National Consumer Disputes Redressal
Purna Chandra Sahu vs Odisha Gramya Bank & Anr. on 7 July, 2025
IN THE NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
AT NEW DELHI
NC/RP/3561/2013
(Against the Order dated 30.07.2013 in FA No. 207/2012 of the
Odisha State Consumer Disputes Redressal Commission, Cuttack)
Purna Chandra Sahu ... Petitioner
Versus
Odisha Gramya Bank & Anr. ... Respondents
BEFORE:
HON'BLE MR. JUSTICE A. P. SAHI, PRESIDENT
HON'BLE MR. BHARATKUMAR PANDYA, MEMBER
Appeared at the time of arguments:
For the Petitioner : Mr. Siddhartha Sinha, Advocate
Ms. Jyoti Fartiyal, Advocate
For the Respondents : Mr. Pratap Sahani, Advocate (VC)
Pronounced on: 07th July 2025
ORDER
JUSTICE A.P. SAHI, PRESIDENT
1. The Petitioner is the Complainant who preferred CC No. 34 of 2011 before the District Consumer Disputes Redressal Commission, Angul, Odisha with a complaint that the Respondent Bank (erstwhile Neelachal Gramya Bank that amalgamated with the Respondent No. 1) has erroneously closed the CC Account No. 12 of the Complainant as a result whereof the Complainant had suffered a lot. The Bank on the basis of its erroneous decisions proceeded to liquidate the securities tendered by the Complainant in order to realise the dues against the cash credit facility of RP No. 3561 of 2013 Page 1 Rs. 5 lakhs, that was later increased to Rs. 8 lakhs, and also illegally charged penal interest as a result whereof the Complainant suffered a loss of Rs. 19 lakhs. The Bank, in spite of the liquid security offered by the Complainant and the collateral security in the shape of immovable property, did not allow the Complainant to operate his cash credit account resulting in severe financial losses and sustained business loss due to the deficiencies in services of the Respondent No. 1 Bank.
2. The Bank took an objection to the maintainability of the complaint on the ground that the Petitioner / Complainant was not a consumer apart from the other objections related to the merits of the matter. The District Commission vide its Order dated 06.03.2012 allowed the complaint after holding that the Complainant was a bonafide Consumer under the provisions of the Consumer Protection Act, 1986 and relied on two decisions of the Apex Court that had been cited on behalf of the Complainant namely Vimal Chandra Grover vs. Bank of India, (2000) 5 SCC 122 and the decision in the case of Standard Chartered Bank Ltd. vs. B.N. Raman (Dr.), (2006) 5 SCC 727. The Order of the District Commission is reproduced hereinunder in order to appreciate the findings as recorded by it:
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3. The District Commission also found that the services of the Bank were deficient after recording a finding that the Bank did not share the documents regarding the adjustments of the amount of Rs. 6,61,399/- from the Fixed Deposits and the LIC documents that had been pledged for the said purpose as well as the other collateral documents which were still in the custody of the Opposite Party Bank. The findings recorded in the issue no. 2 is that the Bank was not correct in claiming privity to the said documents and was taken to be an admission of the Bank to that effect.
4. The dispute had arisen because of the fact that in 2005 the Bank had refused to honour the cheques of the Complainant who was running the firm presumably because of the certain documents that were required for the revalidation of the CC A/c pertaining to the collateral security of the land that was pledged by the father of the Complainant, who had unfortunately died by that time. There were 7 legal heirs and therefore the said documentation was to be carried out with the aid of a Power of Attorney and the Bank took a stand that the documentation was not in accordance with law. It is during these revalidation proceedings that the Complainant was also informed that the proposal for revalidation was not acceptable as the Cash Credit A/c had been declared to be NPA (Non Profitable Account). The letter dated 27.10.2009 is extracted hereinunder:
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5. The Petitioner took an objection to the same through his letter dated 25.11.2009, stating therein that the documents pertaining to the Power of Attorney had been rectified but he was informed that the Power of Attorney should be duly registered. The Complainant relying on the Hon‟ble Supreme Court‟s judgment in the case of Jugraj Singh & Anr. vs. Jaswant Singh & Ors., 1970(2) SCC 386, copy whereof was also enclosed with the representation, urged that the proposal of revalidation be considered on the basis of the Power of Attorney documents already tendered with a further offer of Rs. 2 lakhs as liquid cash against the CC limit and the collateral security of Rs. 16 lakhs with a further prayer to waive the interest and penal interest. A request was also made to return the previous collateral security of Rs. 11 lakhs as per the discussions with the Bank officials. The said representation of the Complainant sufficiently explained the stand taken for revalidation for the CC Limit A/c and is extracted hereinunder:
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6. The Complainant Petitioner did not receive any response and therefore he filed an application under the Right to Information Act before the Bank to which the reply was given on 09.06.2010, which is extracted hereinunder:
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7. A perusal of the said reply indicates that it is through this information that the Complainant was informed that the Bank does not have any interest to enter into the financial transaction on the strength of the „Power of Attorney‟ on the advice of their Law Officer dated 23.07.2009.
