AVM J. RAJENDRA, AVSM, VSM (RETD.), MEMBER

1.      The present First Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (hereinafter referred to as “the Act”) against the Order dated 20.02.2020 passed by the learned State Consumer Disputes Redressal Commission Rajasthan, (hereinafter referred as “the State Commission”), in Consumer Complaint No. 131 of 2015, wherein the Complaint filed by the Complainant (Respondent herein) was partly allowed. The relevant portion of the Impugned Order dated 20.02.2020 is reproduced below:

“1. The Opposite Parties jointly or severally pay a sum of Rs.8,98,800/- (Rupees Eight Lacs, Ninety Eight Thousand and Eight Hundred) to the complainant along with interest of 9% per annum from 09.01.2015 till realization.

2. The Opposite Parties jointly or severally pay a sum of Rs.8,80,000/- (Rupees Eight Lacs Eighty Thousand) i.e. Rs.10,000/-per day towards financial loss and mental agony along with interest @ 9% p.a. from the date of filing of the present complaint i.e. 27.10.2015.

3. The Opposite Parties jointly or severally pay a sum of Rs.50,000/- (Rs. Fifty Thousand) towards litigation charges along with interest @ 9% p.a. from the date of filing of the present complaint i.e. 27.10.2015.

Order be complied within 2 months.”

2.      Along with the present Appeal, an Application seeking condonation of delay of 109 days has also been filed. The impugned order was passed by the learned State Commission on 20.02.2020. The prescribed period for filing the Appeal is 30 days, which expired on 21.03.2020. The present Appeal was filed on 08.07.2020. However, the Hon’ble Supreme Court in Suo Motu Writ Petition (Civil) No. 3 of 2020 in re: Cognizance for Extension of Limitation suspended the period of limitation for filing Petitions/Applications/Suits/Appeals/all other quasi proceedings before any Courts/Tribunals or any Authority due to Covid-19 Pandemic with effect from 15.03.2020 till 28.02.2022. Therefore, the present Appeal filed during the suspended period of limitation can be treated having been filed within limitation. The delay in the filing the matter has accordingly been condoned.

3.      Brief facts of the case are that the complainant/Respondent
Shri Mankumar Kundliya is the sole proprietor of M/s Sahil Distributors, a sole proprietorship concern. Appellant No. 2/OP No. 2 is the Standard Chartered Bank registered under the Banking Regulation Act. The Branch Office of the Appellant No.1/ OP No.1 is Jaipur, where the complainant had entered in to a transaction.

4.      M/s. Sahil Distributors availed loan from OP No.1 branch at Jaipur in its name in the capacity of sole proprietor for business purpose. The type of Loan Account was SMI-Trade and Working Capital vide loan account No. 75105063438. The account number 20920015538 was opened for banking and accounting norms by OP No.1. M/s. Sahil Distributors is sole source of subsistence and livelihood for the complainant. As per the prevailing terms and conditions the loan facility of Rs.4,50,00,000/- sanctioned vide letter dated 11.12.2013 was duly accepted by the complainant. This system of providing working capital and overdraft facility under similar terms was in vogue between the same parties for a few years for the durations prescribed within each such contract. The said facility of Rs.4,50,00,000/- in the present case granted on 11.12.2013 was to fulfill the need of overdraft and working capital. Of this amount, Rs.3,60,00,000/- was for the purpose of demand loan working capital facility. However, the entire facility was limited to Rs.4,50,00,000/-. The entire facility was due for review on 11.10.2014. Later, vide letter dated 24.07.2014, this financial facility was reduced to 4 Crore by the Bank and the credit facility was limited to 4 Crore. Clause-5 of the terms and conditions of the said facility contract deals with default rate fees and charges read as follows:-

Default Rate = 21% per annum. Please note that these rates are subject to change at the discretion of the Bank and are also subject to guidelines issued by regulatory authorities.

