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2025 SCC OnLine SC 460

In the Supreme Court of India

(BEFORE SUDHANSHU DHULIA AND PRASHANT KUMAR MISHRA, JJ.)

Civil Appeal No. 7438 of 2023

Chief Manager, Central Bank of India and Others …
Appellants;
Versus
AD Bureau Advertising Pvt. Ltd. and Another …
Respondents.
With
Civil Appeal No. of 2025
(@ Diary No. 20192 of 2024)
AD Bureau Advertising Pvt. Ltd. … Appellant;
Versus
Chief Manager, Central Bank of India and Others …
Respondents;
Civil Appeal No. 7438 of 2023 and Civil Appeal No. of 2025 (@
Diary No. 20192 of 2024)
Decided on February 28, 2025
Advocates who appeared in this case :
Mr. Ashish Wad, Adv., Mr. Manoj Wad, Adv. Ms. Swati Arya, Adv. Ms.
Akriti Arya, Adv. Mohd. Hadi, Adv., M/s. J S Wad And Co, AOR, Mr.
Viresh B. Saharya, AOR Mr. Akshat Agarwal, Adv. and Mr. Rishabh
Mathur, Adv., Counsel for the parties;
Mr. Dharav Shah, Adv. Mr. Dhawal Desai, Adv. and Mr. Pranaya
Goyal, AOR., Respondent-in-person.
The Judgment of the Court was delivered by
SUDHANSHU DHULIA, J.:— The question which arises in these two
appeals for our determination is that whether the borrower of a project
loan, falls within the definition of ‘Consumer’ under the provisions of
the Consumer Protection Act, 1986 (hereinafter, ‘the Act’).
2. These statutory appeals arise from the order dated 30.08.2023
passed by the National Consumer Disputes Redressal Commission, New
Delhi (hereinafter, ‘NCDRC’) in Consumer Complaint No. 23/2021. The
appellant before us in Civil Appeal No. 7483 of 2023 is the Chief
Manager, Central Bank of India and has filed the appeal under Section
23 of the Act, assailing the finding arrived at by the NCDRC holding
that there was a deficiency in service on part of the appellant and thus,
it is liable to pay compensation to the respondent No. 1, which is M/s
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Ad Bureau Pvt. Ltd., (a company engaged in the business of branding,