8. It is on this background that the complaint had been filed and was ultimately allowed as mentioned above.
9. The Bank aggrieved by the decision of the District Forum filed F.A. No. 207 of 2012 before the State Commission that was allowed after noting the arguments in paragraphs 5, 6 and 7 and holding as under:
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10. A perusal of the Order of the State Commission would demonstrate that on merits, the State Commission came to the conclusion that the cheques tendered by the Complainant were not entertained due to the death of his father but further the Complainant had defaulted in making payment of the loan dues and his loan account was declared as NPA in the year 2006. The request for revival of the loan account and the revalidation of the Cash Credit limit was sent to the Head Office where the Advocate engaged on behalf of the Bank advised not to revive the CC Account as the Power of Attorney was not clear for using the landed property of his late father for financial transactions.
11. However, the primary ground on which the Appeal was allowed was that the Complainant was not a Consumer as he had obtained the Cash Credit Loan for commercial purpose to augment his business and accordingly it was held that the Complainant was not a Consumer. The State Commission distinguished the judgment in the case of Standard Chartered Bank Ltd. vs. B.N. Raman (Dr.) (supra) on the ground that it did not involve the issue as to whether the Respondent in that case namely Dr. B. N. Raman was a Consumer or not and therefore the said decision was not applicable. It was also held that the observations made by the Apex Court were with regard to the nature of functions performed by the Bank and the Banking facilities and therefore it did not touch upon the issue as pleaded.
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12. We have heard learned Counsel for both the Parties and learned Counsel for the Petitioner has submitted written submissions on 03.10.2019 and once again on 03.09.2024 along with a compilation of judgments which we shall shortly refer to hereinafter. Learned Counsel for the Respondent has filed written submissions contending that the Revision Petition does not raise any issue on material irregularity or illegality and even otherwise the Complainant Petitioner is an industrial supplier and was not running a business merely for his livelihood and hence the State Commission has rightly reversed the Order of the District Commission. It has been further stated that the Petitioner has further defaulted in making payment of the loan as such the account was turned into an NPA and as such the Bank was rightly advised not to revive the Cash Credit Account moreso when the Power of Attorney was not clear to be utilised for the security of the landed property of the Petitioner‟s late father.
13. It has also been stated that such documents, if not provided, the same cannot be pressed into service as a matter of right and that the discretion of the financer for any such prospective borrower is absolute.
14. It has further been urged that a concession had been extended calling upon the Petitioner through the letter dated 30.07.2010 for settling the loan amount of Rs. 6,15,000/- instead of the dues of Rs. 8,49,824/- which the Petitioner failed to deposit, as a result whereof the Bank had to file Civil Suit No. 117 of 2013 for recovery which was stated to be pending when the written submissions were filed in August, 2019.
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15. Having considered the submissions raised and having perused the entire facts on record, we find that the Bank could not have claimed any privilege for not producing the documents on the ground that they were not available or even otherwise could not be compelled to be produced, treating it to be an internal matter and not open to judicial scrutiny. This contention of the Bank was absolutely unfounded and the District Commission has rightly commented upon the same. We may point out that under the provisions of Consumer Protection Act, 1986, the powers to be exercised under the procedure prescribed are contained in Section 13 of the Consumer Protection 1986. A perusal of the said powers leaves no room for doubt that a District Commission has the same powers as are vested in a Civil Court for the discovery and the production of any document or other material object producible as evidence. The proceedings before the District Commission are judicial proceedings as defined under the said section even though they are summary in nature. The disputes and allegations are to be settled on the basis of evidence brought forth and the affidavits to be filed in this regard. Even otherwise the Bank cannot contend that such documents are not open to judicial scrutiny and we also do not approve of any such stand taken by the Bank. Withholding of evidence with regard to a commercial transaction which may require scrutiny and may be relevant cannot be claimed as a matter of privilege to be a secret document.
