SHRIKANT G. MANTRI v. PUNJAB NATIONAL BANK,

4. In March 2001, the complainant approached the opposite party bank for temporary increase in his over draft limit. The opposite party bank vide its letter dated 17.03.2001 temporarily enhanced the over draft sanction to the complainant from rupees five crore to rupees six crore for one week.

5. Somewhere around 3^rdweek of March 2001, due to steep fall in share market, there was a steep erosion in the value of the shares pledged by the complainant with the opposite party as security, resulting in shortfall in the security viz-a-viz overdraft facility enjoyed by the complainant. The opposite party thus vide its letter dated 16^th& 17^thMarch, 2001, called upon the complainant to pledge additional shares to secure over draft account. The complainant met the opposite party and explained that he was not having additional shares on the approved list of the opposite party and offered to pledge 37,50,000/- equity shares of face value of Rs.10/- of unlisted company Ansal Hotels Ltd. against the over draft account. It is pertinent to note that subsequently consequent upon the merger of Ansal Hotels Ltd. with ITC Ltd. and the bonus and splitting of ITC shares, the aforesaid shares of 37,50,000 equity shares of Ansal Hotels Ltd. are equivalent to 3,75,000 shares of ITC Ltd.

6. According to the complainant, the opposite party vide its letter dated 23.03.2001, renewed the overdraft facility of the complainant upto February 28, 2002. Thereafter, the complainant vide its letter dated 30.03.2001 in accordance with offer made earlier handed over 37,50,000 shares of Ansal Hotels Ltd. to the opposite party bank by way of a security towards overdraft facility.

7. That after furnishing of additional security due to sustained downfall in the price of pledged shares and decrease in the share market, the over draft account of the complainant became irregular. The opposite party thus called upon the complainant to regularize the overdraft account. As the complainant was unable to regularize the overdraft account, the opposite party bank in its letter dated 14.09.2001 called upon the complainant to pay a sum of Rs.600.16 lakhs to the opposite party bank alongwith interest thereon.

8. It is the case of the complainant that in response to the demand, complainant advised the opposite party bank to sell pledged shares in December 2001 so as to close over draft account. However, the opposite party bank chose not to sell the shares at that point of time. It is alleged that had the opposite party resorted to sale of the pledged shares in December 2001, it would have yielded the amount in excess of the outstanding amount in the over draft account of the complainant.

9. That the opposite party finally contrary to the advice of the complainant arbitrarily sold a part of the pledged shares somewhere around November 2002 when the market value of the shares pledged was at the lowest and this resulted in huge loss to the complainant.

10. After selling a part of the pledged shares for sum of Rs.2,89,66,215.79/-, the opposite party filed Recovery Petition before the DRT Mumbai against the complainant for recovery of the balance amount due from the complainant as on 26.12.2002. The said petition was decreed by DRT vide order dated 26.05.2004. The opposite party, thereafter, initiated recovery proceedings. It is alleged that matter, however, was settled between the parties and one time settlement was reached between the parties on payment of rupees one crore made by the complainant on or about March / April 2005. The opposite party issued a No Objection

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Certificate dated 14.05.2005 certifying that no dues were left outstanding against the over draft account of the complainant.

11. It is further alleged that pursuant to the settlement, all that remained to be done was release of two sets of unsold pledged shares i.e. the above noted shares of Ansal Hotels Ltd. and 4,20,000 shares of First Custodian Fund ( India) Ltd. which shares were still lying unsold because those pertain to an unlisted company. The opposite party returned the shares of First Custodian Fund ( India) Ltd. to the complainant but failed to return 37,50,000 unlisted equity shares of Ansal Hotels Ltd. to the complainant.

12. That the opposite party after aforesaid one time settlement withdrew the recovery proceedings filed before the Recovery Officer DRT-I Mumbai and the recovery proceedings were closed vide order dated 10.06.2005 of the Recovery Officer. Thereafter, the complainant sent a notice dated 14.06.2005 to the opposite party bank seeking release of above noted equity shares of Ansal Hotels Ltd. ( equivalent to 3,75,000 shares of ITC Ltd. consequent upon merger of Ansal Hotels Ltd. with ITC Ltd. and subsequent bonus and splitting)

13. Sometime around October 2001, the opposite party initiated Arbitration Proceedings against the complainant before the Arbitration forum of the Stock Exchange Mumbai in respect of certain alleged transactions in securities. In the arbitration proceedings, it was alleged by the opposite party that above noted 37,50,000 shares of Ansal Hotels Ltd. were pledged by the complainant as security in respect of the alleged transaction in securities through the brokerage of the complainant. The BSE Arbitral Tribunal vide award dated 27.04.2004 dismissed the claim of the opposite party. The appeal filed by the opposite party before the Appellate Tribunal of BSE was also dismissed. The opposite party, thereafter filed Arbitration Petition No. 437 of 2004 before the High Court of Mumbai challenging the award. The said arbitration petition was initially dismissed as withdrawn and original reference was allowed to be withdrawn with liberty vide order dated 30.08.2005 of Mumbai High Court. The complainant filed an appeal challenging the withdrawal of original reference with liberty to file arbitration proceedings. In the said appeal, the order dated 30.08.2005 allowing withdrawal of original reference with liberty was set aside and the matter was remitted to hear the arbitration petition which was still pending at the time of complaint.