consulting & advertising).
3. On the other hand, Civil Appeal (Diary) No. 20192 of 2024 has
been filed by M/s Ad Bureau Pvt. Ltd., challenging the quantum of
compensation awarded by the NCDRC, on the ground that the same has
been awarded inadequately. For the sake of convenience, we shall refer
to the parties as per their respective status in Civil Appeal No. 7483 of
2023.
4. The NCDRC vide its order dated 30.08.2023 has allowed the
Consumer Complaint filed by respondent No. 1 herein and has directed
the appellants1 to pay a compensation of Rs. 75,00,000/- to respondent
No. 1 and to issue a certificate stating that the loan account of
respondent No. 1 with the Central Bank of India was settled and no
outstanding dues remained in the said account and also holding that
the Bank had wrongly reported the status of respondent No. 1 as a
2
defaulter to CIBIL , which caused loss to the respondent No. 1 in the
market. Additionally, the appellants were also directed to pay to
respondent No. 1, litigation costs of Rs. 20,000/-.
5. At the outset, it would be necessary to state the relevant facts. On
28.04.2014, a Project Loan of Rs. 10 crores was sanctioned by the
Central Bank of India in favour of respondent No. 1, which is a private
limited company carrying on advertising business. The purpose behind
availing this loan was that respondent No. 1 was to engage in the post-
production of a movie. A property located at old D. No. 61, new D. No.
194, St. Mary's Road, Abhiramapuram, Chennai, which stood in the
name of the Chairman and Managing Director of respondent No. 1 was
pledged as collateral for the loan. After availing the said loan,
respondent No. 1 defaulted in repayment and its loan account and was
classified as NPA3 on 04.02.2015. When respondent No. 1 failed to
repay the amount even after issuance of Demand Notice by the
appellant-bank, a Possession Notice was issued on 21.05.2015 and
pursuant to the same, symbolic possession of the property pledged as
collateral for the loan was taken in terms of the provisions of the
Securitisation and Reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002 (hereinafter referred to as ‘SARFAESI
Act’).
6. Thereafter, on 09.10.2015 the Bank filed an application under
Section 19 (1) of Recovery of Debts Due to Banks and Financial
Institutions Act, 1993 (hereinafter referred to as ‘RDDBFI Act’) before
the Debts Recovery Tribunal, Chennai for recovery of an amount of Rs.
4,65,39,715/-. This application came to be allowed by the Debts
Recovery Tribunal, Chennai vide order dated 05.12.2016 and the Bank
was held to be entitled to recover an amount of Rs. 4,65,39,715/- with
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interest @ 12% p.a. till the date of realisation along with costs.
Pursuant thereto, a communication was addressed to the appellant-
bank by respondent No. 1 offering a One-Time Settlement of Rs. 3.56
Crores and the offer was duly accepted by the appellant-bank.
7. Thereafter, the appellant-bank called upon respondent No. 1 to
pay the ‘delayed period interest’ which was computed as Rs. 14.43
lacs. Admittedly, this amount was also paid by respondent No. 1 to the
appellant-bank, pursuant to which ‘No-Dues Certificate’ was issued on
13.01.2017 and 20.03.2017 by the appellant-bank towards respondent
No. 1. Further, a ‘full-satisfaction memo’ was also filed before the DRT
by the appellant-bank, wherein the factum of payment of the one-time
settlement amount and delayed interest by respondent No. 1 was
accepted by the appellant-bank.
8. The precise case of the respondent No. 1 before the NCDRC, as
well as before this Court, has been that the appellant-bank was grossly
negligent and deficient in providing banking services to respondent No.
1 and has consequently caused monetary damages and a loss of
4
reputation to it. As per the ‘Master Circular on Wilful Defaulters’ by the
Reserve Bank of India (hereinafter, ‘RBI’), all nationalised banks and
financial institutions have to report information regarding borrower
accounts which are classified as doubtful and loss accounts with
outstanding amount aggregating Rs. 1 Crore and above. These
borrowers are classified and reported as ‘wilful defaulters’ by the
respective banks and financial institutions to the RBI, which in turn,
consolidates the entire information reported in the form of a list on a
yearly basis. The grievance of respondent No. 1 towards the appellant-
bank has been that the appellant-bank, despite issuing a No-Dues
Certificate and despite filing a Full-Satisfaction Memo before the DRT,
incorrectly reported the name of respondent No. 1 to RBI as a defaulter
with a total outstanding amount of Rs. 4.17 Crores.
9. This incorrect reporting by the appellant-bank not only led to a
significant loss of goodwill and reputation, but it also resulted in the
respondent No. 1 losing an exclusive advertising tender/license by the
Airports Authority of India, which although, was initially awarded to
respondent No. 1 but was subsequently cancelled for the reason that a
Bank Guarantee was required to be submitted, but the same could not
be done, as when the respondent No. 1 approached HDFC Bank for
issuance of the same, the bank refused to do so upon finding the name
of respondent No. 1 in the list of wilful defaulters.
10. Aggrieved by the wrongful reporting and the losses which it
faced on account of the same, respondent No. 1 filed Consumer
Complaint No. 23 of 2021 before the NCDRC. Vide Impugned Order dt.
30.08.2023, NCDRC partly allowed the complaint, holding that the
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appellant-bank was deficient in service and also engaged in an unfair