16. Thus, the District Commission was justified in proceeding to comment upon the said conduct of the Bank and this aspect has been completely RP No. 3561 of 2013 Page 28 overlooked by the State Commission while reversing the Order. As to what would be the relevance of such an evidence or its impact on the contest put forth is a matter of appreciation which the State Commission did not proceed to adopt and as a matter of fact has omitted to consider the same. This therefore is one of the irregularities which is evident in the impugned Order on the contest of the parties.
17. The question as to whether the Power of Attorney was permissible or not or could be accepted deserved to be deliberated upon by the Bank. The Complainant has in his representation dated 29.05.2011, quoted above categorically relied on the judgment of the Apex Court in the case of Jugraj Singh & Anr. vs. Jaswant Singh & Ors. (supra), but while issuing the communication dated 09.06.2010, the Bank has simply indicated that in view of the opinion of their Law Officer dated 23.07.2009, the same cannot be accepted. There are no reasons given nor the said opinion of the Law Officer dated 23.07.2009 has been disclosed. In our considered opinion if that was the material relied on by the Bank for forming an opinion, in respect of the Power of Attorney presented by the Complainant Petitioner, then it was obligatory on the Bank to have produced the said document and should have intimated it to the Complainant for an appraisal as it directly affects the Complainant. The said material should also have been brought on record and the State Commission ought to have appreciated the contest in the light of the aforesaid facts. The State Commission has nowhere referred to these things and has abruptly reversed the Order of the District Commission which RP No. 3561 of 2013 Page 29 does not appear to be justified without considering the said material and calling upon the Bank to place it on record.
18. The Bank took a dual stand, the first that the loan Account had become NPA without disclosing the fact as to in what manner the same had been done and as to what had necessitated the declaration of the Account as an NPA. Secondly the Bank should have responded to the objections that were taken in the representation dated 25.11.2009 pertaining to such declaration of NPA and any decision regarding revival of the Account or its revalidation, keeping in view the offers made by the Complainant in his representation dated 25.11.2009. The Bank had simply brushed it aside through the communication under the Right to Information Act on 09.06.2010, referring to some legal opinion from its Law Officer without disclosing the same and recorded a conclusion that the financial transaction does not evince any interest on the strength of Power of Attorney. Once the Complainant had referred to a legal proposition aided by a judgment of the Apex Court, the Bank was under an obligation to meet the same appropriately once it had chosen to rely on the legal opinion of its law officer. Neither the Bank has commented on the same nor the State Commission seems to have assessed it. The State Commission has drawn its conclusion without analysing these facts on the basis of the material that was required to be looked into and therefore we find that the impugned Order on this count also is not sustainable being another issue of irregularity.
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19. The third and the most important point which needs to be dealt with is the erroneous conclusion drawn by the State Commission that the Complainant is not a Consumer. The first imperfection in the impugned Order is that it has only referred to the one judgment of the Apex Court that was referred to by the District Commission, namely the decision in the case of Standard Chartered Bank Ltd. vs. B.N. Raman (Dr.) (supra). The said decision was in respect of a banking transaction relating to a FCNR deposit made by the Complainant therein, where the Bank had taken a stand that the Complainant had given instructions for its premature withdrawal that was denied by the Complainant. It is in this context that an observation was made with regard to the nature of Banking transactions as understood under the Consumer Protection Act, 1986. Paragraph 8 of the said judgment is extracted hereinunder:
"8. The Consumer Protection Act, 1986 provides for formation of the National Commission, the State Commission and the District Forum. These are remedial agencies. Their functions are quasi-judicial. The purpose of these agencies is to decide consumer disputes. Activities relating to non-sovereign powers of statutory bodies are within the purview of the Act. The functions of such statutory bodies come under the term "service" under Section 2(1)(o) of the Act. Banking is a commercial function. "Banking" means acceptance, for the purposes of lending or investment of deposit of money from the public, repayable on demand or otherwise [see Section 5(b) of the Banking Regulation Act, 1949]. The intention of the 1986 Act is to protect consumers of such services rendered by the banks. Banks provide or render service/facility to its customers or even non- customers. They render facilities/services such as remittances, accepting deposits, providing for lockers, facility for discounting of cheques, collection of cheques, issue of bank drafts, etc. In Vimal Chandra Grover v. Bank of India [(2000) 5 SCC 122 : AIR 2000 SC 2181] this RP No. 3561 of 2013 Page 31 Court has held that banking is business transaction between the bank and the customers. Such customers are consumers within the meaning of Section 2(1)(d)(ii) of the Act."
