Supreme Court: In an appeal challenging order of the National Consumer Disputes Redressal Commission (NCDRC), dated 13 March 2023, whereby the consumer complaint of the appellant was dismissed on the ground that the complainant-appellant was not a consumer as per Section 2(1)(d) of the Consumer Protection Act, 1986 (Consumer Protection Act), a Division Bench of Pamidighantam Sri Narasimha and Manoj Misra,* JJ., upheld the impugned order, holding that although the reasoning adopted by the NCDRC regarding the commercial purpose of the deposit was not entirely correct, the dismissal of the complaint was nevertheless justified because the dispute involved serious allegations of fraud and disputed facts unsuitable for summary consumer proceedings.
Factual Matrix
In the instant matter, the appellant filed a consumer complaint against respondent alleging deficiency in banking service. The appellant had invested ₹9 crores in a fixed deposit (FR) with the respondent bank for 1 year starting from 28 February 2014, for which a fixed deposit receipt (FDR) was issued, and interest was credited after deduction of TDS.
Subsequently, the appellant received a communication from the respondent bank stating that an overdraft facility of ₹8.10 crores had been sanctioned against the FDR, which according to the appellant was done without authorization. Suspecting fraud, the appellant lodged a complaint with the Economic Offences Wing and requested the respondent bank to reverse the overdraft entries. The respondent bank refused and later adjusted the maturity value of the FDR towards the overdraft dues and remitted the balance amount.
The appellant did not accept the adjustment and filed a complaint before the NCDRC seeking refund of the entire deposit with interest and compensation. The NCDRC dismissed the complaint holding that the appellant was not a consumer under Section 2(1)(d) of the Consumer Protection Act as the deposit had a commercial purpose. Aggrieved, the appellant approached the Supreme Court.
Moot Points
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Whether a body corporate, while availing services of the respondent bank to deposit its surplus funds in an interest bearing term deposit, such as an FDR, could be considered a consumer as defined in Section 2(1)(d), Consumer Protection Act?
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Whether the nature of allegations made in the complaint were such that they took the claim outside the purview of proceedings under the Consumer Protection Act?
Court’s Analysis
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Whether a company is consumer
The Court examined the definition of consumer under Section 2(1)(d), Consumer Protection Act and observed that the expression “person” includes a body corporate, and therefore a company is not excluded from the category of consumers merely because of its corporate status.
Relying on earlier precedents, including Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers, (2020) 2 SCC 265 and National Insurance Co. Ltd. v. Harsolia Motors, (2023) 8 SCC 362, the Court reiterated that there is no straight-jacket formula for determining commercial purpose. Each case must be decided on its own facts, considering the nature of the transaction and the intention behind it. The crucial test is the dominant purpose of the transaction, whether the goods purchased or services availed have a direct nexus with profit-generating activity, i.e., whether it is for a commercial purpose or not, one has to look at the dominant object or purpose with which those goods are purchased or services are availed.
The Court held that “the status of the purchaser or recipient of goods or services, that is, whether it is an individual or a body corporate, is not the determining factor for holding whether the transaction is, or is not, for a commercial purpose.”
The Court also noted that the burden to prove that the transaction was for a commercial purpose lies on the respondent once the complainant shows that services were availed for consideration.
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Whether Deposit in Bank is Commercial Purpose
The Court held that accepting deposits and paying interest is the most basic banking service, and mere earning of interest on a deposit does not automatically make the transaction commercial. A deposit may be made for safe custody, statutory compliance, or convenience, and therefore the fact that interest is earned cannot by itself establish a commercial purpose. Hence, the Court disagreed with the NCDRC’s assumption that earning interest on a deposit necessarily indicates a commercial purpose.
However, the Court clarified that where the deposit is used to leverage credit facilities for business use, the transaction may have a direct nexus with profit generation and may amount to availing service for a commercial purpose. “In that scenario, the service recipient may not fall in the category of a consumer unless he brings his case within the four corners of the Explanation to Section 2(1)(d), Consumer Protection Act.”
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Maintainability of complaint under Consumer Protection Act
The Court reiterated that proceedings under the Consumer Protection Act are summary in nature and are intended for speedy redressal of consumer disputes. Where the complaint involves allegations of fraud, forgery, criminal conduct, or complicated questions of fact, such disputes should ordinarily be decided in civil or criminal proceedings and not by consumer forums.
The Court noted that in the present case, the bank claimed that the FDR had been pledged for an overdraft facility, whereas the appellant alleged fraud. The Court stated that since the core dispute was whether the FDR had been fraudulently pledged or validly used for overdraft. This issue required detailed examination of evidence and could not be determined in summary jurisdiction.
Consequently, the Court held that the complaint could not be properly adjudicated under the Consumer Protection Act as those allegations could appropriately be addressed in a regular criminal or civil proceeding. Hence, the complaint as framed is not maintainable.
Court’s Decision
The Court held that NCDRC was justified in dismissing the complaint even though the reasons recorded by it for such dismissal, that may not be entirely correct. Accordingly, the Court dismissed the appeal as it lacks merit.
The Court clarified that dismissal of the complaint should not be a bar on the right of the appellant to take recourse to appropriate proceedings before appropriate court/forum.
[Sant Rohidas Leather Industries and Charmakar Development Corpn. Ltd. v. Vijaya Bank, Civil Appeal No. 4841 of 2023, decided on 19-3-2026]
*Judgment by Justice Manoj Misra