Processing Fees=0.25% plus applicable service tax on the overall sanctioned limit INR 45,000.000 to be paid upfront on acceptance of the facility letter [non-refundable]. Cost of valuation and documentation as per actual

Pre-payment charges = The facility shall attract prepayment charge at 2% plus applicable service tax (as may be revised by the Bank from time to time) on the Facility limits granted to the Borrower in the event of

a) Repayment by the Borrower to the Bank of any amount ahead of previously agreed repayment schedule or tenor or terms or dates of repayment or renewal as contained in the Facility letter , or

b) The Borrower’s not availing of the Facility or any part thereof within 60 (Sixty) days from the date of its grant.

Penal/Default Charges = Any non-compliance with the covenants stated or withdrawals in excess of the limits specified above would attract a penal interest rate of 2% p.a. over the contracted rate plus applicable service tax. Please note that these rates are subject to change at the discretion of the Bank and are also subject to guidelines issued by regulatory authorities.

The prepayment charges has been made bold and underlined and the same is relevant for the adjudication of the present dispute.

5.      For the purpose of granting the said loan facility, the Appellants/ OPs have taken the Security Documents, including hypothecation of stocks, Book debts CRR of Stock and Book Debts Standard Chartered Bank with charge on entire current assets of the entity. In addition, Collateral Security Mortgage of the commercial property at Shop No. A-1/13 & A-1/14 Auto Mobile Nagar, Delhi Road; Residential property at Plot No. D-4, Shanti Path, Jaipur; and Commercial Property at Shop No. A-9/24 & A-9/25, Auto Mobile Nagar, Jaipur were also taken. In addition, Guarantee from all the owners of the properties including that of Mr. Man Kumar Kundalia and Mr Mohit Kundalia and Corporate Guarantee of M/s Anuradha Financiers Pvt. Ltd were submitted.

6.      For undertaking transactions, two accounts were opened viz. No. 75105063438 and loan A/c No. 20920015538 with the Opposite Party bank. Prior to the review date i.e. 11.10.2014, on 10.10.2014, the account of the complainant had debit balance of Rs. 97,33,471.80. After he deposited Rs.3,99,59,840, it had the credit balance of Rs.3,02,26,368.20. On 11.12.2015, the Opposite Party No.1 made the A/c No. 75105063438 into a credit balance. Thus, the Complainant deposited the amount in accordance with the demand and in accordance with the review dated 11.10.2014 in time. Further, Rs.3,00,00,000/- was deposited on 13.10.2014 in repayment Loan A/c No. 20920015538 through transfer, and Rs. 94,315/- was debited in A/c No. 75105063438 as interest and deposited through transfer. Thus, the total amount with interest for the loan was paid by the Complainant to the OPs.

7.      Thereafter, the Complainant had no amount left to be paid to the OPs for the loan and interest on the review dated 11.10.2014. He in fact had credit of Rs.1,32,063.20 in the account after the above transfer. The Complainant vide letter dated 18.09.2014 requested the Appellant No.1/ OP No.1 to review the loan facility. But no action was taken. The Complainant received the facility of necessary loan through M/s Bajaj Finserve and arranged the amount for repayment of the balance of the loan due to OPs and deposited through cheque dated 10.10.2014. Thus, there was a credit balance in the account on 11.10.2014. Thereafter, the OPs had no right to retain the title deeds of the immovable properties given as collateral securities. Of these, the title deed of property A/9/24 and A/9/25, Automobile Nagar, Jaipur was returned on the Complainant depositing Rs.50,00,000/- while lowering the limit. The remaining three title deeds were not returned. The complainant requested the OPs to immediately release these original documents. As there was no action, he requested for the same vide emails on 25.11.2014, 09.12.2014, and 12.12.2014. However, no action was taken. Aggrieved, the Complainant vide letter dated 20.12.2014 sought immediate release of the documents and that he would claim Rs. 1,00,000/- per day as damages. Thereafter, the OPs responded stating “as already communicated, property release is subject to deposition of applicable prepayment charges.” Being aggrieved, he pressed his contentions vide the letter dated 20.12.2014 that, if his title deeds are not returned immediately, the complainant will claim damages @ Rs.1,00,000/- per day. Even thereafter, the OPs did not release the said title deeds and recovered Rs.8,98,880/-, out of which Rs.8,00,000/- was in the form of pre-payment charges and 98,880/- in the form of service tax from the account of the complainant on 09.01.2015, without any permission and confirmation and without demanding in writing from the complainant. Thereafter the title deeds were released on 12.01.2015.  The complainant alleged that the unilateral recovery of Rs.8,98,880/- from his account is unauthorized and illegal. It is misuse of their domination and superior position, without his permission and concurrence. Such recovery clearly comes under “deficiency” in service and “deficient service” of the OPs. Thus, he filed a Complaint before the State Commission seeking the following prayers:-