trade practice. It was observed by the NCDRC that since the wrongful
reporting by the appellant-bank constitutes a serious breach of duty, it
is liable to compensate respondent No. 1 for the losses it has incurred
and accordingly, the NCDRC awarded a compensation of Rs. 75,00,000/
- to respondent No. 1 which was to be paid jointly and severally by the
appellants herein and also directed them to pay litigation costs of Rs.
20,000/-. Further, the appellants were directed to issue a certificate in
favour of respondent No. 1, wherein it was to be stated by the appellant
-bank that loan account of respondent No. 1 stood settled and no
outstanding dues remained. The appellant-bank had to further state
that it had been wrongly reporting the status respondent No. 1 as a
‘defaulter’ from 31.03.2017 till 30.06.2020.
11. We have heard learned counsel for the appellants as well as Shri
M. Abirchand Nahar, who appeared and argued as party-in-person, on
behalf of respondent No. 1 and we have also heard the learned counsel
for respondent No. 2, i.e. TransUnion CIBIL Limited.
12. At the outset, it has been submitted by the learned counsel for
the appellants that the order dated 30.08.2023 of the NCDRC is not
sustainable in law, as it was passed without first adjudicating whether
the respondent No. 1 falls within the definition of consumer in terms of
Section 2(1)(d)(ii) of the Act. It has been further submitted by the
learned counsel for the appellants as well as learned counsel for
respondent No. 2 that respondent No. 1 does not come within the
definition of ‘consumer’ under Section 2(1)(d)(ii) of the Act since the
service availed (sanction of project loan) by respondent No. 1 from the
appellant-bank was purely for a commercial purpose and it was a loan
transaction between two business entities. In other words, it was
business-to-business transaction as opposed to a business-to-consumer
transaction. This is the first limb of the argument. The second limb,
which is a continuation of the first, is that this service was availed by
respondent No. 1 with the ‘dominant intention’ of generating profits
and the main purpose behind the loan transaction was to
increase/generate additional revenue for the company. In support of
this argument, learned counsel(s) have relied upon two decisions of
this Court in National Insurance Company Limited v. Harsolia Motors,
(2023) 8 SCC 362 & Lilavati Kirtilal Mehta Medical Trust v. Unique
Shanti Developers, (2020) 2 SCC 265.
13. Before dealing with the rival submissions advanced on behalf of
the respondent No. 1, we consider it necessary to refer to Section 2(1)
(d)(ii) of the Act, which is reproduced as under:
(d) “consumer” means any person who—
(i) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
(ii) hires or avails of any services for a consideration which has
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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 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;
(emphasis provided)
14. A plain reading of the above makes it clear that where a service
is availed, for any “commercial purpose” then the person who has
availed such a service is not a “consumer” for purposes of the Act. All
the same, this is subject to a caveat which is provided by the
Explanation to Section 2(1)(d) of the Act. The explanation clarifies that
when the person uses the goods bought, or avails any service for the
sole purpose of earning his livelihood, by means of self-employment,
then such a person would not be excluded from the definition of
‘consumer’ under the Act.
15. As a counter to the submission of the appellants that respondent
No. 1 is not a ‘consumer’ on account of fact that the it had availed the
loan facility, with the purpose of generating profits for its business,
respondent No. 1 would argue that it is squarely covered by the
Explanation to Section 2(1)(d) of the Act and that loan was availed by
it only for ‘self-use’. This argument was also put forth by respondent
No. 1 before the NCDRC, where it claimed that loan amount of Rs. 10
crores was used by it to engage itself in the post-production of a movie
titled “Kochadaiiyaan” and to see to it that the name of respondent No.
1 is displayed on the movie title, the posters of the movie as well as the
advertisements of the movie. In other words, it was a self-branding
exercise, the sole purpose being building a brand name for respondent
No. 1, in order to earn livelihood and thus, there is no nexus to
generation of profits.
16. We are not convinced by this argument put forth on behalf of
respondent No. 1 for the simple reason that even if partly, it may be
true that the loan was availed for a self-branding exercise, the
dominant purpose behind brand-building itself is to attract more
customers and consequently generate profits or increase revenue for
the business. A bald averment that company engaged itself in the post-
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production of the movie solely for the purposes of brand-building does

