2014 (7) TMI 1267 - SC - Indian Laws

Interpretation of statute - consumer and commercial purpose - The case of the Appellant being Punjab University is that UTI failed to honour the assurance of 13.5% per annum returns and that they were in breach of contract as they invested more than 20% in equity markets owing to which the NAV fell and the same amounts to deficiency of services - whether the complainant-Universities fall within the ambit of the definition of consumer as laid down in Section 2(1)(d) of the Act and that the services hired by them are not for any commercial purpose ? Held that - the words commercial purposes would cover an undertaking the object of which is to make a profit out of the undertakings. In the present case the services of UTI were availed by the complainant for the betterment of their employees, that such an investment was made, and it is to be made clear that no benefit by way of profit was to accrue to the complainant, improving its balance-sheet, in view of the definition of the word commerce given above, under no circumstances, the Appellant could be said to be indulging in any commercial activity, thus excluding him from the definition of consumer as enshrined in the Act. The intent of the Universities in the present dispute is not profiteering and the same is for benevolent interest and there is no intention whatsoever that the investment is made for any commercial purpose or gain and therefore we find that the complainant Universities fall within the definition of consumer under the Act and the complaints are maintainable before the National Commission. Whether in terms of the offer, is there any deficiency of services? - Held that - It has been clearly stipulated in the terms of offer that the maturity amount will depend on the NAV and that the same was guaranteed not to be below the par value of ₹ 10 per unit. All investments are subject to markets risks and fluctuations and an investor has to exercise due caution while investing any amount in any Scheme just because the maturity amount is below their expectations they cannot drag the service provider to Court for the same. The University would come within the purview of consumer as defined in Section 2(1)(d) of the said Act. Appeal dismissed - decided against appellant.

Issues Involved:
1. Delay in filing Civil Appeal No. 503 of 2008.
2. Entitlement to interest at the rate of 13.5% on the reinvested amount.
3. Whether the complainant-Universities fall within the definition of "consumer" under Section 2(1)(d) of the Consumer Protection Act.
4. Deficiency of services by UTI as alleged by the complainant-Universities.
5. Commercial nature of the investment by the Universities.
6. Maintainability of the complaints before the National Commission.

Detailed Analysis:

1. Delay in filing Civil Appeal No. 503 of 2008:
The Supreme Court condoned the delay in filing Civil Appeal No. 503 of 2008.

2. Entitlement to interest at the rate of 13.5% on the reinvested amount:
Punjab University invested Rs. 19 crores in the IISFUS-98 scheme with the understanding that the dividend receivable during the scheme period would be reinvested and refunded with a minimum interest of 13.5% per annum. The dispute arose when the maturity amount received was significantly lower than expected. The University argued that they were assured a minimum return of 13.5% per annum on the reinvested amount, which was not honored by UTI.

3. Whether the complainant-Universities fall within the definition of "consumer" under Section 2(1)(d) of the Consumer Protection Act:
The primary question was whether the complainant-Universities could be considered "consumers" under the Act. The Supreme Court referred to the definition of "consumer" under Section 2(1)(d), which includes any person who hires or avails of any services for a consideration but excludes those who avail services for any commercial purpose. The Court determined that the intent of the Universities was not for commercial profit but for the benevolent interest of their employees. Thus, the Universities were considered "consumers" under the Act.

4. Deficiency of services by UTI as alleged by the complainant-Universities:
The Universities alleged that UTI failed to honor the assurance of 13.5% per annum returns and that this amounted to a deficiency of services. The Supreme Court examined the terms of the offer, which specified that the maturity amount would depend on the NAV and was guaranteed not to be below the par value of Rs. 10 per unit. The Court found that the terms were clear and that the reinvested units were subject to market risks. Therefore, there was no deficiency in services by UTI.

5. Commercial nature of the investment by the Universities:
UTI argued that the investments made by the Universities were for commercial purposes, thus excluding them from the definition of "consumer." The Supreme Court referred to the interpretation of "commercial purpose" and concluded that the investments were made for the betterment of the employees and not for commercial profit. The Court held that the investments were not commercial in nature and did not exclude the Universities from being consumers.

6. Maintainability of the complaints before the National Commission:
The Supreme Court upheld the National Commission's decision that the complaints were maintainable under the Consumer Protection Act. The Court agreed that the Universities fell within the definition of "consumer" and that the complaints were valid.

Conclusion:
The Supreme Court dismissed Civil Appeal No. 400 of 2007 on merits, holding that the National Commission correctly determined that the Universities were consumers under the Act and that there was no deficiency in services by UTI. Civil Appeal Nos. 503 of 2008 and 4664 of 2009 were disposed of in terms of this judgment.

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