“1. Direct the Opposite party No.1 & 2 jointly and severally to refund and credited an amount of Rs.8,98,880/- which has been wrongful gained from the complainant or the complainant is entitled to recover the same from the opposite parties.

2. Direct the opposite parties to pay an amount of Rs.88,00,000/- for the economic loss mental pain and agony pay to the complainant as compensation.

3. Direct the opposite parties to pay an interest of rate 12.20% per annum to the aforesaid amount to the complainant from the filing of the complaint to till date.

4. Direct the opposite parties to pay an amount of Rs.1,00,000/- as expenses to file the present complaint.

5. Any another reliefs as this Hon’ble Forum may deem fit and proper as required.”

8.      The Appellants/OPs have taken preliminary objection that the case would not fall under consumer forum as the individual is carrying business for commercial gain. The Complainant failed to explain as to how he would be considered as a “Consumer” in terms of Consumer Protection Act. The nature of transaction done by the Complainant is commercial. Thus, the complaint needs to be dismissed on this ground alone. Further, the complaint is in respect of the loan account and rendition of accounts. It is settled law that when the matter pertains to rendition of account, the jurisdiction lies only to the Civil Court. The OPs had been communicating the applicability of the pre-closure charges. The complainant is bound by the terms and conditions mentioned in the facility letter dated 11.12.2013. As per the agreement, he is contractually liable to pay the said pre-closure charges. Thus, the complaint is liable to be dismissed.

9.      The learned State Commission vide Order dated 20.02.2020 partly allowed the claim and ordered as follows:-

“1. The Opposite Parties jointly or severally pay a sum of Rs.8,98,800/- (Rupees Eight Lacs, Ninety Eight Thousand and Eight Hundred) to the complainant along with interest of 9% per annum from 09.01.2015 till realization.

2. The Opposite Parties jointly or severally pay a sum of Rs.8,80,000/- (Rupees Eight Lacs Eighty Thousand) i.e. Rs.10,000/-per day towards financial loss and mental agony along with interest @ 9% p.a. from the date of filing of the present complaint i.e. 27.10.2015.

3. The Opposite Parties jointly or severally pay a sum of Rs.50,000/- (Rs. Fifty Thousand) towards litigation charges along with interest @ 9% p.a. from the date of filing of the present complaint i.e. 27.10.2015.

Order be complied within 2 months.”

10.    Being aggrieved by the said impugned order dated 20.02.2020, the Appellants/OPs filed the present Appeal seeking the following:

“i) call for the records of Complaint Case No.131 of 2015 from the Ld. State Consumer Disputes Redressal Commission, Bench No.2, Jaipur, Rajasthan;

ii) set aside the order dated 20.02.2020 passed by the Ld. State Consumer Disputes Redressal Commission, Bench No.2, Jaipur, Rajasthan in Complaint Case No.131/ 2015;

iii) cost of the present Appeal be awarded in favour of Appellant;

iv) pass any such or further order as this Hon'ble Commission may deem fit and proper in the facts and circumstances of the case and in the interest of justice.”

11.    Aggrieved, by the impugned order, the Appellants have filed the instant Appeal mainly on the following grounds:

(a)  The pre-payment charges were levied as per the terms of agreement and there is no deficiency. They relied on the judgement of this Commission in "Standard Chartered Bank Vs. KL Juneja" reported as II (2013) CPJ 498 (NC).

