlier decision in Vimal Chandra Grover Vs. Bank of India (2000) 5 SCC 122. Thus, not only the consumer in that case was individual who had opened the account for keeping his savings with the bank, the services of the bank were hired or availed much before the amendment of Section 2(1)(d) of the Consumer Protection Act w.e.f. 15.03.2003. Harsolia Motors (supra) was a case of claim against an insurance company and during the course of the judgment, it was observed by this Commission that profit was the main aim of commercial purpose and where the goods are purchased or services are hired in an activity, which is not directly intended to generate profit, it would not be a commercial purpose. It was also held that a person who takes insurance policy to cover a risk does not take for commercial purpose but takes it only for indemnification of actual loss. However, the present case is not a case of seeking reimbursement from an insurance company and the service of the bank were hired for an activity which was directly intended to generate profit for the complainant by sale of rice.
14. Since the complainant is not a consumer within the meaning of Section 2(1)(d) of the CP Act, this Commission lacks jurisdiction to entertain this complaint, which is accordingly dismissed as not maintainable. It is however, made clear that dismissal of the complaint will not come in the way of the complainant approaching an appropriate Forum for the redressal of its grievances.
......................J V.K. JAIN PRESIDING MEMBER ...................... DR. B.C. GUPTA MEMBER