Whether a borrower of a project is “consumer” under Consumer Protection Act, 1986

Whether a borrower of a project loan is “consumer” under CP Act 1986

On 28.4.2014, the Central Bank of India sanctioned project loan of Rs.10 crores for movie project was given to the respondent no.1 – a company carrying on advertising business.  The property of the Chairman was pledged as collateral for the loan.

On 21.5.2015, possession notice was given for failure to pay the loan and symbolic possession of pledged property was taken under SARFAESI Act.

On 5.12.2016, the DRT allowed the application of the Bank for recovery of Rs.4,65,39,715/- with interest.

The Respondent no.1 offered one-time settlement of Rs.3.56 crores and it was accepted by the Bank.  The respondent no.1 also paid Rs.14.43 lacs for delayed period interest. 

On 13.1.2017 and 20.3.2017, the No Dues Certificates were issued, and full satisfaction amount memo was also filed before DRT.

However, the Bank incorrectly reported the name of the respondent no.1 to RBI as a defaulter with outstanding of Rs.4.17 crores.

This has loss to the goodwill, reputation and business of the respondent no.1 in view of its name in the list of wilful defaulters.

Respondent no.1 filed consumer complaint.  By the order dated 30.8.2023, NCDRC awarded compensation of Rs.75,00,000/- to the respondent no.1.

HELD that what is to be seen here is that whether the dominant intention or purpose for the transaction was to facilitate some kind of profit generation for the person who has availed the service.   Therefore, the respondent no.1 is not a consumer in terms of Section 2(1)(d)(ii) of the Act.

Judgment dated 27.2.2025 of the Supreme Court of India in Civil Appeal No7438 of 2023 of The Chief Manager, Central Bank of India and others   Vs.   M/s AD Bureau Advertising Pvt Ltd and another with connected matter