V.K. Jain, Presiding Member (Oral)
The complainant company entered into a contract with M/s. Bear Logistics LLC, having its office in Florida, for the supply of 2000 MT of scrap. In terms of the aforesaid agreement, the complainant was required to open an irrevocable Letter of Credit. The complainant, through the opposite party State Bank of India, opened a Letter of Credit on October 13, 2008, in favour of the Bear Logistics LLC for US $ 8 lacs. The opposite party bank made payment to M/s. Bear Logistics LLC in terms of the Letter of Credit opened by it, and debited its amount to the account of the complainant. The case of the complainant is that the opposite party bank was deficient in rendering services to it since the documents, including shipping documents, were not properly scrutinized by it before honouring the Letter of Credit. The complainant is therefore before this Commission, seeking payment of Rs.4,44,88,674/- , along with interest and costs.
2. The complaint has been resisted by the opposite party, inter-alia on the ground that the complainant is not a consumer, since the transaction for import of scrap was for commercial purpose and earning profits by the complainant company.
3. Section 2(1)(d) of the Consumer Protection Act to the extent it is relevant provides that though consumer means any person who hires or avails of any services for a consideration, it does not include a person who avails of such services for any commercial purpose. The explanation attached below the aforesaid clause, to the extent it is relevant, stipulates that commercial purpose does not include use by a person, of the services availed by him, exclusively for the purpose of earning his livelihood by means of self-employment.
4. The complainant had hired or availed the services of the bank for the purpose of opening a Letter of Credit, which it was required to open in favour of M/s. Bear Logistics LLC so as to complete the transaction for import of scrap from the overseas seller. The scrap, which the complainant was to import from the overseas seller, was to be sold for making profit.
5. It is therefore, obvious that the complainant had hired or availed the services of the bank for undertaking a commercial activity, which was intended to generate profit for it, by sale of scrap. Therefore, it can hardly be disputed that the said services were hired or availed for a commercial purpose. The services were hired/availed after amendment of Section 2(1)(d) of the Consumer Protection Act w.e.f. 15.03.2003. Therefore, the complainant is not a consumer, as defined in the Act.
6. The next question which comes up for consideration is as to whether the complainant-company falls within the scope of the explanation attached below Section 2(1)(d) of the Consumer Protection Act. In my view, use of the expression 'exclusively for the purpose of earning his livelihood by means of self-employment', in the explanation leaves no reasonable doubt that the aforesaid provision is made only for a natural person and not for a juristic person such as a company. The aforesaid explanation applies in the case of an individual who seeks to earn his livelihood by means of self-employment, using or availing the services in question. Therefore, it cannot be said that the complainant company was earning its livelihood by means of self-employment by utilizing the credit limit sanctioned by the bank for the purpose of enabling it to trade in foreign currencies.
7. In Subhash Motilal Shah & Ors. Vs. Malegaon Merchants Co.-op Bank Ltd., R.P.No.2571 of 2012 decided on 12-02-2013, the petitioner which had a current account with the bank had alleged deficiency in service on the part of the bank. The State Commission dismissed the complaint, holding inter alia as under:
'Admittedly, since Rainbow Corporation is a firm of Ajay Subhash Shah (HUF), i.e., juristic person, there arise no question of self-employment so as to cover the case under explanation to section 2(1)(d)(ii) of the Consumer Protection Act, 1986 (‘Act’ for brevity). It is a case relating to an action related with services given while operating the Current Account of Appellant Rainbow Corporation which was admittedly opened and used for business purpose, of the business of ‘commission agent’ and business of ‘yarn sale’. Therefore, since the account itself is connected and related to the business transactions and such banking activity is required for the functioning of a given business enterprise of the appellant/complainant, services hired for that purpose would fall within the category of hiring services for commercial purpose. A useful reference can be made to free dictionary by FARLEX (on Internet) which defines the ‘Business Activity’ as the activity undertaken as a part of commercial enterprise. Further, reference can be made to an article available on the internet Website Wise Geek (copyright protected 2003-12 by Conjecture Corporation) and which is written by Alexis. W, edited by Heater Bailey. Under the circumstances, prima facie appellant/complainant Rainbow Corporation cannot be a consumer within the meaning of Section 2(1)(d)(ii) of the Act'.
Being aggrieved from the order of the State Commission, the complainant in the said case approached this Commission by way of a revision petition and it was contended by the complainant that considering the aims and objectives behind enactment of the Act, the expression ‘consumer’ and ‘service’ as defined under the Act should be construed in a comprehensive manner so as to include the services of commercial and trade oriented nature. In other words, the contention was that any person who hires services for consideration shall be deemed to be a consumer, even if the services were obtained in connection with a commercial activity. However, relying upon the amendment made in the Act with effect from 15-03-2003 the revision petition was dismissed by this Commission thereby upholding the view taken by the State Commission.
8. In M/s. Sam Fine O Chem Limited Vs. Union Bank of India, C.C.No.39 of 2013, decided on 12-04-2013, the complainant had availed credit facility from Union Bank of India. Alleging deficiency in the services provided by the bank he preferred a complaint before this Commission. Rejecting the complaint this Commission inter alia noted 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 CC No.11 of 2007, Samkit Art & Craft Pvt. Ltd. Vs. State Bank of India & Ors., decided on 14-10-2014, the complainant which was engaged in the business of export had obtained cash credit limit and term loan facility from the State Bank of India. He filed a complaint alleging deficiency on the part of the bank in the services rendered to him. It was held by this Commission that obtaining cash credit facility for the purpose of export of goods was a commercial purpose and, therefore, the complainant company was not a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act.
9. The learned counsel for the complainant has relied upon the decisions of this Commission in Harsolia Motors Vs. National Insurance Co. Ltd. I (2005) CPJ 27 (NC) & Nalagarh Steel Rolling Mills Pvt. Ltd. & Ors. Vs. ICICI Lombard General Insurance Company Ltd. & Ors. III (2015) CPJ 167 (NC). However, neither of the aforesaid two judgments applies to the present case. Harsolia Motors (supra) was a complaint filed against an insurance company and this Court was of the view that a person who takes an insurance policy to cover the envisaged risk does not take the said policy for commercial purpose. The policy is only for indemnification of the actual loss and is not intended to generate profit. The transaction of import of the goods into India however, was an activity directly intended to generate profit. Without opening the Letter of Credit in favour of the overseas seller, the complainant could not have imported scrap into India. Therefore, it would be difficult to say that the services of the bank were not hired or availed for a commercial purpose.
Nalagarh Steel Rolling Mills Pvt. Ltd.(supra) was also a complaint filed against an insurance company and therefore, reliance on the aforesaid judgment in my opinion would be wholly misplaced.
10. The learned counsel for the complainant has also relied upon the decision of this Commission in Canara Bank Vs. M/s. Jain Motor Trading Company and Mr. Virender Kumar Jain. IV (2013) CPJ 336 (NC). A perusal of the judgmen
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t would show that in the aforesaid case, OCC facility was sought by the respondent form the bank to help resolving the financial difficulties, being faced by it. Also, the complainant in the case was not a company. Considering the purpose behind availing the said facility, this Commission rejected the contention that the complainant was not a consumer. However, in the present case, the scrap was sought to be imported by the complainant with a view to generate profit, which was a commercial activity intended to generate profit. 11. Since the complainant is not a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986, the complaint is hereby dismissed. The civil suit filed by the complainant, claiming the same relief which has been claimed in the present complaint, is already pending before the Civil Court. Since the complaint is not being adjudicated on merits, this order obviously, would have no bearing on the aforesaid civil suit.