The Supreme Court on Friday clarified in an important judgment that institutions which take business loans from banks for commercial benefits will not be considered ‘consumer’ under the Consumer Protection Act, 1986 and cannot file a complaint with the Consumer Forum.
This decision was given during the hearing of the Central Bank of India vs. Ed Bureau Advertising Private Limited case. A bench of Justice Sudhanshu Dhulia and Justice Prashant Kumar Mishra said that the institutions taking business loans from the bank would not be considered consumers but beneficiaries, as their purpose is to earn commercial benefits.
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Case details
In 2014, Central Bank of India gave a project loan of Rs 10 crore to the Ed Bureau Advertising Private Limited for the post-production of actor Rajinikanth’s film ‘Kochdaiyan’, which the company was unable to repay. In 2015, the bank declared the company’s account as the NPA (Non-Performing Asset) and started the recovery proceedings under the Sarfaesi and RDDBFI Act. The case was later settled under a lump sum agreement of Rs 3.56 crore.
Dispute and Supreme Court verdict
Despite the agreement, the bank reported the Credit Information Bureau of India Limited (CIBIL) as a defaulter to the company, causing financial loss to the company and was out of an advertisement tender. Subsequently, the Ed Bureau lodged a complaint with the National Consumer Disputes Prevention Commission (NCDRC), with a compensation of Rs 75 lakh to the bank on 30 August 2023, issuing no-dues certificate, and correcting the CIBIL report.
The bank challenged the decision in the Supreme Court, where the court gave a decision in favor of the bank, saying that business loans are not consumers and they are not entitled to the Consumer Forum under the Consumer Protection Act.
