State Consumer Disputes Redressal Commission
Karnataka Bank Ltd. vs M/S Silvertones Impex Pvt. Ltd. on 28 February, 2022
FA/617/2015 D.O.D. : 28.02.2022
KARNATAKA BANK LTD. VS. M/S SILVERTONES IMPEX PVT. LTD.
IN THE DELHI STATE CONSUMER DISPUTES REDRESSAL COMMISSION
Date of Institution: 22.12.2015
Date of hearing: 14.02.2022
Date of Decision: 28.02.2022
FIRST APPEAL NO.- 617/2015
IN THE MATTER OF
KARNATAKA BANK LTD.
K-13, Main Branch, Outer Circle,
Connaught Place,
New Delhi
(Through: M/S SUDEER ASSOCIATES)
...Appellant
VERSUS
M/S SILVERTONES IMPEX PVT. LTD.
Through its Director Sh. Vinay Chawla,
95A, Municipal Market,
Connaught Circus,
New Delhi-110092.
(Through: ABHISHEK BAJPAI, Advocate)
...Respondent
ALLOWED PAGE 1 OF 10
FA/617/2015 D.O.D. : 28.02.2022
KARNATAKA BANK LTD. VS. M/S SILVERTONES IMPEX PVT. LTD.
CORAM:
HON'BLE DR. JUSTICE SANGITA DHINGRA SEHGAL
(PRESIDENT)
HON'BLE SH. RAJAN SHARMA, MEMBER (JUDICIAL)
Present: None for the Parties.
PER: HON'BLE DR. JUSTICE SANGITA DHINGRA SEHGAL,
PRESIDENT
JUDGMENT
1. The facts of the case necessary for adjudication of the present appeal, as per the District Forum record are:
"The complainant is a company which sought enhancement of overdraft facility from 8 crores to 10 crores. This was sanctioned by OP Bank with a precondition that commitment charges of 0.5% would be imposed if there was under-utilization of sanctioned limit to the extent of 75%. However, on 5.10.2012, commitment chares of Rs.18,967/- was imposed in spite of utilization of 93%. He requested for refund which was refused. The complainant then closed the overdraft account. However, a processing charge of Rs.5,26,686/- was deducted on 6.10.2012 immediately after closure request as processing charges from 31.8.2012 to 30.11.32013. The complainant further contends that the said processing charges have already been deducted on 28.9.2012. A legal notice was sent on 12.11.2012. Thereafter a complaint was filed for refund of same with interest. OP replied to the legal notice on 20th November, 2012 wherein it agreed to refund Rs.18,967/- for commitment charges but stated that processing charges were collected as per sanction letter.
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KARNATAKA BANK LTD. VS. M/S SILVERTONES IMPEX PVT. LTD.
OP in the reply to notice dated 15th November, 2012 stated that as bank has granted an amount of Rs.10 crore enhanced from Rs.8 crore and Rs.5 crore enhanced from Rs.2 crore. It is further alleged that 0.50% of loan amount as processing charges for period of 15 months came to Rs.10,53,315 which was deducted in two stages.
OP has reiterated the same in its reply and evidence affidavit. OP has also stated that relationships between the parties are based on contract and as such OPs are not providing any service to complainant as consumer."
2. The District Forum vide order dated 26.10.2015 has held as under:
"OP has neither in oral submission and a pleading has explained the relevance of entry no.82. Entry no.84 clearly states that processing charges for the period from 6.9.2012 to 030/11/2013 has been deducted. Once the processing charges for a given period has been arrived at through internal calculation and deducted from a customer of the bank, how can it be deducted again for the same period? Entry no.135 is relevant as its shows that loan account is being closed and processing fees is charged again for the same person vide entry no.134 on same day. In addition, OP has kept a veil over calculation of processing fees. It has also failed to explain why the charges were deducted on two dates.
It is apparent from the entries that OP has arbitrarily and in a high handed manner, on receipt of notice of closure of loan account, charged twice the processing fees. We, therefore find OP guilty of deficient and deceptive trade practice which falls within the meaning of unfair trade practice. We direct OP to refund the ALLOWED PAGE 3 OF 10 FA/617/2015 D.O.D. : 28.02.2022 KARNATAKA BANK LTD. VS. M/S SILVERTONES IMPEX PVT. LTD.
processing fees charged on 6.10.12 with 9% interest and also award Rs.50,000/- as compensation for harassment and unfair trade practice inclusive of litigation expenses."
3. The Appellant/Opposite Party has raised a preliminary objection with respect to the maintainability of the Complaint before the District Forum, on the ground that the Overdraft Facility taken by the Respondent/Complainant was for "Commercial Purpose" and the relief, if any, does not lie with the Consumer Commissions/Forums.
4. Notice was issued to the Respondent/Complainant of the present appeal, who has filed its reply.
5. We have heard the counsel for the Appellant/Opposite Party and perused the material available on record.
6. The moot question for consideration before us is whether the District Commission/Forum was having the Subject-Matter jurisdiction to entertain the Complaint Case filed before it i.e. whether the Respondent/Complainant was excluded from the purview of the definition of "consumer" under Section 2(d) of the 1986 Act on account of the subject transaction being for a commercial purpose.
7. It would be pertinent to begin our discussion by referring to the definition of the term "consumer" under Section 2(d) of the Consumer Protection Act, 1986, which reads as under:
(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 ALLOWED PAGE 4 OF 10 FA/617/2015 D.O.D. : 28.02.2022 KARNATAKA BANK LTD. VS. M/S SILVERTONES IMPEX PVT. LTD.
