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Metco Export International (S) v. Federal Bank Limited And Others (S).

National Consumer Disputes Redressal Commission

Feb 6, 2018

Judgment

Subsequent
References

CaseIQ

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Concise Analytical Summary of the Opinion

Factual and Procedural Background

The appellant, M/s. Metco Export International, filed this first appeal against the order dated 10.12.2013 of the State Consumer Disputes Redressal Commission, Maharashtra, Pune in C.C. No.11/42. The State Commission had dismissed the appellant's consumer complaint at the admission stage, holding that the complainant was not a "consumer".

Material facts as set out in the opinion:

The appellant is an export company that exported five containers of sesame seeds to Italy by invoice dated 13.11.2008 for US$141,375 and shipped via Airway Bill dated 26.11.2008.
All shipping documents were deposited with respondent no.1 (a bank), which forwarded them to respondent no.2 to send to the buyer's banker in Italy through respondent no.3 (a courier company).
The buyer in Italy did not receive the documents; the documents were lost in transit and the buyer denied receipt, which prevented the buyer from taking delivery.
As a result, demurrage was levied on the appellant. The appellant obtained duplicate documents and sold the goods to another buyer in Poland at a lower price (US$135,525), incurring a loss from the price decline, paid transport costs from Italy to Poland of Euro 6,220, and demurrage of Rs.53,842.
The appellant sent a legal notice dated 05.06.2010 to respondent no.1 and received a reply dated 29.07.2010. The appellant also learned that respondent no.1 had debited Rs.5,59,621 from his account as commission charges.
The appellant filed consumer complaint CC/11/42 before the State Commission. The State Commission did not admit the complaint and rejected it in limine on 10.12.2013, concluding that the complainant was not a consumer. The appellant appealed that decision.

Legal Issues Presented

Whether the appellant (an export company) is a "consumer" within the meaning of the Consumer Protection Act, 1986 for the purpose of a complaint against the bank and other respondents for loss of shipping documents and related consequences.
Whether the services provided by the bank (forwarding of documents) and other respondents were services availed for a "commercial purpose" such that the appellant would be excluded from the definition of consumer.

Arguments of the Parties

Appellant's Arguments

The State Commission dismissed the complaint at the admission stage observing that services were availed for commercial purpose; appellant contends this was incorrect.
Banking services are included within the definition of "service" under Section 2(1)(o) of the Consumer Protection Act, 1986; therefore persons availing banking services are consumers.
The complainant paid bank charges and availed the bank's services and thus qualifies as a consumer.
Relied on precedents including this Commission's judgment in Canara Bank v. M/s. Jain Motor Trading Company and decisions such as Harsolia Motors and Madan Kumar Singh to support the contention that commercial concerns are not per se excluded from being consumers.

Respondent No.1 (Bank)'s Arguments

Respondent no.1 stated it sent the documents to respondent no.2 and discharged its duty; any failure thereafter was not its deficiency.
Asserted that the complainant availed services for commercial purpose and therefore is not a consumer. Relied on Branch Manager, Punjab National Bank v. M/s. Bhaskar Textiles and the Supreme Court decision in Laxmi Engineering Works v. P.S.G. Industrial Institute.

Respondent No.2's Arguments

Respondent no.2 contended its role was limited to forwarding documents to respondent no.3 and implied no further liability for loss in transit.