20. The State Commission while referring to the said ratio completely omitted to consider the other judgment which was relied on by the District Commission in the case of Vimal Chandra Grover vs. Bank of India (supra). Surprisingly, the State Commission seems to have overlooked this citation for some unknown reasons in spite of the fact that the said decision was not only mentioned in the Order of the District Commission but has also been referred to in paragraph 8 of the judgment in the case of Standard Chartered Bank Ltd. vs. B.N. Raman (Dr.) (supra) that has been referred to by the State Commission itself. We fail to understand as to why the State Commission chose to ignore the same and in our considered opinion, the omission to consider the said judgment and its ratio is a material irregularity as we find that the said judgment was very much relevant to the controversy.
21. We, however, wish to deliberate upon it a little more in order to reflect on the ratio of the said judgment in the context of the present case. The Complainant has maintained that he was running the business in the name and style of M/s. Talcher Industrial Supplier and in paragraph 1 of the complaint has categorically stated that it was to earn his livelihood. The nature of the business may have been commercial but the purpose for which the venture being run has been disclosed by the Complainant is to earn his livelihood from the said business. It is for supporting the same that RP No. 3561 of 2013 Page 32 he applied for a Cash Credit Loan upon having been appointed as an authorised distributor for Tata BP Lubricants in the area. This was therefore private a business enterprise set up by the Complainant with the aid of the collateral security of the land belonging to his father for earning his livelihood. There does not seem to be any allegation regarding it being commercial except that the firm was not a registered firm and that the Complainant was an owner of an unregistered firm. The dispute began when the father of the Petitioner died in 2005 whose landed property had been pledged as a collateral security, and then the operation of Accounts were obstructed. Nowhere in the reply is there any evidence indicated that the business was not for earning livelihood. It has been asserted in paragraph 14(a) of the reply that the loan was being availed of as a CC Limit to augment and expand an already existing business which was a commercial purpose and therefore it cannot be accepted that the Complainant had availed the loan for earning his livelihood by self- employment. Thus it was in paragraph 14(a) that this plea had been taken without any evidence to substantiate the same on the presumption that since it is a business enterprise therefore it was a commercial purpose.
22. We may point out that such business that is set-up by an individual does not necessarily fall within the definition of commercial purpose as understood for the purpose of excluding a complaint on the ground that the Complainant is not a Consumer. It is in this background that we find that the submission made on behalf of the Complainant Petitioner needs to be dealt RP No. 3561 of 2013 Page 33 with more extensively. The illustrations regarding the same needs to be considered in the light of the leading judgments of the Apex Court in this regard. It is not necessary to reproduce the definition of the word Consumer contained in Section 2(1)(d) of the 1986 Act that has been dealt with in all the judgments that we are proceeding to refer to. The first judgment which explains the said aspect is in the case of Laxmi Engineering Works vs. PSG Industrial Institute 1995 3 SCC 583, where in paragraph 11, it has been observed as under:
"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 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 RP No. 3561 of 2013 Page 34 from the purview of the expression "commercial purpose" -- a case of exception to an exception. Let us elaborate : 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 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.
RP No. 3561 of 2013 Page 35 The aforesaid observations are mainly in relation to purchase of goods, and not services.
23. A perusal of the decision would leave no room for doubt that the explanation added to Section 2(d)(i), the Court went on to hold that the explanation excludes certain purposes from the purview of the expression "commercial purpose" which is a case of exception to an exception. The Apex Court elaborated upon the nature of the acquisition of goods by an individual that would not fall within the definition of commercial purpose and would stand excluded if the commercial use is by the purchaser himself for earning his livelihood by means of self-employment. It was held that such a purchaser of goods would be a consumer.