(b)   The credit facilities were availed for commercial purpose. Therefore, the Complainant does not fall within the purview of consumer under Section 2(d) of Consumer Protection Act 1986. The issue of "commercial purpose", and this was completely overlooked by the State Commission.

(c)  The Complainant availed the facility for generating profit out of business. The National Commission, in Union Bank of India & Anr Vs. M/s. Learning Spiral Pvt Ltd & Anr decided on 30.07.2018 categorically held that 'if the business activities of a company cannot be conveniently undertaken without the goods purchased or the services hired or availed by a company, such purchase or hiring/availing as the case may be, would be for a commercial purpose, because the objective behind such purchase of goods or hiring or availing of the services would be to enable the company to earn profits by undertaking and advancing its business activities”

(d)  In "M/s. Sam Fine o. Chem Limited Vs. UBI” CC No 39/2013, the National Commission on 12.04.2013 held 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 "Bird Machines Pvt. Ltd. Vs Indusind Bank Ltd & Anr "in CC No. 137/2020 the National Commission on 31.01.2020 held that "the credit facilities were taken by the complainant from the bank for the purpose of its business activities. The amount which the complainant took from the bank was to be used to serve the commercial interest of the company. Therefore, there is no scope for disputing that the services of the bank were availed by the complainant for commercial purpose”. Similar was the order in "Maa Pet Pvt. Ltd. Vs. Bank of Baroda" III (2016) CPJ 271 (NC).

(e)  The State Commission failed to consider the pre-payment clause that "the facility shall attract prepayment charges at 2% plus applicable service tax (as may be revised by the bank from time to time) on the facility limits granted to the Borrower in the event of repayment of any amount ahead of previously agreed repayment schedule.

(f)   In the present case, the Complainant shifted its credit facilities from the Appellants to Bajaj Finance and tendered a DD towards repayment of credit facilities on 10.10.2014, which is prior to the renewal date of the credit facilities. Therefore, in terms of the agreement between the parties, the Appellant has rightly charged the prepayment charges.

(g)  The State Commission failed to appreciate that the firm accepted and acted upon the terms agreed between parties, availed and enjoyed the credit facilities under the agreement is estopped from challenging its terms subsequently.

(h)  The State Commission erred in relying on Shriram City Union Finance limited Vs Venkata Krishna Reddy reported as IV (2018) CPJ 355 (NC) where the issue involved was non-issuance of NOC by the Petitioner, despite receipt of full loan payment. The State Commission also erred in relying on SBI Vs. Darshan Lal II(2016) CPJ 47(NC) and Bank of Baroda Vs. Sushant Saha reported as II (2018) CPJ 574 (NC) where the issue was non returning of the original title deeds. The State Commission erred in relying upon ICICI Bank Ltd. Vs. Limenaph Chemicals Private Ltd. reported as IV (2017} CPJ 31NC), where the issue was penal charges on credit account.

(i)        The order directing refund of Rs.8,98,880/- being pre-payment charges along with further interest and all directions given in the impugned order are liable to be set aside. Notwithstanding the same, even if this Commission is to hold that the Appellant is liable to refund such charges, the order granting interest @ 9% per annum from 09.01.2015 till the date of payment and to pay compensation of Rs. 880,000/- with litigation cost of Rs.50,000/- and also to pay interest @ 9% per annum on these cannot stand test of legal scrutiny.

(j)        The State Commission failed to appreciate that the claim of the Respondent was Rs.96,98,880/- with interest @ 12.20% p.a was beyond Rs. 1 Crore. Thus, complaint ought to have been rejected being lack of pecuniary jurisdiction.

12.    The learned Counsel for the Appellant has placed on reliance on the following judgments:-

(i)   Shrikant G. Mantri Vs. Punjab National Bank, Civil Appeal No.11397/2016, decided on 22.02.2022 by the Hon’ble Supreme Court.