Respondent No.3 (Courier Company)'s Arguments

Respondent no.3 contended it delivered documents at the assigned address and there was no deficiency in service.
Argued its liability is limited to the maximum amount agreed between respondent no.2 and respondent no.3 under the courier contract and that liability is not related to the value of the documents or the consequential loss suffered by the appellant. Relied on Bharathi Knitting Company v. DHL Worldwide Express Courier Division of Airfreight Ltd.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Canara Bank v. M/s. Jain Motor Trading Company (2013 SCC OnLine NCDRC 656)	Authority indicating commercial concerns are not per se excluded from filing complaints under the Consumer Protection Act if the activity does not involve direct generation of profits or resale.	Referenced by appellant's counsel to support the proposition that a commercial firm can be a consumer; the opinion cites this as part of the broader jurisprudence considered.
Harsolia Motors v. National Insurance Company Ltd. [I (2005) CPJ 27 (NC)]	Discussion on what constitutes "commercial purpose"—profit generation as a main criterion.	The Court relied on the Commission's observations in Harsolia Motors to support the view that "commercial purpose" requires direct generation of profit and that not all activities by commercial concerns fall outside the Act.
Madan Kumar Singh v. District Magistrate, Sultanpur [(2009) 9 SCC 79]	Cited as part of settled law on the Act's scope (referenced in the opinion as supporting authority).	Referenced among authorities showing that commercial purpose depends on facts; used as part of the chain of precedent considered by the Court.
Branch Manager, Punjab National Bank v. M/s. Bhaskar Textiles (R.P. No.2533 of 2013, decided 29.10.2014)	Holds that where services are availed in relation to a commercial business transaction, complainants are not covered within the definition of "consumer".	Referred to by respondent no.1 to support the argument that the complainant's use of bank services was for commercial purpose; the Court considered this authority but distinguished it on facts.
Laxmi Engineering Works v. P.S.G. Industrial Institute ((1995) 3 SCC 583)	Establishes that whether a purpose is "commercial" depends on the facts and circumstances of each case.	The Court invoked this Supreme Court landmark judgment to emphasize that "commercial purpose" must be determined on facts; this supported the Court's fact-specific analysis.
Regional Provident Fund Commissioner v. Shiv Kumar Joshi (2000) 1 SCC 98	Explains the combined reading of definitions of "consumer" and "service" and indicates services of commercial and trade-oriented nature are contemplated by the Act; persons hiring services for consideration may be consumers.	The Court relied on this precedent to show that even services connected to commercial activity may fall within the Act; it supported the conclusion that the bank's forwarding of documents could still bring the complainant within the Act.
Bharathi Knitting Company v. DHL Worldwide Express Courier Division of Airfreight Ltd. (AIR 1996 SC 2508)	Holds that liability under contract between parties (e.g., courier terms) may limit the respondent's liability; National Commission limited liability to the extent undertaken by the respondent.	Referred to by respondent no.3 to support the proposition that courier liability may be contractually limited; the Court considered this as part of the parties' submissions on limitation of liability.

Court's Reasoning and Analysis

The Court framed the central question as whether the appellant is a "consumer" within the meaning of the Consumer Protection Act, 1986. The reasoning proceeded in these steps, as set out in the opinion:

Statutory scope: The Court noted that banking services are covered under Section 2(1)(o) of the Consumer Protection Act, 1986 and therefore services provided by banks fall within the Act's definition of "service".
Review of precedent: The Court examined authorities (including Laxmi Engineering Works v. P.S.G. Industrial Institute and Regional Provident Fund Commissioner v. Shiv Kumar Joshi) to establish that whether services are for a "commercial purpose" depends on the facts and circumstances, and that the Act can cover services connected with commercial activity.
Meaning of "commercial purpose": The Court relied on the approach in Harsolia Motors to identify generation of profit from goods/services as the main criterion for "commercial purpose". The Court emphasized that goods/services used in activities not directly intended to generate profit may not amount to a commercial purpose that excludes the Act.
Application to facts: The Court analyzed the specific service in issue — the bank's forwarding of documents — and concluded that dispatch of papers by the bank itself does not directly generate profit for the appellant; any profit would arise from sale and dispatch of the exported goods, not from the mere forwarding of documents.
Conclusion from analysis: Taking a wider view and applying the cited authorities, the Court held that the appellant's availing of the bank's forwarding service fell within the ambit of the Act's definition of "consumer" (Section 2(1)(d)).
Remedial direction: Because the State Commission had dismissed the complaint at the admission stage on the ground that the complainant was not a consumer, the Court set aside that order and remanded the matter to the State Commission to decide the complaint on merits treating the complainant as a consumer. The Court directed restoration of the complaint to its original number and the parties were directed to appear before the State Commission on 22.03.2018.

Holding and Implications

Core Holding: The Court held that the appellant is a "consumer" within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986, and accordingly First Appeal No.42 of 2014 is allowed and the order of the State Commission dated 10.12.2013 is set aside.

Implications and direct consequences:

The matter is remanded to the State Commission for adjudication on merits treating the complainant as a consumer; the complaint is to be restored to its original number and proceeded with according to law.
The immediate effect on the parties is that the appellant's complaint will be considered on merits by the State Commission rather than being dismissed in limine on the ground of non-consumer status.
The opinion applies existing precedent to the particular facts and does not purport to lay down a novel general rule beyond applying established principles that the determination of "commercial purpose" is fact-sensitive. The decision therefore operates to allow adjudication on merits in this case; the opinion does not state that it creates a new precedent beyond its factual application.

Order information in the opinion: Parties were directed to appear before the State Commission on 22.3.2018. The opinion was delivered by Prem Narain, Presiding Member.

Show all summary ...

