Hindu Cooperative Bank Ltd. vs INDUSTRIAL INVESTMENT BANK OF INDIA LTD

THE key question is, "whether the complainant is a consumer "? The facts of the instant complaint are these. The Hindu Cooperative Bank Ltd, the complainant in this case, has called into question the action of the opposite party, another bank, known as Industrial Investment Bank of India Limited, which prematurely redeemed the bonds held by the complainant without the latter ''s consent. The case of the complainant is that the opposite party issued insecure partly cumulative transferable bonds through private placement in favour of the complainant. The complainant was the holder of 900 and 1200 bonds total being 2100 bonds with issued price of bond being Rs. 1,600 per bond. The bonds were issued for 25 years with maturity date in August/September, 2028. The maturity value was Rs. 1 lakh per bond. It was categorically stated that the bonds were cumulative and redeemable on maturity. There was no provision for premature redemption of the bonds in the offered documents or anywhere else.

ON 30.6.2011, the complainant received a letter enclosing a cheque of Rs. 1,95,82,550 towards redemption of 900 bonds and also informing about the unilateral decision of the opposite party to redeem the 900 bonds held by the complainant. The complainant protested vide its letter dated 7.7.2011. On 30.6.2011, the complainant received another second letter enclosing a cheque of Rs. 2,60,31,540 towards redemption of 1200 bonds. On 16.7.2011, complainant wrote a letter stating that it was not accepting the redemption amount. The complainant while prematurely redeeming the bonds, made payment of interest only at the rate of 5% simple interest per annum, whereas, under the original transactions, the bonds were to carry interest at the rate of 9.5% compounded quarterly. On 17.8.2011, the complainant wrote a letter asking the opposite party to pay balance interest. The opposite party replied stating that the decision to prematurely redeem the bonds was in accordance with a policy decision of the Government. On 29.10.2011, the complainant again raised a demand with the opposite party. It evoked no response. Consequently, the present complaint was filed with the following prayers: "(i) Set aside the letters dated 30.6.2012 issued by the respondent and direct the respondent to treat the 2100 bonds bearing ISIN No. INE237F11026 and ISIN No. INE237F11034 as redeemable only in August, 2028 @ Rs. 1,00,000 per bond; OR (ii) In the alternative, direct the Respondent to pay an amount of Rs. 2,64,12,072 on account of balance interest along with future interest @ 12% per annum; AND (iii) Award appropriate compensa-tion on account of the harassment faced by the complainant in pursuing the present complaint; AND (iv) Award the costs of the present proceedings in favour of the complainant; AND (v) Pass such other order(s) that this Hon ''ble Commission may deem fit in the facts and circumstances of the present case. "

WE have heard the Counsel for the complainant. It is difficult to fathom as to how the complainant is a consumer. Learned Counsel for the complainant also could not satisfy us. This is a commercial transaction. The complainant also did not explain in so many words as to how it is a consumer. The complainant has explained his position in para No. 2 of the complaint which runs as follows: "The respondent, Industrial Investment Bank of India, is a 100% Government of India-owned financial investment institution. It was established in 1971, by a resolution of the Parliament of India under Section 617 of the Companies Act, 1956. The respondent was reconstituted as Industrial Reconstruction Bank of India in 1985 under the IRBI Act, 1984. With a view to converting the institution into a full-fledged development financial institution, IRBI was incorporated under the Companies Act 1956 as Industrial Investment Bank of India Ltd. in March 1997. The respondent offers a wide range of products and services, including term loan assistance for project finance, short duration non-project asset-backed financing, working capital/other short-terms loans to companies, equity subscription, asset credit, equipment finance and investments in capital market and money market instruments. The respondent ''s headquarters are located in Kolkata, and its address for service is as mentioned in the memo of parties. "

SECTION 2(d) and explanation appended to it defines consumer which is reproduced as follows: "(d) "consumer " means any person who - (i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or (ii) [hires or avails of] any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who [hires or avails of] the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person; [but does not include a person who avails of such services of any commercial purpose;] [Explanation -For the purposes of sub-clause, "commercial purpose " does not include use by a consumer of goods bought and used by him exclusively for the purpose of earning his livelihood by means of self-employment.] "

There is no evidence that the complainant is availing the services exclusively for the purposes of earning his livelihood by means of self-employment. Consequently the complaint is not maintainable and is dismissed at its admission stage. Complaint dismissed.