Top News Headlines 23rd Feb 2022: Treating Business To Business Disputes As Consumer Disputes Will Defeats Purpose Of Consumer Protection Act

Treating Business To Business Disputes As Consumer Disputes Will Defeats Purpose Of Consumer Protection Act: SC

• The Hon’ble Supreme Court (SC or Court), in the case of Shrikant G Mantri v Punjab National Bank, has observed that the legislative intent of the Consumer Protection Act, 1986 (Act) is to keep commercial transactions outside the purview of the Act and simultaneously, to give benefit of the Act to a person entering into commercial transactions exclusively for the purposes of earning his livelihood by means of self-employment.
• Opening a bank account and availing overdraft facility to expand business profits tant amounts to a business-to-business relationship and is a transaction purely for commercial purpose. Such services cannot be said to have been availed “exclusively for the purposes of earning his livelihood” “by means of self-employment”.
• The Appellant, a stock broker by profession, opened a bank account with Nedungadi Bank (erstwhile bank) and sought an overdraft facility in lieu of pledged shares for ₹1 crore; which was subsequently increased to ₹5 crores. Later, upon the request of the Appellant, the facility was temporarily enhanced to ₹6 crores. Thereafter, owing to a steep fall in the stock market, the erstwhile bank called upon pledge of additional shares to regularise the overdraft account.
• The Appellant pledged 37,50,000 shares of face value 10 each of an unlisted company as additional security. However, the company merged with a public listed company and the aforesaid shares became equal to 3,75,000 shares of the public company.
• The overdraft account became irregular and when the Appellant was not able to regularise it, the erstwhile bank called upon the appellant-complainant to pay a sum of ₹6.61 crores along with interest.
• The Appellant alleged that the erstwhile bank failed to sell the pledged shares on a date notified by the Appellant and sold them on a date when the market value was the lowest thereby causing colossal loss to the Appellant.
• Later on, the Respondent Bank, successor in interest of the erstwhile bank, filed a petition before the Debt Recovery Tribunal for recovery of the balance due from the Appellant. However, a one-time settlement was reached between the parties and the Respondent bank issued a no dues certificate and withdrew proceedings against the Appellant.
• The Appellant was also working as a stockbroker of the Respondent Bank and had arbitration proceedings pending with the Respondent Bank. The appellant filed a complaint before the National Consumer Disputes Redressal Commission (NCDRC), alleging deficiency in services on the part of the respondent-Bank and claimed a relief for return of the 3,75,000 shares of the listed company along with dividend.
• Raising objection with regard to maintainability of the complaint, the Respondent claimed that the Appellant was not a consumer under as per the definition under section 2(1)(d) of the Act. The NCDRC ruled in favor of the Respondent.
• The contention of the Applicant was that since he was a stockbroker and since the services of the overdraft facility were taken for his profession, the services rendered by the Bank were exclusively for the purposes of earning his livelihood.
• The Bank contended that if commercial disputes are included in the definition of 'consumer', it will give rise to floodgates of complaints.
• Analysing the provision of the Act, the SC observed that when a person avails a service for a commercial purpose, in order to be adjudged a consumer, he will have to establish that the services were availed exclusively for the purposes of earning his livelihood by means of self-employment. However, if the goods are bought for commercial purpose, he will be out of the definition of 'consumer'.
• The Court observed that in the instant case, the transaction was of a commercial nature and as such it was purely a "business to business" relationship between the parties. Acceptance of such disputes as consumer disputes will defeat the purpose of enactment of the Consumer Protection. In effect, the appeal was dismissed.