This first appeal has been filed by the appellant, M/s. Metco Export International against the order dated 10.12.2013 passed by the State Consumer Disputes Redressal Commission, Maharashtra, Pune (for short, State Commission) in C.C. No.11/42 filed by the appellant/complainant wherein the complaint has been dismissed on the ground that the complainant is not a consumer. The brief facts of the case are that appellant/complainant is an export company which2. exported to Italy 5 containers of sesame seeds vide Invoice dated 13.11.2008 for US $ 1,41,375/-. The material was exported vide Airway Bill dated 26.11.2008. All documents were deposited with respondent no.1 and respondent no.1 had forwarded the same to the respondent no.2 to be forwarded to the said buyers banker in Italy through the respondent No.3 Courier Company. However, the buyer did not receive the documents and the documents were lost somewhere in transit. The appellant came to know of this fact when he contacted the buyer and he denied receiving all documents. Due to this the buyer could not take the material and the demurrage charges was levied on the appellant. Later on, the complainant got duplicate papers prepared and got another buyer in Poland but by that time, the international price of sesame seeds had declined and therefore, he suffered a loss on that account as well and he sold the items for US $ 1,35,525 only. Moreover, the complainant had to spend Euro 6220 for transporting the material from Italy to Poland. He has also paid demurrage charges of Rs.53,842/-. The complainant issued a legal notice dated 5.6.2010 to the OP No.1/respondent no.1 and he received a reply dated 29.7.2010 from respondent no.1. The complainant also came to know that respondent no.1 has debited his account for Rs.5,59,621/- as charges for commission. Then the complainant filed a consumer complaint no.CC/11/42 before the State Commission. It seems that the State Commission issued notice, however, it is not clear whether the complaint was admitted before that date or not. It seems from the order dated 20.11.2013 wherein the OP-1 had filed their reply opposing the admission of the complaint that the complaint was not admitted by then. The impugned order dated 10.12.2013 also states that the complaint is not admitted and rejected in limini. . Hence, the present appeal.3 . Heard the learned counsel for the parties and perused the record.4 Learned counsel for the appellant states that the complaint has been dismissed at admission5. stage in limini observing that the complainant is not a consumer as the service of the OPs was availed for commercial purpose. It was emphasized by the learned counsel that banking service is included in the definition of Service under Section 2(1)(o) of the Consumer Protection Act, 1986 and anybody who avails the services of the Bank is a consumer. Learned counsel further stated that the complainant has availed the service of the Bank after paying the due charges to the Bank and therefore, complainant is a consumer. In support of his arguments, learned counsel referred to the judgment of this Commission in Canara Bank Vs. M/s. Jain Motor Trading Company, wherein it has been observed: 2013 SCC OnLine NCDRC 656 (2013) 646 We also do not accept the contention of Counsel for Appellant /bank that Respondent being a commercial firm is not a consumer as per the provisions of the Consumer Protection Act, 1986. Commercial concerns per se are not excluded from filing a complaint under the Consumer Protection Act, 1986 if it does not involve direct generation of profits or resale. Also as stated in the instant case, the OCC facility was sought from Appellant/bank to help resolve the financial difficulties being faced by Respondent which was not per se a commercial activity generating profits. As pointed out by Counsel for Respondent, these aspects are well settled in a number of judgments, including of this Commission as also of the Honble Supreme Court e.g. Harsolia Motors v. National Insurance Company Ltd. [I (2005) CPJ 27 (NC) and Madan Kumar Singh v. Distt. Magistrate, Sultanpur [(2009) 9 SCC 79]. Further , learned counsel referred to the judgement of this Commission in the matter 6. M/s. Harsolia Motors Vs. M/s. National Insurance Company Ltd. [F.A. No.159 of 2004 and others, to support his assertion that the appellant/complainant is a consumer. This decided on 3.12.2004] Commission observed as under: . 23 Further, from the aforesaid discussion, it is apparent that even taking wide meaning of the words for any commercial purpose it would mean that goods purchased or services hired should be used in any activity directly intended to generate profit. Profit is the main aim of commercial purpose. But, in a case where goods purchased or service hired in an activity which is not directly intended to generate profit, it would not be commercial purpose. . On the other hand, the learned counsel for respondent no.1 stated that respondent no.1 had7 sent the documents to respondent no.2 and it was the duty of the respondent no.2 to send it to the concerned buyer. Thus, so far as the services of respondent no.1 are concerned, they have duly discharged their duties successfully. Thus, there is no deficiency on the part of respondent no.1. However, it is necessary to point out that the complainant is not a consumer as rightly held by the State Commission. The learned counsel argued that the services of respondent no.1 have definitely been availed for the commercial purpose. In support of his arguments, learned counsel for respondent no.1 referred to the judgment in The Branch Manager, Punjab National Bank Vs. M/s. Bhaskar Textiles, R.P. No.2533 of 2013 and another, decided on 29.10.2014 by this wherein it is held that: Commission, Admittedly both the respondents firms are in the business of textile product and they sent the goods sold by them to M/s. Sharda Traders by transport and the papers were allegedly sent through the petitioner Bank who was required to collect the payment before releasing bilties to M/s. Sharda Trader. From this it is evident that the services of the petitioner was availed by both the respondents complainants in relation to commercial purpose i.e. their business transaction. Therefore, in our considered view, the respondents are not covered within the definition of consumer. As such, they could not have maintained the consumer complaint. In our aforesaid view, we are supported by the judgment of Supreme Court in the matter of Laxmi Engineering Works Vs. P.S.G. Industrial Institute (1995) 3 SCC 583. The State Commission while deciding the appeal has ignored this fact. Therefore, the impugned order cannot be sustained. . Learned counsel for respondent no.2 stated that the role of respondent no.2 was very limited8 and it only forwarded the documents to respondent no.3 to deliver to the buyer. . Learned counsel for respondent no.3/Courier Company stated that it delivered the documents9 at the assigned address and there was no deficiency in service on behalf of respondent no.3 as the documents were rightly couriered. It was further argued by learned counsel for respondent no.3 that the liability of respondent no.3 would be limited to the maximum amount agreed between the respondent no.2 and respondent no.3 as per the terms of courier service and it has no relationship with the value of documents or any loss suffered. To support his contention, the learned counsel relied upon the judgment in the matter Bharathi Knitting Company Vs. DHL Worldwide wherein the Apex CourtExpress Courier Division of Airfreight Ltd., AIR 1996 SC 2508 opined as under: In view of the above consideration and findings, we are of the opinion that the National Commission was right in limiting the liability undertaken in the contract entered to by the parties and in awarding the amount for deficiency in service to the extent of the liability undertaken by the respondent. I have given a thoughtful consideration to the arguments advanced by the learned counsel10. for the parties and have examined the material on record. . The State Commission has dismissed the complaint filed by the appellant herein on the11 ground that the complainant was not a consumer as he had availed the services of the OPs for commercial purpose. Hence, the basic question to be decided in the present appeal is whether the appellant is a consumer or not as per the definition given in the Consumer Protection Act, 1986. Clearly as per Section 2(1)(o) of the Consumer Protection Act, 1986 the banking services are covered under the Consumer Protection Act. The landmark judgment of the Honble Supreme Court in states thatLaxmi Engineering Works Vs. PSG industrial Institute, (1995) 3 SCC 583 the commercial purpose shall depend on the facts and circumstances of each case. Here the services of the bank related to forwarding of certain documents to a particular destination i.e. the buyer. It is clear that availing of this service is not an activity directly leading to profit. In this11. Harsolia Motors Vs. National Insurance Co. Ltd. [I (2005) CPJ 27 (NC)], Commission has observed as follows:-

