M/S. SAMDARIYA BUILERS PRIVATE LTD vs STATE BANK OF INDIA & ANR

In CC No.1389 of 2015, the complainant, which is a company incorporated under the provisions of Companies Act and is engaged in business of jewellery, besides construction of shopping malls/residential houses, etc. was sanctioned a term loam of Rs.29 crore by the opposite party - State Bank of India. The loan had been sanctioned for construction of shopping malls. The complainant sought enhancement of the aforesaid loan by Rs.11 crore. Since the opposite party failed to sanction further loan, the complainant got a term loan of Rs.40 crore sanctioned from another bank. The complainant on receipt of the Statement of Account found that the Bank had debited a sum of Rs.54 lakhs in its account as penal interest and Rs.9,79,414/- as discharge interest. The complainant is aggrieved from the aforesaid debits in its account and, therefore, has filed this complaint seeking payment of the aforesaid amounts along with interest and compensation.

In CC No.139 of 2015, the complainant, a partnership firm of three persons engaged in the business of trading of chillies was granted credit facility by the Karur Vysya Bank. The complainant required additional finance for expansion of its business but the said Bank did not enhance the loan limit. The Branch Manager filed a complaint against the complainant under section 420 of IPC on 26.2.2013. The operation of the bank account was stopped by the said bank on 28.2.2013. This is also the case of the complainant that the loan account was classified as "Non-Performing Asset" (NPA) by the Bank and the proceedings under the SARFAESI Act were initiated against it. The provisions of the aforesaid Act, according to the complainant, were not followed by the Bank. Alleging deficiency in service on the part of the Bank in rendering services to it, the complainant is before this Commission seeking compensation quantified at Rs.5 crore with interest.

In CC No.140 of 2015, the complainant who is in business of trading of red chillies as proprietor of M/s Yamini Exports and a partner of Sri Narayana Traders (complainant in CC No.139 of 2015) was grated credit facility by Dhanalaxmi Bank. Credit facilities to the extent of Rs.1 crore were sanctioned to the complainant by the aforesaid Bank. In this case also, the Branch Manager filed a complaint against the complainant under section 420 of IPC and after classifying the account as "Non-Performing Asset" (NPA), proceedings under the SARFAESI Act were initiated. The complainant in this case is seeking compensation quantified at Rs.5 crore from the Bank along with interest.

I have heard the learned counsel for the complainants on the question as to whether they are consumers within the meaning of section 2 (1) (d) of the Consumer Protection Act. " 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."

The complainant in CC No.1389 of 2015 hired or availed the services of the Bank in order to arrange finance for construction of a shopping-cum-mall complex whereas the complainants in CC No.139 of 2015 and 140 of 2015, hired or availed the services of the Bank for undertaking the business of trading in chillies. The complainants, therefore, hired or availed the services of the Bank for undertaking a commercial activity which was intended to generate profit for them by construction and selling of shopping malls in CC No.1389 of 2015 and by selling and purchasing chillies in CC No.139 and 140 of 2015. Therefore, it can hardly be disputed that the services of the Bank were hired or availed for a commercial purpose. Since the services were hired or availed after amendment of section 2(1)(d) of the Consumer Protection Act w.e.f. 15.3.2003, the said complainants are not a consumer as defined in the Act.

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.

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.

Since the complainants are not consumer within the meaning of section 2(1)(d) of the Consumer Protection Act, this Commission lacks jurisdiction to entertain the complaints. I, therefore, need not go into the question as to whether the jurisdiction of this Commission is also barred under the provisions of SARFAESI Act or not. The complaints are accordingly dismissed. It is, however, made clear that dismissal of the complaints will not come in the way of the complainants approaching forum other than a consumer forum, for the redressal of their respective grievances.