(ii) Magma Fincorp Ltd. Vs. Rajesh Kumar Tiwari, Civil Appeal No.5622 of 2019, decided on 01.10.2020 by the Hon’ble Supreme Court.

(iii) Bird Machines Pvt. Ltd. Vs. Indusind Bank Limited and Ors., Consumer Case No.137 of 2020, decided on 31.01.2020 by the NCDRC.

iv) Standard Chartered Bank Vs. Krishan Lal Juneja, Revision Petition No.3855 of 2011, decided on 12.04.2013 by the NCDRC.

13.    The Respondent filed written submissions in the matter and substantially relied on the contentions raised in the Complaint before the State Commission. In addition, the learned Counsel for the Respondent has also placed reliance on the judgments:-

(i) Laxmi Engineering Works Vs. P.S.G. Industrial Institute, Civil (MANU/SC/0271/1995).

(ii) Bhagwati Vanaspati Traders VS Senior Superintendent of Post Offices (MANU/SC/0902/2014).

(iii) Ashok Transport Agency Vs. Awadesh Kumar and Anr. (MANU/SC/0675/1998)

(iv) Vimal Chandra Grover Vs. Bank of India (MANU/SC/ 0316/2000)

(v) Citibank N.A. and Ors. Vs. Geekay Agropack (P) Ltd. and Ors. (MANU/SC/7516/2008)

(vi) Adhara Pradesh Co-op. Housing Federations Ltd. Vs. P. Kamalanna and Anr., Revision Petition No.4798 of 2012, decided on 01.02.2021 by the NCDRC.

14.    The learned Counsel for the Appellant in his arguments has brought out that the pre-payment charges were levied squarely as per the terms of agreement executed by the Respondent. There is no question of any deficiency. The credit facilities were availed for commercial purpose. Thus, the Respondent does not fall within the purview of consumer as defined under Section 2(d) of Consumer Protection Act 1986. The State Commission failed to consider the pre-payment clause in the facility letter, which contemplates that "the facility shall attract prepayment charges at 2% plus applicable service tax on the facility limits granted, in the event of repayment of any amount ahead of previously agreed repayment schedule. As the Respondent shifted its credit facilities from the Appellants to Bajaj Finance and tendered a DD towards repayment of credit facilities on 10.10.2014, which was prior to the renewal date of the credit facilities, the Appellant rightly charged the prepayment charges. The Respondent who accepted and acted upon the terms agreed between the parties and availed and enjoyed credit facilities under the same agreement is estopped from challenging its terms later. The order directing refund of Rs.8,98,880/- being pre-payment charges along with interest and other directions in the impugned order are liable to be set aside.

15.    Even for the sake of argument, if the Appellant is liable to refund such charges, the grant of interest @ 9% per annum from 09.01.2015 till the date of payment and to pay compensation of Rs. 8,80,000/- with litigation cost of Rs.50,000/- and also to pay interest @ 9% per annum on these cannot stand test of legal scrutiny. In any case further, the State Commission failed to appreciate that the amount claimed was Rs.96,98,880/- with interest @ 12.20% per annum, which is beyond the pecuniary jurisdiction of the State Commission.