Bail In POCSO Cases: Love Affair Not A Valid Ground, Says SC

• The SC has, in the case of X (Minor) vs. The State of Jharkhand, held that once it has been established that the victim / prosecutrix was below the age of consent (below the age of 18 years), the fact that she was in a love affair with the accused and that the accused later refused to marry her were irrelevant considerations so far as the grant of bail is concerned.
• In the instant case, an FIR was registered in Ranchi for offenses punishable under section 376 of IPC and section 6 of the POCSO Act. The case of the prosecution was that when she was a minor, the respondent had taken her to her hotel and had sexual relations with her after promising that he would marry her.
• Not only did he not marry her, but according to the victim, he sent obscene videos of her to her father. The High Court had granted the accused bail and it was against that bail order that the appeal to the Apex Court had been made.
• The Apex Court noted that bail had been granted by the High Court was based on the reasoning that the it had appeared from the 164 statements and also from the FIR that there was a love affair between the petitioner and the respondent and that the case seems to be instituted only on the point of the refusal of the accused to marry her.
• It was argued that at the time of the incident, the victim was 13 years old and the accused was 20. It wasn't like they were both teenagers and that the bail granted by the HC was wholly based on extraneous considerations. The minor was not capable of giving her consent and the incident thus amounts to statutory rape.
• The Apex Court observed that the HC had committed an error in granting bail to the accused on the ground of the alleged love affair between the victim and the accused and that the case was instituted purely on the reason of the accused’s refusal to marry her.
• The Court observed that once it appears prima facie that the victim was only 13 years old, the ground that there was a love affair between the victim and the accused, as well as the alleged refusal to marry, are circumstances which have no bearing to the grant of bail. Having regard to the age of the prosecutrix and the gravity of the crime, the order of the HC had to be interfered with.
• Thus, the Hon’ble SC allowed the application and the bail granted by the HC was set aside.

Visiting Matrimonial Home For One Day Cannot Be Presumed As Resumption of Matrimonial Relationship: SC

• The Hon’ble Supreme Court (SC or Court), in the case of DEBANANDA TAMULI v SMTI KAKUMONI KATAKY, dissolved a marriage on the ground that a case of desertion under Section 13 of the Hindu Marriage Act, 1955 (HMA or the Act) was made out.
• The appeal arose from the dismissal of petition for divorce in the Sessions Court and the Gauhati High Court (HC) filed by the Appellant husband on the grounds of cruelty and desertion under Section 13 of HMA.
• The matrimonial dispute arose between the parties on the grounds that the respondent consistently refused to consummate the marriage, thereby causing mental agony to the appellant. The Appellant’s petition for divorce failed before the Sessions Court and the HC.
• It was submitted that parties married on 17 June 2019; on 30 June 2019, the respondent left to her matrimonial home and never returned. The Appellant further claimed the respondent never showed any inclination to return to the matrimonial home and that she never had any intention to start cohabiting with the Appellant. Reliance to prove desertion was placed on the judgment passed in the case of Lachman Utamchand Kirpalani v Meena @ Mota.
• It was further submitted that the Respondent returned to the matrimonial home only for a day on the death of the Appellant’s mother and the same could not be regarded as resumption of matrimonial relationship.
• The Appellant argued that the earlier Courts grossly erred in their decision by holding that the ground of desertion was not made out and submitted that in view of the irretrievable breakdown of marriage, the SC should exercise its plenary jurisdiction under Article 142 of the Constitution and pass decree of divorce.
• The Counsel for the Respondent submitted that the Appellant did not establish that there was no consummation and urged that even the factum of desertion has not been established. It was submitted that the Respondent did not intend to desert the Appellant and it was the latter who made no efforts to resume cohabitation.
• The Counsel further submitted that merely because husband and wife are stayed separately, an inference regarding desertion on the wife’s part could not have been drawn.
• Analysing the provision pertaining to desertion, the Court remarked that whether a case of desertion is established or not depends on the facts of each case and it is a matter of drawing an inference based on the facts brought on record by way of evidence.
• The Court observed that there was no dispute in the instant case since the parties barely cohabited and also observed that no case was made out by the Respondent regarding her intention to resume the matrimonial relationship when she visited the Appellant at the time of the mother’s death.
• The Court noted that there was no effort on the Respondent’s side to resume the matrimonial relationship and also the fact that no petition for restitution of conjugal rights was filed. Visiting matrimonial home for a day cannot be presumed to be a resumption of cohabitation.
• Observing that the ground of desertion under the provisions of Section 13 of HMA were made out as there was desertion for a continuous period of more than two years before the institution of the petition was established, the Court granted the decree of divorce.
• The Court agreed to the findings of the lower courts that there was no cruelty involved.