Overdraft Facility Not Per Se Commercial Transaction: Delhi State Commission Sets Aside Dismissal Of Consumer Complaint

The Delhi State Consumer Disputes Redressal Commission, comprising Justice Sangita Dhingra Sehgal (President) and Ms. Bimla Kumari (Member), allowed an appeal against HDFC Bank, holding that the District Commission erred in dismissing the complaint on the ground of “commercial purpose”.

The Commission observed that the mere availing of an overdraft facility does not, by itself, render a transaction commercial. In the absence of any evidence to establish that the facility was availed for commercial use, the complainant could not be excluded from the definition of a “consumer”. Accordingly, the impugned order was set aside and the matter was remanded to the District Commission for fresh adjudication on merits.

Brief facts of the case:

The complainant , Hans Batra, had opened a bank account with Lord Krishna Bank in 2002 and invested around ₹1.45 lakh in Fixed Deposits (FDs) in his and his family members' names, along with availing overdraft (OD) facilities. Following the merger of the bank with Centurion Bank and its subsequent amalgamation with HDFC Bank in 2008, his accounts were transferred to the opposite party bank.

After the merger, the bank allegedly closed the complainant's FDs and adjusted the proceeds towards alleged OD liabilities without authorization, while also failing to provide proper account details.

The complainant initially approached the Banking Ombudsman and thereafter filed a complaint before the District Consumer Commission. The District Commission held that the transaction involved a “commercial purpose” and dismissed the complaint on the ground that the appellant did not qualify as a consumer under the Consumer Protection Act.

Aggrieved by the dismissal, the complainant (appellant) filed the present appeal before the State Commission.

Contentions of the Bank:

The bank contended that the complainant had availed overdraft facilities against the FDs and failed to regularize the accounts despite repeated notices, thereby justifying the liquidation of FDs in accordance with applicable terms and conditions. The bank denied any arbitrariness and maintained that all calculations were done as per banking norms. It was further argued that the transaction was commercial in nature and, therefore, the complaint was not maintainable.

Observations and Decision:

The Commission held that the District Commission erred in dismissing the complaint solely on the ground that the transaction was of a commercial nature without properly examining the facts. Referring to Section 2(1)(d) of the Consumer Protection Act, 1986, the Commission reiterated that whether a transaction constitutes a 'commercial purpose' must be determined on the facts of each case.

Relying on Shrikant G. Mantri v. Punjab National Bank, the Commission noted that availing an overdraft facility does not automatically make the transaction commercial. It also referred to Laxmi Engineering Works v. PSG Industrial Institute and Kavita Ahuja v. Shipra Estates Ltd. to emphasize that the burden to prove commercial purpose lies on the party asserting it.

The Commission found that HDFC Bank failed to establish that the overdraft facility was availed for any business or profit-oriented activity. Accordingly, it held that the complainant falls within the definition of a “consumer,” set aside the District Commission's order, and remanded the matter for fresh adjudication on merits.

For complainant /Appellant:Mr. Anoop K. Kaushal, Advocate

For Opposite Party/ Respondent: Ms. Anita Saran, Advocate

Case No.: FA/143/2022

Case Title: MR. HANS BATRA VS. HDFC BANK

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