16.    The learned Counsel for the Respondent in his arguments has brought out that the complainant is the sole proprietor of M/s Sahil Distributors, a sole proprietorship concern. The firm availed loan facility from the Appellants in the capacity of sole proprietor for business purpose. M/s. Sahil Distributors is sole source of subsistence and livelihood for the complainant. As per the terms and conditions, loan facility of Rs.4,50,00,000/- was sanctioned vide letter dated 11.12.2013 for overdraft and working capital needs. Later, vide letter dated 24.07.2014, it was reduced and was limited to Rs. 4 Crore. For granting the said loan facility, the Appellants took the Security Documents, including hypothecation of stocks, Book debts CRR of Stock and Book Debts etc as well as collateral Security Mortgage of number of properties. For conduct of transactions, two A/cs bearing No. 75105063438 and loan account A/c No. 20920015538 were opened. Prior to the review of the contract on 11.10.2014, on 10.10.2014, the account of the complainant had the debit balance of Rs. 97,33,471.80. He deposited Rs.3,99,59,840 and the account had a credit balance of Rs.3,02,26,368.20. Thus, he deposited the amount in accordance with the demand and in accordance with the review dated 11.10.2014 in time. The Complainant deposited Rs.3 Cr on 13.10.2014 as repayment of loan A/c No.20920015538 through transfer, mentioning the value date 12.10.2014 and Rs.94,315/- was debited in A/c No. 75105063438 as interest on the same day. Thus, entire amount with interest was paid to the OPs and no balance was due on the review on 11.10.2014 and he had credit of Rs.1,32,063.20. Thereafter, he sought the Appellants to review the loan facility on 18.09.2014. In the absence of reply, he availed loan facility from M/s Bajaj Finserve, arranged funds for repayment of balance due to OPs and deposited on 10.10.2014. Thus, there was a credit balance in the account as on 11.10.2014.

17.    After this payment, the OPs had no right to retain title deeds of immovable properties given as collateral securities. He sought OPs to immediately release the original documents. As there was no action, he made several requests. As no action was taken, vide letter dated 20.12.2014 he claimed damages @ Rs. 1,00,000/- per day. When there was no response, he claimed damages at @ Rs.1,00,000/- per day. The OPs illegally recovered from his account Rs. 8,98,880/- (Rs.8,00,000/- as pre-payment charges and Rs. 98,880/- as Service Tax), without any permission and concurrence and released the title deeds on 12.01.2015. Such unilateral recovery is illegal, unauthorized and misuse of their domination position and clearly comes within under the category of “deficiency” in service and “deficient service” of the OPs.

18.    We have examined the pleadings, associated documents placed on record, the citations referred by both the Parties and arguments advanced by the learned counsels for both the parties. The matter entails two main issues for adjudication. The first is whether the Complainant is a “Consumer” under the Consumer Protection Act; and whether the Appellant/Opposite Parties are entitled to charge Pre-Closure charges and Service Tax deducted.

19.    Adverting to the first issue, the definition of the term ‘Consumer’ as contained in Section 2(1)(d) of the Act of 1986 as it stood after the amendment Act of 2002, reads:

(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 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 self-employment;]                                   

(Emphasis supplied)

20.    While elaborately discussing the impact of amendments made to the definition of ‘Consumer’ in relation to exclusion of categories of activities as envisaged under the exception of commercial activity, particularly after the 2002 Amendment, the Hon’ble Supreme Court in Shrikant G. Mantri Vs. Punjab National Bank, Civil Appeal No.11397 of 2016 decided on 22.02.2022, held as under:-

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 self-employment, was 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 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 self-employment 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 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 Institute 6 (1995) 3SCC 583, 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 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 “business­to­ consumer” 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 “business­to­ business” disputes. It has been held that 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 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’ de-notes “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: 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 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]

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’ 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 self-employment” make the intention of the Parliament abundantly clear, that the goods bought must be used by the buyer himself, for earning his livelihood.

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 profit generating activity; that the identity of the person making the purchase or the value of the transaction is not conclusive for determining the question 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 self-employment” need not be looked into.

45. It could thus be seen, that when a person avails a service for a commercial purpose, to come within the meaning 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 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.

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 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 self­employment” 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 self­employment.

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.”

21.    The first issue in the case is whether the dispute pertaining to the terms of the agreement between the Parties to provide for the facility of overdraft and working capital to the business firm of the Complainant by the OPs constitutes a Consumer dispute under the Act? In this regard, as enunciated in the Act and clarified by the Hon’ble Supreme Court, the Act is mainly for the purpose of securing expeditious legal remedies to Consumers. As per Section 2(1) (d) of the Act, a Consumer is a person who buys goods or hires or avails services for consideration, except for commercial purposes. However, this exception has been expanded to a limited extent that, if such transactions are carried out for the purpose of earning livelihood, the individual undertaking such transaction will be considered as a Consumer.

