PRATIBHA PRATISHAN & ORS v.

MANAGER, CANARA BANK &

ORS. CIVIL APPEAL NO. 3560 of 2008

SUBMITTED BY-

RISHABH SEN GUPTA

FACULTY IN CHARGE-

MR. SACHIN SHARMA

(Assistant Professor of Law)

NATIONAL LAW UNIVERSITY AND JUDICIAL ACADEMY, ASSAM

GUWAHATI

11th May, 2017

INTRODUCTION:
In today’s day and age Consumer Laws are given to protect a consumer from being cheated
by a salesman or manufacturer or any person or institution rendering services. In India
consumer laws saw an advent through the enactment of the Consumer Protection Act of
1986. The laws were designed to prevent enterprises from engaging in heinous acts such as
fraud or unfair practices so that they do not gain any advantage over competitors and may
provide safeguards to the weak and poor however it is also done to safeguard enterprises
from suffering any harm. It should be the duty of both the buyer and seller to be aware of any
decisions they make as made clear through the maxims Caveat Emptor and Caveat Venditor
and both should be on their toes while coming up with any monetary decisions. A trust is a
relationship whereby property is held by one party for the benefit of another. The main contention of
the researcher in this paper is to see whether a Trust can come under the ambit of consumer laws as
elucidated through the case analysed in the paper.

FACTS OF THE CASE:

In the instant case the aforesaid complaint was filed by the trust and some of the trustees
against the (1) Manager, Canara Bank, Bhat Bazar Branch, Mumbai, (2) The Allahabad
Bank, Andheri (West) Branch, Bombay, and Other trustees, namely, (3) Mr.Ismail N. Kanga,
Mr. R.S.Gavai, Mr.Anant Kumar Patil, and Mr.A.M.Hetavkar, joined as Opposite Parties.  It
was said by the complainants that on 13 th March 1994 the trust had an amount of
Rs.10,44,85,784/- with Corporation Bank, which was transferred to Canara Bank, Bhat
Bazar Branch, Mumbai on 31st March 1994 with a directions to Canara Bank to keep the
said amount in FDR. The bank, thereafter, issued an FDR Numbered 54/94 for the said
amount. It is contended that the Opposite Party No.1 was directed to keep the original FDR
in its safe custody by letter dated 28th April 1994. On basis of the letters dated 22 nd September
1994, 8th March 1995, and 13th September 1995 written by the Complainant to the Bhat
Bazar Branch of Canara Bank, Mumbai, the FDR was renewed for a further period of 6
months on each occasion. However, Opposite Party No.1 by its letter dated 25 th September
1995 informed that the FDR which was due on 30th September 1995 was pledged to the Bank
vide letters dated 4th April 1994 and 20th July 1994 as security for an over draft limit of Rs.6
Crores granted to one M/s.Vijay Mutta & Co. and that there was an outstanding liability of
the said party Vijay Mutta & Co. for a sum of Rs.6,38,05,943/-. The Complainants were also
informed that if the amount was not cleared before 29 th September 1995 the bank would
appropriate the FDR in liquidation of the said over draft facility. It is contended by the
Complainant that they were not aware of the said over draft facility. Thereafter, on 18 th
October 1995, the Bank informed the Trust that the OD facility of Rs.6 Crores granted to the
Vijay Mutta & Co. has been cleared and that the FDR of Rs.11,81,54,538/- was renewed for
a further period of 6 months from 30th September 1995 and that the earlier letter dated 25th
September 1995 was withdrawn. Thereafter on 21st October 1995 the Complainant wrote a
letter to the Opposite Party No.1 to find out under what circumstances the FDRs were
pledged without the knowledge and consent of the Trust. On the same day the Complainant
sent also another letter requesting the Bank to send the renewed FDR in original as it was
required for transmission to the Charity Commissioner. On 26 th October 1995 the Opposite
Party informed the Complainant that the FDR was renewed for further period of six months
with effect from 30th September 1995 and the original was kept with it under safe custody. On
27th October 1995 the Trust wrote a letter to the general Manager of the Bombay Regional
office of the Bank to ensure the safety of the FDR. On 15 th November 1995 the Trust asked
the bank to send another legible certified copy of the FDR. On 11 th March 1996 a letter
similar to this effect was also sent to the Opposite Party Bank. Thereafter, on 23 rd March
1996 the Trust asked Canara Bank to transfer the maturity amount of Rs.11,81,54,538/- with
interest to the account of the Trust in the Indian Bank, Nariman Point Branch, on maturity of
the FDR on 3rd April 1996. Finally, on 3rd April 1996, Senior Manager of the Opposite Party
No.1 wrote a letter to the Complainant to the effect that:

(a) That Vijay Mutta & Co. approached the Opposite Party No. 1 for over draft limit of
Rs.600 lakhs for which the complainant trust offered to pledge FDR 54/99 for
Rs.10,44,85,784/-

(b) That the Trust produced a copy of Resolution resolving to pledge the said FDR towards
the over draft facility granted to Vijay Mutta & Co.