16. Further, what is commercial purpose is discussed by the Apex Court in various decisions. We would refer to few relevant judgments: In Regional Provident Fund Commissioner Vs. Shiv Kumar Joshi, (2000) 1 SCC 98, the Court elaborately considered the provisions of Sections 2(1)(d) and 2(1)(o) as well as earlier decisions and held that The combined reading of the definitions of consumer and service under the Act and looking at the aims and object for which the Act was enacted, it is imperative that the words consumer and service as defined under the Act should be construed to comprehend consumer and services of commercial and trade-oriented nature only. Thus any person who is found to have hired services for consideration shall be deemed to be a consumer notwithstanding that the services were in connection with any goods or their user. Such services may be for any connected commercial activity and may also relate to the services as indicated in Section 2(1)(o) of the Act.

17. The aforesaid ratio makes it abundantly clear that services may be for any connected commercial activity, yet it would be within the purview of the Act. From the above judgments of this Commission, it is clear that for commercial purpose,12. generation of profit from the goods purchased or services availed would be the main criterion and it should be seen whether the complainant is engaged in regular trading of the goods so purchased or of the services availed. It is clear that dispatch of papers by the Bank per se is not going to generate any profit to the complainant as the actual profit will come from the dispatch and sale of the exported goods. Therefore, by taking a wider view of the matter, it is held that the complainant/appellant is a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986. . On the basis of the above discussion, First Appeal No.42 of 2014 is allowed and the order13 of the State Commission is set aside. The matter is remanded to the State Commission for deciding the complaint on merits treating the complainant a consumer. Accordingly, the complaint may be restored to its original number and proceeded with as per law by the State Commission. . Parties to appear before the State Commission on 22.3.2018.14 ...................... PREM NARAIN PRESIDING MEMBER