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Onus of Proving the service is provided for ‘Commercial Purpose’ Lies with Service Provider, Not consumer: Supreme Court

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Case Title: SHRIRAM CHITS (INDIA) PRIVATE LIMITED EARLIER KNOWN AS SHRIRAM CHITS (K) PVT. LTD Versus RAGHACHAND ASSOCIATES

Case No: CIVIL APPEAL NOS. Of 2024 (@ SPECIAL LEAVE PETITION (CIVILI NO. 15290 OF 2021)

Decided on: 10th May , 2024

Quorum: HON’BLE JUSTICE Mr.Aravind Kumar

Facts of the case

The conflict concerned a subscriber and a chit fund company. The subscriber, Raghachand Associates, wanted the return of the money placed, alleging that Shriram Chits had unlawfully halted the chit operation in 1996. Shriram Chits declined to pay back, claiming the sum had been deducted from unpaid debt. The Consumer Protection Act of 1986’s application had to be determined by whether the service was purchased for a commercial purpose, which was at the heart of the issue. The Supreme Court decided that the service provider has the burden of proof.

Issues

1. Whether under the Consumer Protection Act, 19861, who is responsible for proving whether a service was purchased for a commercial purpose?

2. Whether the despite of service provider’s assertion that the service was provided for a commercial purpose, is the complaining company still regarded as a “consumer” for the purposes of the customer Protection Act?

Legal Provisions

 According to Section 2 (1) (d) of the  Consumer Protection Act 1986, a consumer is an individual who:Buys goods or hires any service for personal use (not for commercial resale).Uses goods or services with the approval of any buyer or service provider.Uses goods and services to earn a livelihood through self-employment

Appellant’s Contentions

Raghachand Associates was not a “consumer,” according to Shriram Chits, because the service was used for business purposes. The chit fund argued that the Consumer Protection Act precluded the complaining company from pursuing any remedies. They contended that because the service was commercial in character, the complainant was not covered by the Consumer Protection Act of 1986 as a “consumer.”

Respondent’s Contentions

Raghachand Associates demanded that their subscription money be returned, arguing that they were entitled to protection under the Consumer Protection Act. Raghachand Associates, the respondent, argued that they qualified for protection under the 1986 Consumer Protection Act. They said that they had used Shriram Chits’ services for purposes that were covered under Act, rather than for a profit. The Supreme Court decided in favor of the respondent, holding that the service provider has the burden of demonstrating that the service was used for a business purpose

Court Analysis and Judgement

The Supreme Court ruled that the service provider bears the burden of demonstrating that the service was obtained for a business purpose. The Court underlined that the Consumer Protection Act is legislation that is favorable to consumers and that the service provider is not allowed to negatively impact the consumer. The Indian Supreme Court rendered a decision in support of Raghachand Associates, the respondent. The Court determined that Shriram Chits, the service provider, has the burden of demonstrating that a service was acquired for a commercial purpose. Under the Consumer Protection Act of 1986, this was a landmark decision that emphasized the defense of consumer rights.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

Judgement Analysis Written by – K.Immey Grace

Click here to read the judgment

 

 

 

 

 

 

 

 

 

 

 

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Onus of Proving the service is provided for ‘Commercial Purpose’ Lies with Service Provider Not consumer: Supreme Court

Blog ,

Case Title: SHRIRAM CHITS (INDIA) PRIVATE LIMITED EARLIER KNOWN AS SHRIRAM CHITS (K) PVT. LTD Versus RAGHACHAND ASSOCIATES

Case No: CIVIL APPEAL NOS. Of 2024 (@ SPECIAL LEAVE PETITION (CIVILI NO. 15290 OF 2021)

Decided on: 10th May , 2024

Quorum: HON’BLE JUSTICE Mr.Aravind Kumar

Facts of the case

The conflict concerned a subscriber and a chit fund company. The subscriber, Raghachand Associates, wanted the return of the money placed, alleging that Shriram Chits had unlawfully halted the chit operation in 1996. Shriram Chits declined to pay back, claiming the sum had been deducted from unpaid debt. The Consumer Protection Act of 1986’s application had to be determined by whether the service was purchased for a commercial purpose, which was at the heart of the issue. The Supreme Court decided that the service provider has the burden of proof.