14. It is alleged that when the opposite party had failed to cooperate, complainant filed an application under section 9 of the Arbitration and Conciliation Act, 1996 before Mumbai High Court being Arbitration Petition No. 256/2005 which petition was subsequently withdrawn due to the objection raised by the opposite party that the High Court had no jurisdiction to entertain such application under section 9 of the Arbitration and Conciliation Act.

15. As the opposite party has failed to release the subject shares of Ansal Hotels Ltd. , the complainant has approached this Commission alleging deficiency in service on the part of the opposite party bank with following prayer:

(a) That it may be declared that the Opposite Party have indulged in deficiency in service by not returning the said 3,75,000 shares of ITC Ltd. ( earlier 37,50,000 shares of Ansal Hotel Ltd.) with all accruals;

(b) That the Opposite Party may be directed to forthwith return 3,75,0000/-

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shares of ITC Ltd ( earlier 37,50,000 shares of Ansal Hotel Ltd.) and dividend of Rs.7,75,000 to the Complainant together will all accretions thereon including all rights, bonuses and dividends to the complainant and directly to all such things as are necessary for transfer thereof in favour of the complainant; (c ) That in the alternative to the dividend only in the event the Opposite Party has sold the said 3,75,000 shares of ITC Ltd ( earlier 37,50,000 shares of Ansal Hotel Ltd.) or any part thereof then the opposite party may be ordered and directed to forthwith pay a sum of Rs.7.50 crores ( being the Present market price of the said shares as also the accrued dividend thereof on Rs.7,75,000) together with interest thereon @ 18% p.a. from the date hereof till payment and / or realization thereof;

(d) Pending the hearing and final disposal of the above complaint, the Opposite Party be restrained by an Order of injunction from in any manner selling, dealing or disposing of the said 3,75,000 shares of ITC Ltd. ( earlier 37,50,000 shares of Ansal Hotel Ltd.) and all accruals thereon;

(e ) For Costs;

(f ) For such further and other reliefs as the case may require." 15-A. The opposite party on being served with the notice of complainant has filed written statement resisting the claim on merits. The opposite party also raised a preliminary objection that the consumer complaint is not maintainable as the complainant is not a "consumer" as envisaged under section 2 (1) (d) of the Consumer Protection Act, 1986 ( in short, the Act). It was also pleaded that complaint is not maintainable as the issue pertaining to subject shares of Ansal Hotels Ltd. at the time of filing of complaint was already subjudice before the Hon'ble High Court of Mumbai in Arbitration Petition No. 437/2004.

16. We have heard learned counsel for the parties and perused the material on record.

17. So far as maintainability of the complaint is concerned, the foremost question which needs consideration is whether the complainant is a "consumer" as defined under section 2 (1)

(d) of the Act, 1986. The relevant provision is reproduced as under:

(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

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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 purposes;

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."

18. Reading of Section 2 (1) (d) (i) & (ii) makes it clear that consumer is a person who buys any goods or hires or avails of any service for consideration but does not include a person who bought goods or hires or avails of services for any commercial purpose..

19. On careful perusal of record, we find that complainant admittedly is a member of stock exchange Mumbai and he has been engaged in the business of stock brokerage. It also the admitted position that complainant opened the account with the opposite party bank and took over draft facility which was increased from time to time in furtherance of his business as a stock broker and for the aforesaid purpose, he had pledged the share certificates as security with the bank. Thus, it is obvious that complainant had hired / availed of service of the opposite party bank for commercial purpose and as such in view of the built in exception carved out in the definition of consumer, the complainant cannot be termed as consumer.

20. Learned counsel for the complainant in order to wriggle out of the situation has drawn our attention to the averments made in para 1 of the complaint and submitted that complainant had availed of service of the opposite party bank exclusively for the purpose of earning his livelihood as a share broker by means of self employment. Therefore, in view of restricted meaning given to the term "Commercial Purpose" in the definition of consumer, the complainant is squarely covered under the definition of "consumer" and is a consumer for the purpose of the Act. In support of this contention, learned counsel for the complainant has relied upon the judgment of the Supreme Court in the matter of Laxmi Engineering Works Vs. PSG industrial Institute (1995) 3 SCC 583.