(c) That the permission for the above was granted by the Charity Commissioner by letter
dated 23rd March 1994.

(d) That the Over Draft facility of Rs.600 lakhs was given to Vijay Mutta & Co. by Opposite
Party No.1.

(e) That the loanee Vijay Mutta & Co. defaulted in repayment of the overdraft. The amount of
the FDR of the complainant trust was adjusted against the liabilities of the loanee after
issuing a Registered A.D. Notice to the Trust on 25th September 1995.

(f) That Vijay Mutta & Co. repaid their liability.

The trust vide a letter dated 13th October 1995 requested the Opposite Parties to transfer the
maturity proceeds of the F.D.R to Andheri (West), Branch of Allahabad Bank. The
Complainant Trust sent to the Opposite Parties a resolution for the purpose alleged to have
been passed by the Trust.

(g) That as per those instructions demand drafts totaling to Rs.11,81,54,538/- was
transferred to the account of the Trust at Allahabad Bank Andheri (West) Branch of
Allahabad Bank being Account No.450.

(h) That the above facts were duly informed to the Trust by registered letter dated 19 th
October 1995.

CONTENTIONS PRESENTED:

Whether the Trust had pledged an FDR for any amount?

Contentions raised by complainant:

It is the contention of the Complainant that the trust has never pledged the FDR for any
amount; the trust has never sought permission from the Charity Commissioner for over draft
facility; the trust has never requested the bank to transfer the maturity proceeds to any
account of the FDR to Allahabad Bank or anybody else or passed any resolution as falsely
claimed; and, the trust was not informed anything by the letter dated 19 th October 1995 as
alleged or otherwise.

 It is, therefore, contended that the aforesaid conduct and services of the nationalized bank
reveals shockingly negligent conduct and that the Complainants have not sought transfer of
the amount to the Allahabad Bank, Opposite Party No.3.

Therefore, the Complainant trust sent legal notice dated 14 th January 1997 and requested to
repay the amount of the fixed deposits totalling to Rs.11,81,54,538/- with interest at the rate
of 26% p.a.   It is also stated that the Complainant No.1 Trust has lodged FIR with the CID,
Mumbai on 11th September 1996.

 Finally, the Complainants have approached this Commission for a direction the Opposite
Party No.1 to 4 to pay the sum of Rs.11,81,54,538/- with interest at the rate of 26% p.a. from
30th September 1995 till its payment. It has also claimed Rs.10 lakhs as liquidated damages
for the mental agony, worry and anxiety caused to the Trust and Trustees.
 

Contentions of the Opposite Parties:

It is contended by Canara Bank that:

(a) Considering the forgery and fraud committed by the Trustees, the parties must be referred
to civil court for adjudication of the case;

 (b) The Complainant, Kudalkar, who has verified the complaint died during the course of
proceedings and no formal application been taken out to continue the proceedings initiated by
him. Therefore, the complaint must be deemed to have been abated.
 
(c) Vide application dated 4th April 1994, one M/s.Vijay Mutha & Co., Chartered
Accountants had requested the Opposite Party No.1 to grant an over draft of Rs.4 Crores. The
Complainant No.1 agreed to pledge the said FDR with the Opposite Party No.1 as a security
for the due repayment of the loan amount by M/s.Vijay Mutha & Co. The Complainant has
also executed a letter of pledge dated 4th April 1994 pledging the said FDR No.54/94. For this
purpose, the Complainant No.1 had produced a certified copy of the Resolution dated
2.4.1994 passed by the trust to pledge the FDR as security. Thereafter, an additional facility
of Rs.2 Crores was also granted. For that purpose, another Resolution dated 8 th July 1994
passed by the Trust was produced and that the Complainant had also executed another letter
of pledge for the enhancement of the overdraft facility.
 