Issues

1. Whether under the Consumer Protection Act, 19861, who is responsible for proving whether a service was purchased for a commercial purpose?

2. Whether the despite of service provider’s assertion that the service was provided for a commercial purpose, is the complaining company still regarded as a “consumer” for the purposes of the customer Protection Act?

Legal Provisions

• Section 2 (1) (d) Consumer Protection Act of 1986.According to Section 2 (1) (d) of the Act, a consumer is an individual who:Buys goods or hires any service for personal use (not for commercial resale).Uses goods or services with the approval of any buyer or service provider.Uses goods and services to earn a livelihood through self-employment

Appellant’s Contentions

Raghachand Associates was not a “consumer,” according to Shriram Chits, because the service was used for business purposes. The chit fund argued that the Consumer Protection Act precluded the complaining company from pursuing any remedies. They contended that because the service was commercial in character, the complainant was not covered by the Consumer Protection Act of 1986 as a “consumer.”

Respondent’s Contentions

Raghachand Associates demanded that their subscription money be returned, arguing that they were entitled to protection under the Consumer Protection Act. Raghachand Associates, the respondent, argued that they qualified for protection under the 1986 Consumer Protection Act. They said that they had used Shriram Chits’ services for purposes that were covered under Act, rather than for a profit. The Supreme Court decided in favor of the respondent, holding that the service provider has the burden of demonstrating that the service was used for a business purpose

Court Analysis and Judgement

The Supreme Court ruled that the service provider bears the burden of demonstrating that the service was obtained for a business purpose. The Court underlined that the Consumer Protection Act is legislation that is favorable to consumers and that the service provider is not allowed to negatively impact the consumer. The Indian Supreme Court rendered a decision in support of Raghachand Associates, the respondent. The Court determined that Shriram Chits, the service provider, has the burden of demonstrating that a service was acquired for a commercial purpose. Under the Consumer Protection Act of 1986, this was a landmark decision that emphasized the defense of consumer rights.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

Judgement Analysis Written by – K.Immey Grace

Click here to read the judgment

 

 

 

 

 

 

 

 

 

 

 

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Onus of Proving the service is provided for ‘Commercial Purpose’ Lies with Service Provider Not consumer: Supreme Court

Blog ,

Case Title: SHRIRAM CHITS (INDIA) PRIVATE LIMITED EARLIER KNOWN AS SHRIRAM CHITS (K) PVT. LTD Versus RAGHACHAND ASSOCIATES

Case No: CIVIL APPEAL NOS. Of 2024 (@ SPECIAL LEAVE PETITION (CIVILI NO. 15290 OF 2021)

Decided on: 10th May , 2024

Quorum: HON’BLE JUSTICE Mr.Aravind Kumar

Facts of the case

The conflict concerned a subscriber and a chit fund company. The subscriber, Raghachand Associates, wanted the return of the money placed, alleging that Shriram Chits had unlawfully halted the chit operation in 1996. Shriram Chits declined to pay back, claiming the sum had been deducted from unpaid debt. The Consumer Protection Act of 1986’s application had to be determined by whether the service was purchased for a commercial purpose, which was at the heart of the issue. The Supreme Court decided that the service provider has the burden of proof.

Issues

1. Whether under the Consumer Protection Act, 19861, who is responsible for proving whether a service was purchased for a commercial purpose?

2. Whether the despite of service provider’s assertion that the service was provided for a commercial purpose, is the complaining company still regarded as a “consumer” for the purposes of the customer Protection Act?

Legal Provisions

• Section 2 (1) (d) Consumer Protection Act of 1986.

Appellant’s Contentions

Raghachand Associates was not a “consumer,” according to Shriram Chits, because the service was used for business purposes. The chit fund argued that the Consumer Protection Act precluded the complaining company from pursuing any remedies. They contended that because the service was commercial in character, the complainant was not covered by the Consumer Protection Act of 1986 as a “consumer.”