22.    As regards the legal status of the Complainant, the Appellant asserted that the Complainant is not a Consumer as M/s Sahil Distributers is a commercial entity and involved entirely in commercial transactions. Therefore, the firm is not a Consumer for any relief from any Commission constituted under the Act.

23.    It is a matter of record that M/s Sahil Distributers, for which the Complainant is the sole Proprietor, was established on 01.02.1991 and is in the business of trading. The overdraft facility and the working capital facility were availed under the agreement in question alone was Rs.4.50 Crore. It is an admitted position that he opened an account with the Appellant Bank, took facility for overdraft and working capital mainly for the purpose of expanding business and thus profits. Subsequently, from time to time, the firm enhanced the overdraft facility to Rs. 4.5 Cr to further expand its business and earn profits. Therefore, the firm is a large entity, and its activities are inherently for commercial purpose and the relationship between parties was purely “Business to Business”. Thus, unless it is established that the Complainant was engaged in such transactions for his livelihood, the firm cannot be termed as a “Consumer” under the Act. Towards establishing its status as a Consumer within the scope of the Act, the Complainant repeatedly asserted that he is the Sole Proprietor of M/s Sahil Distributers’, and that the firm is his livelihood. He, however, did not support his contention in any manner with corroborating evidence.

24.    On the other hand, it is an admitted position of the Complainant itself that, towards progressing the grant of facility of overdraft and working capital from the Appellant Bank, the firm had provided Collateral Security Mortgage of the commercial property located at Shop No. A-1/13 and A-1/14 Automobile Nagar, Delhi Road, Jaipur and Commercial Property located at Shop No. A-9/24 and A-9/25, Automobile Nagar, Delhi Road, Jaipur, both owned by Shri Mankumar Kundliya, Sole Proprietor of M/s Sahil Distributors. Therefore, admittedly, in addition to the firm in question, which is involved in large commercial business transactions, the Complainant also has further significant independent commercial interests. In any case, the transactions in question between the Respondent/ Complainant and the Appellants/ OPs are exclusive business to business transactions.

25.    Therefore, analyzing the present case in terms of the principles evolved in Laxmi Engineering Case (Supra) by the Hon’ble Supreme Court differentiating between availing products/services for ‘earning livelihood’ vis-à-vis  ‘performing activities in large scale with the purpose of earning profits’, we are of the considered view that the availing of subject services from the Appellants in the present case  by the Respondent cannot be said to be for earning livelihood of the Respondent, and the same are  inherently commercial in nature and the relationship between the parties is purely “Business to Business” in nature. Further, the Appellant also has independent commercial interests. Therefore, the transactions are essentially for ‘Commercial Purpose’ and the case does not fall under the exceptions to the term ‘Commercial Purpose’ carved out in the definition of the term ‘Consumer’ under the statute.

26.    As regards the second issue whether the Appellants/ OPs are entitled to charge Pre-Closure charges and Service Tax deducted, it is an admitted position that the Respondent had entered into and utilized the subject facility with the Appellants Bank for a few years. Perusal of the Agreement dated 11.12.2013 between the parties vide which the Appellant granted overdraft facility and working capital demand loan for Rs.4.5 Crore indicates that the same was in vogue till 11.10.2014. After holding that the Complainant is not a Consumer under the Act, we restrain from examining the tenability of the deductions made by the Appellants from the Account of the Complainant/ Respondent.

27.    In view of the foregoing, the impugned order dated 20.02.2020 passed by the learned State Commission in C.C. No.131/2015 is set aside. The issue whether the Appellants/ Opposite Parties are entitled to charge pre-closure charges and service tax is not a matter for adjudication by this Commission. Accordingly, the Complainant is granted liberty to avail its legal remedy by approaching appropriate forum, having jurisdiction to decide the matter. 

28.    In the result, the First Appeal No.489/2020 is allowed.  There shall be no order as to costs. All pending Applications, if any, shall stand disposed of. The statutory amount deposited by the Appellants, if any, may be disposed of as per law.