Calcutta High Court: A revision application was filed by The Branch Manager, Uttarbanga Kshetriya Gramin Bank along with connected revisional applications by the farmers and the Jute Corporation of India (JCI), seeking to challenge the orders of the District Consumer Commission, State Commission, and National Commission, which had held the bank and JCI liable for deficiency in service and granted compensation to the farmers. Debangsu Basak, J., held that the bank in the facts and circumstances of the present case, cannot be foisted with the liability for alleged deficiency of service on the ground that it failed to sell the pledged goods as the bank did not initiate any recovery proceedings.
The dispute originated when certain jute farmers approached the respondent bank for credit facilities by pledging warehouse receipts of jute goods. The loans were sanctioned and disbursed on the strength of such pledged receipts. At the relevant time, there was also a Central Government scheme under which the Jute Corporation of India was expected to provide Minimum Support Price to jute farmers. The farmers, however, failed to repay the loans even after recall notices were issued. The pledged jute goods were not sold by the bank, and no further recovery steps were initiated thereafter.
Aggrieved, the farmers approached the District Consumer Forum alleging deficiency in service by both the bank and JCI. Their case was that the bank’s failure to sell the pledged goods in time resulted in loss, and JCI’s failure to purchase the jute under the MSP scheme prevented them from repaying their dues. The District Commission allowed the claims, directed recovery of loan amounts from the farmers, and awarded compensation on the ground of deficiency in service. The appeals before the State Commission were dismissed, and the National Commission concurred. Even the Special Leave Petition before the Supreme Court was disposed of with liberty to approach the High Court, leading to the present revisional applications.
The Court observed that the bank could not be held liable for deficiency merely for not selling pledged goods, since the clause permitting sale was meant only to mitigate damages in case of default, and significantly, the bank had not initiated any recovery proceedings at all. The Court noted that without recovery steps, the question of failure to mitigate loss did not arise. The Court further stated that JCI’s liability also could not be sustained because it was not established, even on a preponderance of probabilities, that the farmers had actually offered the pledged goods for sale to JCI at MSP.
The Court noted that as per Section 2(o) of the Consumer Protection Act, 1986 “service” means service of any description which is made available to potential [users and includes, but not limited to, the provision of] facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both, [housing construction], entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service.”
Thus, the Court held that JCI rendered no “service” within the meaning of the Act, since it charged no fee and services rendered free of charge fall outside consumer jurisdiction. Accordingly, the Court held that the decisions of the District Commission, State Commission, and National Commission were unsustainable and set them aside, disposing of all revisional applications.
[Uttarbanga Kshetriya Gramin Bank v. Dulal Ch. Chandra, 2025 SCC OnLine Cal 10727, decided on 26-11-2025]