Respondent’s Contentions

Raghachand Associates demanded that their subscription money be returned, arguing that they were entitled to protection under the Consumer Protection Act. Raghachand Associates, the respondent, argued that they qualified for protection under the 1986 Consumer Protection Act. They said that they had used Shriram Chits’ services for purposes that were covered under Act, rather than for a profit. The Supreme Court decided in favor of the respondent, holding that the service provider has the burden of demonstrating that the service was used for a business purpose

Court Analysis and Judgement

The Supreme Court ruled that the service provider bears the burden of demonstrating that the service was obtained for a business purpose. The Court underlined that the Consumer Protection Act is legislation that is favorable to consumers and that the service provider is not allowed to negatively impact the consumer. The Indian Supreme Court rendered a decision in support of Raghachand Associates, the respondent. The Court determined that Shriram Chits, the service provider, has the burden of demonstrating that a service was acquired for a commercial purpose. Under the Consumer Protection Act of 1986, this was a landmark decision that emphasized the defense of consumer rights.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

Judgement Analysis Written by – K.Immey Grace

 

 

 

 

 

 

 

 

 

 

 

 

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NBFC Policy should be taken into consideration in interest rate matters: Supreme Court

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Case Title: Rajesh Monga versus Housing Development Finance Corporation  Limited and Ors.

Case No: Civil Appeal NO.1495 of 2023

Quorum: Judge A.S.Bopanna

Facts of the case:-

In August of 2005, the appellant, who was in need of a home loan, was approached by respondents Nos. 2 and 3, who were employed by respondent No. 1. In addition, the appellant was considering the possibility of obtaining a loan from another financial institution. In the appellant’s case, respondents Nos. 2 and 3, who are respondent No. 1’s (HDFC) resident manager and direct sales representative, respectively, persuaded the appellant that respondent No. 1’s interest rate on a house loan was lower than what ICICI Bank was charging. Regarding this, the appellant mentioned an email from respondent No. 2 dated October 5, 2005, arguing that the communication presented a comparison showing that respondent No. 1’s interest rate was less expensive.

The respondent No. 2 promised respondent No. 1 that the interest rate would be determined by the Prime Lending Rate of the RBI. Based on these claims, the appellant is said to have applied to respondent No. 1 for a home loan in the amount of Rs. 3,50,00,000/= (Rupees Three Crores and Fifty Lakhs), which was approved and a loan agreement dated 11.01.2006 was signed. 

Even though this was the case, the appellant is upset that respondent No. 1 increased the interest rate to 8.25% even though the RBI did not alter the prime lending rate between January 11, 2006, and May 1, 2006. Despite the complainant contacting respondent No. 2 and other officers, there was no resolution; instead, respondent No. 1 increased the interest rate to 8.75 percent, 9.25%, and 10.5% on Page 3 of C.A. No. 1495 of 2023, even though the RBI did not alter the Prime Lending Rate. Thus, on September 27, 2007, the appellant received a legal notification requesting that the interest amount that was imposed above and beyond the 7.5% annual percentage rate be returned. The appellant sought the Consumer Forum against this backdrop.

Contentions:

It is contended by the Learned Counsel of the Appellant that the Respondent No. 2, speaking on behalf of Respondent No. 1, had promised that the interest rate assessed by Respondent No. 1 would be in line with the retail prime lending rate that the RBI would announce. Although the agreement states that the interest rate will be in line with respondent No. 1’s prime lending rate, this contradicts the assurance given to the appellant that the adjustable interest rate would only be agreed upon in the event that the RBI changed the interest rate, not in line with respondent No. 1’s interest. In this context, the appellant’s senior counsel has heavily relied on the email dated October 5, 2005, to assert that the appellant received such an assurance.

Furthermore, plethora of cases were relied on by the Counsel of Appellant to establish that despite the fact that the parties may have reached a consensus on some points in the agreement, what really matters is the parties’ intention, and any correspondence that the parties exchanged prior to the transaction or before signing the agreement will be pertinent to understanding the parties’ intention.