(d) The renewed FDR remained to be pledged with the Opposite Party No.1 as security for
due payment of loan amount by M/s. Vijay Mutha & Co.

 (e) As the borrower failed to repay the amount Opposite Party No.1 informed this fact to the
Chairman of the Complainant No.1 vide its letter dated 25 th September 1995 which is
produced on record as R-1/15. Thereafter, M/s.Vijay Mutha & Co. deposited the amount
equivalent to the outstanding in its over draft account. Subsequently, vide letter dated 13 th
October 1995 the Complainant No.1 instructed the Opposite Party No.1 to transfer the
proceeds of FDR No.107/95 to Allahabad Bank, Andheri (West) Branch, Mumbai. The letter
was also produced on record along with the resolution passed by the Trust. Accordingly,
Opposite Party No.1 remitted the said amount of Rs.11,81,54,538/- to Allahabad Bank and
intimated about it to the Complainant No.1 vide its letter dated 18 th October 1995 by
registered AD and a copy of the said AD card is also produced on record as Annexure R-
1/21. The Bank has also produced on record a letter dated 31 st May 1994 written to the
Complainant No.1 that the FDR was lying with them as security. The Complainant No.1 duly
acknowledged the same vide its letter dated 2nd May 1995.
 
(f) The amount was ultimately paid on the basis of the cheques issued by the Trust and the
original documents were in custody of Criminal Court. With regard to disbursement of Rs.13
Crores, it had been pointed out that on the same facts involved in the transactions herein, an
FIR was lodged based upon the complaint of the trustee Mr. Kudalkar. After investigations
by the police it was found that the trustees and their co-conspirators had joined in cheating
both the banks and the trust. Accordingly a chargesheet has been filed and prosecution
launched. A perusal of the charge sheet, which is reproduced hereinafter, alone is sufficient to
indicate the complicity of some of the trustees in the transactions complained of. Further,
perusal of the 161 Cr. P.C statements elaborates their individual roles. In the said prosecution,
no officer of the Canara Bank is joined as co-accused and hence the complaint against the
Canara Bank is totally misconceived.
 ANALYSIS AND CONCLUSION:

Through this appeal a very short question has arisen and that is whether a complaint can be
filed by a Trust under the provisions of the Consumer Protection Act, 1986.

Section 2 (c) of the Act provides for a complainant making a complaint, inter alia, for an
unfair trade practice or a restrictive trade practice adopted by any trader or service provider; a
complaint in respect of goods (bought by a complainant) suffering from one or more defects;
a complaint of deficiency in services hired or availed of by a complainant and so on. 1

A complainant is defined in Section 2 (b) of the Act in the following words:

(i) A consumer; or

(ii) Any voluntary consumer association registered under the Companies Act, 1956 (1 of
1956) or under any other law for the time being in force; or

(iii) The Central Government or any State Government; or

(iv) One or more consumers, where there are numerous consumers having the same interest;

(v) In case of death of a consumer, his legal heir or representative; who or which makes a
complaint;2

It is quite clear from the above definition of a complainant that it does not include a Trust.
But does a Trust come within the definition of a consumer?

A consumer has been defined in Section 2 (d) of the Act as follows:-

"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;

1
Consumer Protection Act, 1986 § 2(c)
2
Consumer Protection Act, 1986 § 2(b)
Explanation. - For the purposes of this clause, "commercial purpose" does not include use by
a person of goods bought and used by him and services availed by him exclusively for the
purposes of earning his livelihood by means of self-employment;3

After a reading of the definition of the words ‘complaint’, ‘complainant’ and ‘consumer’
makes it clear that a Trust cannot invoke the provisions of the Act in respect of any allegation
on the basis of which a complaint could be made. To put this beyond any doubt, the word
‘person’ has also been defined in the Act and Section 2(m) thereof defines a person as
follows :-

(i) A firm whether registered or not;

(ii) A Hindu undivided family;

(iii) A co-operative society;

(iv) Every other association of persons whether registered under the Societies Registration
Act, 1860 (21 of 1860) or not.4

On a plain and simple reading of all the above provisions of the Act it is clear that a Trust is
not a person and therefore not a consumer. Consequently, it cannot be a complainant and
cannot file a consumer dispute under the provisions of the Act.

3
Consumer Protection Act, 1986 § 2(d)
4
Consumer Protection Act, 1986 § 2(m)