24. Thus, the terminology "commercial purpose" would govern the status of a Consumer and in the instant case the Complainant has categorically stated that the Banking facilities were availed as services for his livelihood. The stand of the Bank in paragraph 14(a) is the reverse. The Bank has taken a position that since it was a running business, therefore a Cash Credit Limit Loan for supplementing the said business would be a commercial purpose. We are unable to agree with this stand of the Bank in as much as no evidence was led to dislodge the fact that the business was not for his livelihood and through his self-employment. To the contrary, the Bank has taken a stand that the Petitioner Complainant was running an unregistered firm but that by itself is no proof that the Complainant was not running the business for earning his livelihood. The burden lies on the RP No. 3561 of 2013 Page 36 Opposite Party, namely the Bank, to dislodge the said assertion by any cogent evidence which does not appear to have been done in the present case. There are a series of judgments that throw light on this subject as follows:
i. (2020) 12 SCC 235, Sunil Kohli vs. Purearth Infrastructure Ltd.
ii. (2020) 10 SCC 274, Internet & Mobile Assn. of India vs. RBI iii. (2020) 2 SCC 265, Lilavati Kirtilal Mehta Medical Trust vs. Unique Shanti Developers iv. (2018) 14 SCC 81, Paramount Digital Colour Lab vs. AGFA India (P) Ltd.
v. 2016 SCC OnLine NCDRC 2730, Shrikant G. Mantri vs. Punjab National Bank vi. 2015 SCC OnLine NCDRC 972, Paramount Digital Color Lab vs. Agfa India (P) Ltd.
vii. (2001) 9 SCC 432, CBI vs. Braj Bhushan Prasad viii. (2000) 1 SCC 512, Kalpavruksha Charitable Trust vs. Toshniwal Bros. (Bombay) (P) Ltd.
ix. (1997) 1 SCC 131, Cheema Engg. Services vs. Rajan Singh x. (1995) 3 SCC 583, Laxmi Engg. Works vs. P.S.G. Industrial Institute The State Commission has nowhere taken care to assess the legal position as reflected in these pronouncements.
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25. On the other hand, it has completely omitted to consider the decision in the case of Vimal Chandra Grover vs. Bank of India (supra).
26. We may point out that we have been able to retrieve the Order of this Commission in the case of Vimal Chandra Grover vs. Bank of India that was under challenge before the Apex Court. The decision dated 21.06.1996 has been perused by us and we find that that was also a case of an overdraft facility and the facts which led to the dispute in that case are stated in paragraph „4‟ of the said decision reported in II (1996) CPJ 159 (NC), which is extracted hereinunder:
"4. The complainant was a partner in a partnership firm by the name of M/s. Shiv Dutt & Sons which had a facility to establish a letter of credit for Rs. 2 lakhs. Later the business of the said firm was taken over by the complainant as sole proprietor. The letter of credit facility was renewed in the years 1990-91 in account of M/s. Shiv Dutt & Sons, Proprietor V.C. Grover. It is alleged that in the year 1992 the Chief Manager declined to renew letter of credit facility taking contradictory stands, but the real reason was to pressurise the complainant to liquidate the overdraft account. The complainant claimed that due to non-renewal of letter of credit facility by the opposite party the complainant lost permanent customer, regular business income of approximately Rs. 25,000/- per annum. The action of the Chief Manager of the opposite party is branded as mala fide act on the part of the opposite party and thus the opposite party is liable to pay damages."
27. When the matter reached the Apex Court, the definition of the word "Consumer, Service and Banking" were all taken into account and while holding that the Bank in that case had failed to honour its commitment resulting in loss to the Appellant, it was observed in paragraphs 8 to 10 as follows:
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8. We think that the argument that the appellant is not a consumer or that the Bank is not rendering service is an argument in desperation. No such plea was raised before the National Commission. The overdraft limit prescribed by the Bank was not without consideration. The Bank is rendering service by providing the overdraft facilities to a customer which is not without consideration. The Bank is charging interest and other charges as well in providing the service. The provision for overdraft facility is certainly a part of banking and its service within the meaning of clause (o) of Section 2 of the Act. In ordinary parlance "banking" is business transactions of a bank (Concise Oxford Dictionary). "Banking" is defined in Black's Law Dictionary. It is as under:
"The business of banking, as defined by law and custom, consists in the issue of notes payable on demand intended to circulate as money when the banks are banks of issue; in receiving deposits payable on demand; in discounting commercial paper; making loans of money on collateral security; buying and selling bills of exchange; negotiating loans, and dealing in negotiable securities issued by the government, state and national, and municipal and other corporations. Mercantile Bank v. New York [121 US 138, 156 : 7 SCt 826 : 30 L Ed 895] US at p. 156; Prudence Co., D.C.N.Y. In re [10 F Supp 33, 36] ."