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 service 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 purposes;
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 self-employment.
(emphasis supplied)
8. The explanation regarding the meaning of "Commercial Purpose"
was added vide an amendment in the year 1993, and was considered for the first time by the Hon'ble Supreme Court in Laxmi Engineering Works vs. PSG Industrial Institute reported at (1995) 3 SCC 583, wherein it was noted that even prior to the 1993 amendment, the Hon'ble National Commission had been taking a consistent view that was broadly in accordance with the amended definition, i.e. only persons purchasing goods or availing of services for carrying on activity on a large scale, for the purpose of earning profit, would be excluded from the ambit of the definition of "Consumer" [See Synco Textiles Pvt. Ltd. v. Greaves Cotton and Co. Ltd. reported at (1991) 1 ALLOWED PAGE 5 OF 10 FA/617/2015 D.O.D. : 28.02.2022 KARNATAKA BANK LTD. VS. M/S SILVERTONES IMPEX PVT. LTD.
CPJ 499; Oswal Fine Arts v. HMT reported at (1991) 1 CPJ 330 and Secretary, Consumer Guidance and Research Society of India v. BPL India Ltd. reported at (1992) 1 CPJ 140 (NC)].
9. The Hon'ble Apex Court in Laxmi Engineering (supra), further observed that:
"11. ... 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 self-employment, 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 self-employment, 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 livelihood" and "by means of self-employment" 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 auto-rickshaw to ply it himself on hire for earning his livelihood would be a consumer. Similarly, a purchaser of a truck who ALLOWED PAGE 6 OF 10 FA/617/2015 D.O.D. : 28.02.2022 KARNATAKA BANK LTD. VS. M/S SILVERTONES IMPEX PVT. LTD.
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 auto-rickshaw, 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 self-employment" 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)
10. From the aforesaid dicta of the Hon'ble Apex Court, it is evident that when a person avails a service for a commercial purpose, to come within the meaning of 'Consumer' as defined in the Act, it will have to be established that the services were availed exclusively for the purposes of earning his livelihood by means of self-employment. 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. (Reference: Shrikant G. Mantri vs. Punjab National Bank reported at 2022 SCC OnLine SC 218)
11. Further, the Hon'ble Apex Court while dealing with a similar issue pertaining to Overdraft Facility, in Shrikant G. Mantri (supra), after taking into consideration the previous pronouncements, held as under:
"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 Respondent-Bank. It is also not in dispute that he was also acting as a stock-broker ALLOWED PAGE 7 OF 10 FA/617/2015 D.O.D. : 28.02.2022 KARNATAKA BANK LTD. VS. M/S SILVERTONES IMPEX PVT. LTD.
for the Respondent-Bank. 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 self-employment" will have to be given its 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 self-employment.
47. In the present case, the Commission has come to a finding that the Appellant had opened an account with the Respondent-Bank, took overdraft facility to expand his business profits, and subsequently from time to time the overdraft facility was enhanced so as to further expand his business and increase his profits. The relations between the Appellant and the Respondent is purely "business to business" relationship. As such, the transactions would clearly come within the ambit of 'commercial purpose'. It cannot be said that the services were availed "exclusively for the purposes of earning his livelihood" "by means of self-employment". If the interpretation as sought to be placed by the Appellant is to be accepted, then the 'business to business' disputes would also have to be construed as consumer disputes, thereby defeating the very purpose of providing speedy and simple redressal to consumer disputes.
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KARNATAKA BANK LTD. VS. M/S SILVERTONES IMPEX PVT. LTD.
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. "
12. From the aforesaid dicta of the Hon'ble Apex Court, it has been well established that taking of Overdraft Facility constitutes a Commercial Purpose and in cases pertaining to the same, it cannot be said that the services were availed "exclusively for the purposes of earning his livelihood" "by means of self-employment".
13. Returning to the facts of the present case, the perusal of the Complaint filed before the District Forum reflects that the Respondent/Complainant is a Private Limited Company, availing Overdraft Facility from the Appellant/Opposite Party. In this case, it is quite clear that the Overdraft Facility was directly related to the business of the Respondent/Complainant. It will be far-fetched to argue that the Overdraft Facility per se was not meant to earn any profit even though the business carried out with the money that was provided under the Overdraft Facility was admittedly "Commercial", i.e., for earning profit. Moreso, nowhere in the Complaint it is mentioned that the Overdraft Facility was taken for earning livelihood, to make the Respondent/Complainant fall under the definition of Consumer.
14. Hence, it is a clear case in which the jurisdiction of the District Commission/Forum is barred under the Consumer Protection Act and the remedy, if any, lies with the appropriate Court.
15. In terms of the aforesaid discussion, we set aside the order dated 26.10.2015 passed by the District Forum/Commission, New Delhi, ALLOWED PAGE 9 OF 10 FA/617/2015 D.O.D. : 28.02.2022 KARNATAKA BANK LTD. VS. M/S SILVERTONES IMPEX PVT. LTD.
with the liberty to the Respondent/Complainant to approach the appropriate forum for the Redressal of its grievance, if he is so advised.
16. Application(s) pending, if any, stands disposed of in terms of the aforesaid judgment.
17. A copy of this judgment be provided to all the parties free of cost as mandated by the Consumer Protection Act, 1986. The judgment be uploaded forthwith on the website of the commission for the perusal of the parties.
18. File be consigned to record room along with a copy of this Judgment.
(DR. JUSTICE SANGITA DHINGRA SEHGAL) PRESIDENT (RAJAN SHARMA) MEMBER (JUDICIAL) Pronounced On:
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