Court Analysis and Judgement:

Having perused the precedents on which reliance was placed, the court was of the opinion that the same does not come to the aid of the appellant. It was noted that respondent No. 1 would be subject to its lending and recovery policies and processes because it was an NBFC and a business entity. In this sense, unless the parties’ express agreement specifies otherwise, the application of the interest rate to be charged is likewise a matter of policy and cannot be case-specific.

It is evident at the threshold that the appellant is not too ignorant to benefit from the precedents cited. However, the argument that the appellant was sufficiently intelligent to know better than to enter into the transaction after being duped by the email and to have the option of obtaining a loan from another bank would suggest otherwise. Under such circumstances, the parties to the agreement would be bound by its provisions, and any correspondence between the parties would not supersede the respondent No. 1 institution’s policy decisions. 

The Court pointed out that in order to argue that the appellant was deceived or that the previous representation will result in unfair trade practices, the appellant should have brought up this argument at the time the agreement was scheduled to be signed. It was noted that there is nothing in the record or evidence presented to show that the appellant actually pursued other financial institutions that had consented to approve loans, or to show that the deal was better and that the appellant would have been better off if it had come from one of those institutions.

The Court dismissed the appeal with the view that no error has been committed so as to call for interference.

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.

Judgement Analysis Written by – K.Immey Grace

Click here to view the judgement

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NCDRC overstepped its authority and jurisdiction by disregarding the Agreement’s binding covenants: Supreme court

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Case title: Venkataraman Krishnamurthy vs Lodha Crown Buildmart Pvt. Ltd.

Case no.: CIVIL APPEAL NO. 971 OF 2023

Decided on: 22.02.2024

Quorum: Hon’ble Justice Aniruddha Bose, Hon’ble Justice Sanjay Kumar

 

Hon’ble Justices stated that, “it was not open to the NCDRC to apply its own standards and conclude that, though there was delay in handing over possession of the apartment, such delay was not unreasonable enough to warrant cancellation of the Agreement. It was not for the NCDRC to rewrite the terms and conditions of the contract between the parties and apply its own subjective criteria to determine the course of action to be adopted by either of them.”

 

BRIEF FACTS:

The complainants, who planned to buy an apartment in a Mumbai building that the respondent company was going to build, were the appellants. The complainants received a flat as a result of the parties’ execution of an Agreement to Sell. The sale consideration was to be paid in four instalments of “application money” in accordance with the payment schedule, with the remaining sum due when fit outs started. According to the agreement, the complainants were to receive possession of the flat by June 30, 2016, or within a grace period of one year, so they could fit it out.

The complainants went to the NCDRC, claiming that the company had terminated the agreement and failed to deliver possession of the flat for fit outs by the specified date. In addition to reimbursement for the money they had paid, they prayed for damages for the harassment, mental anguish, and torture they had endured, as well as reimbursement for the costs of the lawsuit. The complainants were before the supreme Court because they were unhappy NCDRC order.

COURT ANALYSIS AND JUDGEMENT:

The court ruled that the contract condition required payment of delay compensation, and that if the delay lasted more than twelve months after the end of the grace period, the allottee could terminate the contract and receive a refund of his payment. The contract condition, however, stated that the refund would be made without any interest.

The Court went on to say that the appellants’ desire to avoid the additional tax liability resulting from the implementation of the Goods and Service Tax regime could not be used against them or attributed to them as an underhanded reason for withdrawing from the agreement.

After analysing the evidence and the parties’ agreement, the court concluded that the NCDRC exceeded its authority and jurisdiction by ignoring the binding covenants in the Agreement and introducing its own logic and rationale to determine what the parties’ future course of action, particularly the appellants, should be.  

The court orders the respondent-company to refund the deposited amount of Rs. 2,25,31,148 in twelve equal monthly instalments via post-dated cheques, with simple interest at 12% per annum, from the date of receipt of the amount or parts thereof until actual repayment.

 

“PRIME LEGAL is a full-service law firm that has won a National Award and has more than 20 years of experience in an array of sectors and practice areas. Prime legal fall into a category of best law firm, best lawyer, best family lawyer, best divorce lawyer, best divorce law firm, best criminal lawyer, best criminal law firm, best consumer lawyer, best civil lawyer.”

 

Written by – Surya Venkata Sujith

Click here to read judgement

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