9. Reserve Bank of India under the Reserve Bank of India Act, 1934 controls various activities of the banks in India. Under Section 22 of that Act, Reserve Bank of India has the sole right to issue bank notes in India. The Bank in the present case is governed by the Banking Regulation Act, 1949. Under clause (b) of Section 5 "banking" means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by a cheque, draft, order or otherwise. Under clause (c) a "banking company"
means any company which transacts the business of banking in India. Under clause (cc) a "branch" or "branch office", in relation to a banking company, means any branch or branch office, whether called a pay office or a sub-pay office or by any other name, at which deposits are received, cheques cashed or moneys lent, and for the purposes of Section 35 includes any place of business where any other form of business referred to in sub-section (1) of Section 6 is transacted. Section 6 [ "6. Forms of business in which banking companies may engage.--(1) In addition to RP No. 3561 of 2013 Page 39 the business of banking, a banking company may engage in any one or more of the following forms of business, namely--(a) the borrowing, raising, or taking up of money; the lending or advancing of money either upon or without security; the drawing, making, accepting; discounting, buying, selling, collecting and dealing in bills of exchange, hoondees, promissory notes, coupons, drafts, bills of lading, railway receipts, warrants, debentures, certificates, scrips and other instruments, and securities whether transferable or negotiable or not; the granting and issuing of letters of credit, traveller's cheques and circular notes; the buying, selling and dealing in bullion and specie; the buying and selling of foreign exchange including foreign bank notes; the acquiring, holding, issuing on commission, underwriting and dealing in stock, funds, shares, debentures, debenture stock, bonds, obligations, securities and investments of all kinds; the purchasing and selling of bonds, scrips or other forms of securities on behalf of constituents or others, the negotiating of loans and advances; the receiving of all kinds of bonds, scrips or valuables on deposits or for safe custody or otherwise; the providing of safe deposit vaults; the collecting and transmitting of money and securities;(b) acting as agents for any Government or local authority or any other person or persons; the carrying on of agency business of any description including the clearing and forwarding of goods, giving of receipts and discharges and otherwise acting as an attorney on behalf of customers, but excluding the business of a managing agent or secretary and treasurer of a company;(c) contracting for public and private loans and negotiating and issuing the same;(d) the effecting, insuring, guaranteeing, underwriting, participating in managing and carrying out of any issue, public or private, of State, municipal or other loans or of shares, stock, debentures, or debenture stock of any company, corporation or association and the lending of money for the purpose of any such issue;(e) carrying on and transacting every kind of guarantee and indemnity business;(f) managing, selling and realising any property which may come into the possession of the company in satisfaction or part satisfaction of any of its claims;(g) acquiring and holding and generally dealing with any property or any right, title or interest in any such property which may form the security or part of the security for any loans or advances or which may be connected with any such security;(h) RP No. 3561 of 2013 Page 40 undertaking and executing trusts;(i) undertaking the administration of estates as executor, trustee or otherwise;(j) establishing and supporting or aiding in the establishment and support of associations, institutions, funds, trusts and conveniences calculated to benefit employees or ex-employees of the company or the dependants or connections of such persons; granting pensions and allowances and making payments towards insurance; subscribing to or guaranteeing moneys for charitable or benevolent objects or for any exhibition or for any public, general or useful object;(k) the acquisition, construction, maintenance and alteration of any building or works necessary or convenient for the purposes of the company;(1) selling, improving, managing, developing, exchanging, leasing, mortgaging, disposing of or turning into account or otherwise dealing with all or any part of the property and rights of the company;(m) acquiring and undertaking the whole or any part of the business of any person or company, when such business is of a nature enumerated or described in this sub-section;(n) doing all such other things as are incidental or conducive to the promotion or advancement of the business of the company;(o) any other form of business which the Central Government may, by notification in the Official Gazette, specify as a form of business in which it is lawful for a banking company to engage.(2) No banking company shall engage in any form of business other than those referred to in sub-section (1)."] of this Act describes the forms of business which can be conducted by a banking company in addition to the business of banking. When the bank is engaged in different types of business as mentioned in Section 6, it is apparent that when the bank is granting the overdraft facilities to its client which is a customer, it is providing service to him. The Act itself does not define the term "banking" and as to what services a bank can provide, we can usefully refer to Section 6 of the Banking Regulation Act, 1949.