not alter the fundamental nature of the transaction, i.e. the availing of
credit facility from the appellant-bank, which was purely a business-to-
business transaction, entered into for a commercial purpose. Post-
production of a film involves multiple activities, which finally gives
shape and presentation to a film, which is a commercial venture.
17. In Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti
Developers, (2020) 2 SCC 265, this Court has observed that no strait-
jacket formula can be laid down for determining whether an activity or
transaction is for a commercial purpose and has laid down certain
principles which are to be kept in mind. The relevant excerpt is
reproduced hereunder:
“19. To summarise from the above discussion, though a strait
jacket formula cannot be adopted in every case, the following broad
principles can be culled out for determining whether an activity or
transaction is “for a commercial purpose”:
19.1. The question of whether a transaction is for a commercial
purpose would depend upon the facts and circumstances of each
case. However, ordinarily, “commercial purpose” is understood
to include manufacturing/industrial activity or business-
tobusiness transactions between commercial entities.
19.2. The purchase of the good or service should have a
close and direct nexus with a profitgenerating activity.
19.3. The identity of the person making the purchase or the value
of the transaction is not conclusive to the question of whether it is
for a commercial purpose. It has to be seen whether the dominant
intention or dominant purpose for the transaction was to facilitate
some kind of profit-generation for the purchaser or their beneficiary.”
(emphasis provided)
18. We are cognisant of the fact that respondent No. 1 would not be
excluded from the definition of consumer merely on account of the fact
that it is a commercial entity/enterprise. But what has weighed with us
in coming to the conclusion that in the instant case, respondent No. 1
cannot be said to be a ‘consumer’ is the fact that the transaction in
question i.e. obtaining a project loan did have a close nexus with a
profit-generating activity and in fact, the dominant purpose for getting
this loan sanctioned was to generate profits upon successful post-
production of the movie titled “Kochadaiyaan”.
19. We may also refer to the decision of this Court in Shrikant G.
Mantri v. Punjab National Bank, (2022) 5 SCC 42. The facts of this case
were that the appellant therein was a stockbroker who availed an over-
draft facility from the respondent-bank, the purpose of which was to
facilitate his daily transactions in the stock and share market. As
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collateral for the overdraft facility, the appellant therein had pledged his
shares, which were not returned to him despite the matter being
settled between the parties through a one-time settlement. Alleging
deficiency in service by the respondent-bank, the appellant approached
the NCDRC which dismissed the complainant on the grounds of
maintainability, holding that he is not a consumer under the provisions
of this Act. When the matter came up before this Court, it was the
appellant's case that he had availed the overdraft facility for his ‘self-
employment’. This Court found no merit in this argument and held that
the overdraft facility was taken by the appellant therein to expand his
business profits and the relationship between the appellant and
respondent-bank would purely be a ‘business-to-business’ relationship
and therefore, the transaction would clearly come within the ambit of
the term “commercial purpose”.
20. Further, in National Insurance Company Limited v. Harsolia
Motors, (2023) 8 SCC 362, this Court has laid down the determining
factors which have to be kept in mind while considering whether a
service is availed for a commercial purpose or not. The relevant excerpt
is reproduced hereunder:
“39. Applying the aforesaid test, two things are culled out : (i)
whether the goods are purchased for resale or for commercial
purpose; or (ii) whether the services are availed for any commercial
purpose. The two-fold classification is commercial purpose and
noncommercial purpose. If the goods are purchased for resale or for
commercial purpose, then such consumer would be excluded from
the coverage of the 1986 Act. For example, if a manufacturer who is
producing product A, for such production he may be required to
purchase articles which may be raw material, then purchase of such
articles would be for commercial purpose. As against this, if the
same manufacturer purchases a refrigerator, television or air-
conditioner for his use at his residence or even for his office has no
direct or indirect nexus to generate profits, it cannot be held to be
for commercial purpose and for aforestated reason he is qualified to
approach the Consumer Forum under the 1986 Act.
40. Similarly, a hospital which hires services of a medical
practitioner, it would be a commercial purpose, but if a person avails
such services for his ailment, it would be held to be a non-
commercial purpose. Taking a wide meaning of the words “for
any commercial purpose”, it would mean that the 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
services hired is an activity, which is not directly intended to
generate profit, it would not be a commercial purpose.”
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(emphasis provided)
21. From an analysis of the afore-mentioned decisions, it is quite
clear that what is to be seen here is that whether the dominant
intention or dominant purpose for the transaction was to facilitate some
kind of profit generation for the person who has availed the service.
Therefore, it is our considered opinion that the respondent No. 1 is not
a ‘consumer’ in terms of Section 2(1)(d)(ii) of the Act.
22. In view of the aforesaid, we find merit in this appeal and
accordingly set aside the order dated 30.08.2023 passed by the
NCDRC. The Civil Appeal stands allowed, accordingly. Pending
applications, if any, shall stand disposed of.
23. However, we deem it necessary to add that we have only dealt
with the issue of maintainability of the Consumer Complaint filed by
respondent No. 1 before the NCDRC, and we have allowed this appeal
only on the ground of lack of jurisdiction of NCDRC. We have not
expressed any opinion on the merits of the dispute between the parties
herein. We also clarify that this judgment shall not come in the way of
respondent No. 1 to pursue appropriate remedies in accordance with
law.
Civil Appeal No. of 2025
(@ Diary No. 20192 OF 2024)
24. Delay condoned.
25. In view of the aforesaid, we see absolutely no scope for our
interference with the order dated 30.08.2023 of the NCDRC as regards
the quantum of compensation awarded.
26. The civil appeal stands dismissed, accordingly.
27. Pending application(s), if any shall stand disposed of.
———
1
Appellant Nos. 1, 2 & 3 are the Chief Manager, Mount Road Branch, Chennai; Field General
Manager, Chennai; and the Managing Director & Chief Executive Officer of the Central Bank of
India respectively.

2
Credit Information Bureau of India Limited.

3
Non-Performing Asset.

4
Circular No. DBOD No. BC/CIS/47/20.16.002/94 dated 23.04.1994.

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