Shrikant G. Mantri Vs Punjab National Bank (Supreme Court of India)
Facts- The appellant, a stock-broker by profession, had opened an account with erstwhile Nedungadi Bank Limited. The appellant had applied for an overdraft facility on 25th April, 1998, in connection with his day today share and stock transactions. It is not in dispute that the said overdraft facility was sanctioned by the Bank to the appellant initially for an amount of Rs.1 crore, for which the appellant had pledged certain shares worth more than Rs.1 crore, as security as per the margin requirements specified by the Bank. Subsequently, in the year 1999, the appellant applied for enhancement of the said overdraft facility.
The said overdraft facility was enhanced by the Bank from Rs.1 crore to Rs. 5 crore, vide its letter dated 13th December, 1999.
Again, in March 2001, the appellant approached the Bank for temporary increase in the overdraft limit. The Bank, vide its letter dated 17th March, 2001, granted the request of the appellant and temporarily enhanced the overdraft facility from Rs.5 crore to Rs.6 crore, for a period of one week.
It appears that due to steep fall in the share market, the Bank, vide its letters dated 16th and 17th March, 2001, called upon the appellant to pledge additional shares to regularize the overdraft account. As an additional security, the appellant pledged 37,50,000 equity shares of face value of Rs.10/ of unlisted company Ansal Hotels Ltd. towards the dues of the Bank, vide his letter dated 30th March, 2001. It is not in dispute that subsequently, consequent to the merger of Ansal Hotels Ltd. with ITC Ltd., and the bonus and splitting of ITC shares, the aforesaid 37,50,000 equity shares of Ansal Hotels Ltd. became equivalent to 3,75,000 shares of ITC Ltd.
It appears that during 2001, the overdraft account of the appellant became irregular and as such, the Bank called upon the appellant to regularise the overdraft account. As the appellant was unable to regularise the overdraft account, the Bank, vide letter dated 14th September, 2001, called upon the appellant to pay a sum of Rs.600.61 lakhs along with interest thereon.
It is the case of the appellant that though he had advised the erstwhile Bank to sell the pledged shares in December, 2001, so as to close overdraft account, the Bank chose not to sell the said shares at that point of time. It is the case of the appellant that the said shares were sold by the Bank in November 2002, when the market value of the said pledged shares was at the lowest, which resulted in huge loss to the appellant.
After selling a part of the pledged shares for a sum of Rs.2,69,66,215.79, the Bank, the success or in interest of the Bank, filed a Recovery Petition before the Debts Recovery Tribunal, Mumbai against the appellant for recovery of the balance amount due as on 26th December, 2002. The said petition was decreed by the Debts Recovery Tribunal, Mumbai, vide order dated 26th May, 2004. However, the matter was settled between the parties and a ‘One Time Settlement’ was reached between them on payment of Rs. 2 crore. As such, the Bank issued a ‘No Dues Certificate’ dated 14th May, 2005, certifying that no dues were left outstanding against the overdraft account of the appellant. After the OTS, the Bank withdrew the recovery proceedings filed against the appellant.
It is the case of the appellant that since the Bank failed to return the said shares to the appellant, he sent a notice on 14th June, 2005 to the Bank, seeking release of the said shares.
It appears that the appellant was also working as a stockbroker of the Bank. With regard to the transactions with the appellant in the capacity as a stockbroker, the Bank had initiated arbitration proceedings against the appellant before the Arbitration forum of the Bombay Stock Exchange. According to the appellant, the Bank failed in the said arbitration proceedings, which have attained finality.
In this background, the appellant filed a complaint before the Commission, alleging deficiency in services on the part of the Bank. The main relief claimed in the said complaint was for a direction to the Bank to return 3,75,000 shares of ITC Ltd. along with dividend and all accretions thereon.
In the said proceedings, on being served with the notice, the Bank raised a preliminary objection with regard to maintainability of the said complaint, on the ground that the appellant was not a consumer as envisaged under Section 2(1)(d) of the said Act.
Conclusion- It could thus be seen, that when a person avails a service for a commercial purpose, to come within the meaning of ‘consumer’ as defined in the said Act, he will have to establish that the services were availed exclusively for the purposes of earning his livelihood by means of self-employment. There cannot be any straitjacket formula and such a question will have to be decided in the facts of each case, depending upon the evidence placed on record.
In the present case, the Commission has come to a finding that the appellant had opened an account with the Bank, took overdraft facility to expand his business profits, and subsequently from time to time the overdraft facility was enhanced so as to further expand his business and increase his profits. The relations between the appellant and the respondent is purely “business to business” relationship. As such, the transactions would clearly come within the ambit of ‘commercial purpose’. It cannot be said that the services were availed “exclusively for the purposes of earning his livelihood” “by means of self employment”. If the interpretation as sought to be placed by the appellant is to be accepted, then the ‘business to business’ disputes would also have to be construed as consumer disputes, thereby defeating the very purpose of providing speedy and simple redressal to consumer disputes.
We, therefore, find no error with the findings of the Commission.