10. The request for sale of a part of the pledged shares for getting the overdraft facilities and which is agreed to by the bank is certainly part of the service connected with the grant of overdraft facilities. The appellant as a consumer was hiring the service of the Bank for consideration by way of payment of interest for the overdraft facilities received by him by pledging the shares of different companies. We reject the argument that the appellant is not a consumer or that the Bank is not providing any service to the appellant. The only question that RP No. 3561 of 2013 Page 41 requires consideration is if there was any deficiency in service in the present case.
28. Thus, it was a direct decision, the ratio whereof has been completely overlooked by the State Commission to appreciate the contention raised on behalf of the Complainant.
29. Learned Counsel for the Complainant has relied on other judgments as well which are as follows:
i. Madan Kumar Singh (Dead) through LR vs. District Magistrate, Sultanpur & Ors., (2009) 9 SCC 79 ii. Sanjay Kumar Joshi vs. Municipal Board, Laxmangarh & Anr., (2015) 12 SCC 709 iii. A. K. Naikwadi, Proprietor, M/s. Zoom Colour Lab vs. M/s.
Kodak Pvt. Ltd., (2012) SCC OnLine NCDRC 303
30. We may point out that the case of Madan Kumar Singh (Dead) through LR (supra) was in relation to the purchase of a truck for earning a livelihood by self-employment. The case of Sanjay Kumar Joshi (supra) was in respect of the purchase of an immovable property for earning livelihood and it was held that the Complainant would fall within the definition of the word "Consumer". It was also held that no evidence was led to demolish the contention of the Complainant that he had purchased the plot for the purpose of earning his livelihood as he was an unemployed person.
31. The next decision relied on by the learned Counsel is an Order of this Commission in the case of A. K. Naikwadi (supra). The dispute in that case was regarding extending a loan for expanding the business of the RP No. 3561 of 2013 Page 42 Complainant by opening a Kodak Express Lab outlet at Kolhapur, for which a lab machine was offered for a sum of Rs. 17,50,000/-. On the dispute being raised, the manufacturer raised a contention that the Complainant had purchased a machine for commercial purpose and therefore the Complainant was not a Consumer. This Commission held in paragraph „9‟ as follows:
"9. Before we proceed to discuss and decide on these aspects, it would be appropriate to consider the preliminary objections that have been raised by the opposite parties. It has been contended that the complainant does not fall within the definition of a „consumer‟ as defined under Section 2(1)(d) of the Consumer Protection Act, 1986 as the machine in question was purchased by the complainant for commercial purpose. In this regard, it may be stated that the complainant has specifically made an averment that he purchased the machine by raising a bank loan for earning his livelihood for daily basic needs of bread and butter and family maintenance through self-employment assisted by his brother. To belie this contention of the complainant, the opposite parties in the additional evidence adduced by them have contended that the complainant to run the photo lab had employed an assistant by the name of Udai Mansingh Powar, who in his affidavit has stated that apart from him there were two other persons working at this lab. While the same additional evidence has not been countered in specific terms by the complainant, the said Udai Mansingh Powar has neither given the names of the other two persons who were engaged by the complainant in the running of the lab nor has any affidavit been filed on behalf of the other persons. A perusal of the premises from the photograph filed in the additional evidence, it appears that only the machine has been installed in a cubicle with hardly any space for more than a person to man the machine and the counter. The Supreme Court of India in the case Madan Kumar Singh v. District Magistrate, Sultanpur [(2009) 9 SCC 79] while considering whether the appointment of a driver to ply a truck would take the owner of the truck out of the definition of „consumer‟, it has been clearly held that "Appellant purchasing a truck to earn his livelihood by means of self-employment, held, notwithstanding RP No. 3561 of 2013 Page 43 appointment of a driver to ply the said truck, appellant would still be a consumer". Drawing support from this ruling by the Hon'ble Apex Court, it may be stated that it would be too much to think that an individual running a photo lab shop will be expected to continuously man the shop without any break. Engagement of an assistant/helper to man the counter/shop, therefore, would not be justified to say that the owner was running the shop for commercial purposes as his primary objective is to earn his livelihood by processing the film rolls of the customers."
