Bench and Court
Bench: Justice L. Nageswara Rao and Justice B.R. Gavai
Court: Supreme Court of India
Appeal From: National Consumer Disputes Redressal Commission (NCDRC) Decision, 01 June 2016
Relevant Law: Consumer Protection Act, 1986 – Sections 2(1)(d)(i) & 2(1)(d)(ii)
Parties to Dispute
- Appellant/Complainant: Shrikant G. Mantri, a registered stockbroker and a member of the Mumbai Stock Exchange.
- Respondent/Opposite Party: Punjab National Bank (PNB), which acquired the erstwhile Nedungadi Bank Ltd., with whom Mr. Mantri had his original banking relationship.
Introduction
The case of Shrikant G. Mantri v. Punjab National Bank revolves around the interpretation of the term “consumer” under the Consumer Protection Act, 1986, particularly regarding services availed for commercial purposes. The Supreme Court of India, through this judgment delivered on February 22, 2022, clarified the scope of protection available to individuals who avail banking services for commercial activities, and the exceptions provided for self-employed individuals.
Background of the Case
Legislative History of Consumer Protection Act
The Consumer Protection Act, 1986 was enacted to provide better protection to consumer interests and establish machinery for settling consumer disputes. The definition of “consumer” under Section 2(1)(d) originally had two parts:
- Section 2(1)(d)(i) – relating to goods: A person who buys goods for consideration, but excluding those who obtain goods for resale or commercial purposes.
- Section 2(1)(d)(ii) – relating to services: A person who hires services for consideration, initially without any exclusion for commercial purposes.
The Act underwent significant amendments:
- 1993 Amendment Act:
- Changed “hires” to “hires or avails of” in Section 2(1)(d)(ii)
- Added Explanation to Section 2(1)(d)(i) excluding goods used for earning livelihood through self-employment from “commercial purpose”
- 2002 Amendment Act:
- Excluded services availed for commercial purposes from Section 2(1)(d)(ii)
- Extended the Explanation to both sub-sections (i) and (ii)
Facts of the Case
The appellant, a stock broker, availed an overdraft facility with Nedungadi Bank (later merged with PNB), pledging shares. When the market crashed, the bank delayed selling the shares, causing losses. The appellant later settled the dues but claimed the bank failed to return the remaining pledged shares. He filed a complaint before the NCDRC for deficiency in service.
Issue of the Case
Primary Issue: Whether the appellant availed the banking services for a “commercial purpose” and thus was not a “consumer” under Section 2(1)(d)?
This included determining:
- Whether the services fell within the term “commercial purpose”
- Whether they were availed exclusively for earning livelihood through self-employment
Appellant’s Argument
The appellant contended the overdraft was used for his self-employment as a stock broker, and thus he should qualify as a “consumer.” He cited dictionary definitions, case law, and emphasized that banking services are essential for self-employment.
Respondent’s Argument
The respondent argued that the Act was intended for simple, consumer-level disputes, not commercial disputes. Expanding the definition would go against the Act’s purpose of speedy redressal and open the floodgates to business disputes.
Rule of Law & Interpretation
Relevant Legal Provisions:
- Section 2(1)(d)(i) & (ii): Defines “consumer” and excludes those availing services for commercial purposes, unless for livelihood through self-employment.
Key Judicial Precedents:
- Laxmi Engineering Works v. PSG Industrial Institute (1995)
- Paramount Digital Colour Lab v. AGFA India (2018)
- Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers (2020)
Court Analysis and Judgement
The Supreme Court dismissed the appeal, ruling the appellant was not a consumer. The Court reasoned that:
- The appellant used banking services for profit-making business expansion
- There was a business-to-business relationship
- The self-employment exception did not apply as the services were not exclusively for livelihood
- The legislative intent was to exclude commercial disputes
Conclusion
The judgment clarified that:
- Banking services used for profit-driven business expansion fall under “commercial purposes”
- The self-employment exception is narrowly applied
- Business-to-business disputes are outside the Consumer Protection Act’s scope
This preserves the intent of the Act—to provide efficient redressal to genuine consumers, not commercial entities.
