The Supreme Court held that Commercial transactions are outside the purview of the Consumer Protection Act, 1986.
The Supreme Court Bench comprising Justices Vikram Nath and Satish Chandra Mishra was hearing an appeal and held that commercial transactions are outside the purview of the Consumer Protection Act, 1986. The Bench observed that commercial disputes cannot be decided in summary proceedings under the Consumer Protection Act, 1986.
In the present case, the Supreme Court granted leave to appeal, contesting the order of the National Consumer Disputes Redressal Commission (NCDRC) dated 01.04.2022. This order had dismissed a revision petition (No.161 of 2022) that challenged the decision of the State Consumer Disputes Redressal Commission (SCDRC) and the District Consumer Disputes Redressal Forum (DCDRF). These lower bodies had directed the Opposite Parties (OP) No.1 to 5 to jointly and severally pay Rs.5 lakhs along with interest for a financial dispute.
Respondent No.1 had initially filed a complaint alleging that he had invested Rs. 5 Lakhs in a partnership firm on 21.05.2002, seeking premature payment which was denied. Despite repeated attempts, payment was not made, leading to a complaint before the DCDRF alleging a deficiency in service.
The DCDRF initially allowed the complaint, which was subsequently challenged through multiple appeals and revisions. The SCDRC and NCDRC successively entertained the complaint, leading to the present appeal.
The appellants contended that respondent No.1 was a partner in the firm as per a registered partnership deed, and therefore the complaint under the Consumer Protection Act, 1986 was not maintainable. They argued that the dispute was commercial in nature and should be addressed through civil court.
Respondent No.1 argued that the appellants' refusal to return the invested amount amounted to a deficiency in service and that the appellants inherited the estate of the deceased partner and, hence liable for payment.
The Supreme Court, upon considering the arguments, held that there was no evidence to show dissolution of the registered partnership deed, and therefore the complainant remained a partner till the investment date. They also ruled that the investment was for profit, making it a commercial transaction outside the purview of the Consumer Protection Act.
The Supreme Court bench observed, "the investment made by the respondent No.1 complainant was for deriving benefit by getting an interest on the same at the rate of 18 % per annum, therefore, it would be an investment for profit/gain. It was a commercial transaction and therefore also would be outside the purview of the 1986 Act. Commercial disputes cannot be decided in summary proceeding under the 1986 Act"
Furthermore, the Court stated that legal heirs do not automatically become liable for the firm's liabilities upon a partner's death. They concluded that the lower forums erred in allowing the complaint, thus allowing the appeal, setting aside the impugned orders, and dismissing the complaint.
However, the Supreme Court left it open for the complainant to pursue other remedies available under the law before a competent forum.