32. The Complainant has maintained that he has opened the outlet on the distributorship being awarded by Tata BP Lubricants India Ltd. and it is evident that no material was placed by the Bank to demonstrate that the business or proprietorship of the Complainant was not for earning livelihood through self-employment.
33. However, there is one recent judgment of the Apex Court which needs a reference, keeping in view the background of the case where the Complainant has availed of a Cash Credit Facility for running the distributorship.
34. The Apex Court in the case of Shrikant G. Mantri vs. Punjab National Bank, (2022) 5 SCC 42 was dealing with a case where the Complainant had an Account with the Bank and was a stock broker by profession. He had applied for a overdraft facility in respect to his day to day share holding and stock transactions which was sanctioned by the Bank and the Complainant applied for enhancement of the said overdraft facility which was enhanced by the Bank from Rs. 1 Crore to Rs. 5 Crore. A further enhancement was sought to the tune of Rs. 6 Crores, but due to a steep fall in the Share Market, the Bank called upon the Complainant to replenish the RP No. 3561 of 2013 Page 44 overdraft Account by pledging additional shares as an additional security. Certain shares of M/s. Ansal Hotels were tendered and during this period, the overdraft account of the Appellant became irregular. Since the overdraft Account was not regularised a demand of Rs. 6,00,61,000/- along with interest was made by the Bank. The Complainant maintained that he had advised the Bank to sell his shares which had not been done by the Bank and that resulted in the huge loss to the Complainant.
35. A one-time settlement was entered into between the Bank and the Complainant on payment of Rs. 2 Crores certifying that no dues was left over, that was subject to the return of the shares.
36. Other proceedings in Arbitration were also undertaken where the Bank failed and in this background, the Complainant filed a Complaint before this Commission alleging deficiency in service on the part of the Bank claiming a direction to return the 3,75,000 shares of ITC along with dividends that was retained by the Bank. It is in this complaint that the Apex Court after having dealt with the various decisions that have been referred to hereinabove, except the decision in the case of Vimal Chandra Grover vs. Bank of India (supra), held that since the overdraft Account on the basis whereof the transaction was carried out between the parties was a business to business transaction and for commercial purpose as the Complainant was a Stock Broker and was availing the services of an overdraft facility which was for commercial purpose to earn profits and enhancing the same. In that context, this Commission has held the RP No. 3561 of 2013 Page 45 Complaint to be not maintainable and the Apex Court confirmed the same. Paragraph 56 of the said judgment is extracted hereinunder:
"56. 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 are 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."
37. However on the facts of the present case, prima facie we do not find any such similarity in as much as no evidence has been led by the Bank to demonstrate that the Cash Credit Facility was availed for any other commercial purpose except to run the business of the Tata BP Lubricants Distributorship for which the Complainant might have needed more funds to sustain his livelihood. The State Commission has nowhere taken care to deal with this issue and has arrived at a conclusion by totally ignoring and omitting to consider these aspects.
38. We are therefore satisfied that the impugned Order of the State Commission deserves a reversal being an irregularity and not in conformity with the law discussed hereinabove. The impugned Order dated 30.07.2013 therefore is set aside and the matter is remanded back to the State RP No. 3561 of 2013 Page 46 Commission for decision afresh in the light of the observations made hereinabove preferably within a period of six months after giving a reasonable opportunity to the parties to plead their case.
39. Since both the parties are represented before us, we direct that Appeal No. 207 of 2012 shall stand restored before the State Commission and the State Commission shall proceed to hear the matter as directed above.
Parties shall appear before the State Commission on 01.08.2025. The Revision Petition accordingly stands disposed of.
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(A.P. SAHI, J.) PRESIDENT .......................................
(BHARATKUMAR PANDYA)
MEMBER
Pramod / Reserved
RP No. 3561 of 2013 Page 47