21. In the matter of Laxmi Engineering Works ( supra), Hon'ble Supreme Court while dealing with scope of Section 2 (1) (d) of the Act has observed as under:

" 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

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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 af441firming the said view and more particularly with a view to obviate any confusion the expression "large-scale" is not a very precise expression the 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 earing 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 emphasis 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.

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It is argued by the learned counsel for the appellant that such a narrow construction may not be warranted by the scheme and object of the enactment. He says that there may be a widow or an old or invalid man who may have no other means of livelihood and who purchases an auto-rickshaw or a car or other machinery to be plied or operated by another person either on payment of consideration on a daily, weekly or monthly basis or as a servant or agent. While there is certainly 442some logic in the said submission it cannot be accepted in view of the language of the explanation. We are also of the opinion that the definition of the expression " person" in Section 2(m) as including a firm (whether registered or not), a Hindu undivided family, a co-operative society or any other association of persons (whether registered under the Societies Registration Act, 1860 or not) makes no difference to the above interpretation. If a firm purchases the goods, the members of the firm should themselves ply, operate or use the goods purchased. Same would be the case of purchase by Hindu Undivided Family, cooperative society or any other association of persons. Reference in this behalf may be made to the definition of the expression "consumer" in Section 20(6) of the Consumer Protection Act, 1987 of United Kingdom. It reads thus:

"Consumer" - (a) in relation to any goods means any person who might wish to be supplied with the goods for his own private use or consumption;

(b) in relation to any services or facilities, means any person who might wish to be provided with the services of facilities otherwise than for the purposes of any business of his; and

(c) in relation to any accommodation, means any person who might wish to occupy the accommodation otherwise than for the purposes of any business of his:"

. This definition is undoubtedly narrower than the definition in our Act. The English Act requires that to be a consumer in relation to any goods, a person must put the goods for his own private use or consumption. Notwithstanding this difference in definition, the object of both the enactments appears to be the same, to protect the consumer from the exploitative and unfair practices of the trading and manufacturing bodies and to provide him with an easily accessible, inexpensive and speedy remedy for the wrong suffered by him".

22. On careful reading of the above noted judgment, we find that Hon'ble Supreme Court has categorically observed that question what is "Commercial Purpose" is a question of fact to be decided on the facts of each case. The question which needs answer, therefore is whether the complainant availed of services of the opposite party bank exclusively for earning his livelihood by way of self employment?

23. In order to find answer to this question, it would be useful to have a look on the stand of the complainant in his complaint. In para 1 of the complaint, the complainant has alleged as under:

"The Complainant is a member of Stock Exchange, Mumbai and for earning his livelihood as share broker. The Complainant is a self employed person who had

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availed the services of the opposite party / erstwhile Nedungadi Bank exclusively for the purposes of earning his livelihood as a broker by means of self-employment."

24. On reading of the above, it is clear that stand of the complainant is that he is a member of Stock Exchange and is a self employed person who earn his livelihood as a share broker and that the complainant had availed of services of the opposite party bank exclusively for the purpose of earning his livelihood as a broker. The averment itself is not sufficient to bring the complainant within the four corners of the Explanation to Section 2 (1) ( d) of the Act which gives a restricted meaning to the term " Commercial Purpose". In order to get benefit of the Explanation, the complainant is required to prove that he availed of services of the opposite party bank exclusively for earning his livelihood by way of self employment. The term

"exclusively" used in the Explanation clearly means that the services ought to have been availed only for earning livelihood by way of self employment. There is a marked difference between availing of service for earning livelihood vis-à-vis an effort to expand an existing business to increase income or to generate extra wealth.

25. In the instant case, it is undisputed that the complainant who was working as Stock Broker in his capacity as member of Mumbai Stock Exchange opened an account with the opposite party bank and took overdraft facility to expand his business profits which over draft facility was increased at the instance of the complainant from initial rupees one crore to rupees six crores against the security including pledging of shares. Thus, it is clear that complainant had availed of services of the opposite party bank i.e. over draft facility against the security of shares with the intention to expand his business and increase his business profits. Therefore, it cannot be said that complainant had availed of services of the opposite party exclusively for the purpose of earning his livelihood by way of self employment. Thus, in our view, Explanation to the definition of term "consumer" in Section 2 (1) (d) of the Act is of no avail to the complainant.

26. In view of the discussion above, we are of the opinion that complainant is not a consumer as envisaged under section 2 (1) (d) of the Act because he had availed of the services of the opposite party bank for commercial purpose. As the complainant is not a consumer, he cannot invoke jurisdiction of consumer Fora by raising a consumer dispute. Thus, the instant complaint does not fall within the jurisdiction of this Commission. Complaint is accordingly dismissed. Complainant shall be at liberty to avail of his remedy by approaching appropriate forum having jurisdiction.

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AJIT BHARIHOKE

PRESIDING MEMBER

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REKHA GUPTA

MEMBER

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