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The Chief Manager, Central Bank of India & Ors. v. M/s Ad Bureau Advertising Pvt. Ltd. & Anr.

Civil Appeal · 2025 INSC 288Decided 28 Feb 2025
Civil Appeal No. 7438 of 2023, with connected Civil Appeal (@ Diary No. 20192 of 2024)
Justice Sudhanshu Dhulia · Justice Prashant Kumar Mishra

Background

Ad Bureau Advertising, an advertising company, took a Rs. 10 crore project loan from Central Bank of India to help finance the post-production of a film. After the company defaulted, the loan was settled through a one-time settlement and the bank issued a "No-Dues Certificate," but it nonetheless later reported the company to RBI/CIBIL as a defaulter. This wrongful reporting caused the company to lose an advertising contract with the Airports Authority of India when another bank refused to issue a required guarantee. The company filed a consumer complaint before the National Consumer Disputes Redressal Commission (NCDRC), which awarded it Rs. 75 lakh in compensation; the bank appealed, and the company cross-appealed seeking more.

Decision Breakdown

The Supreme Court held that the NCDRC should have first determined whether the company even qualified as a "consumer" under the Consumer Protection Act before deciding the merits. Since the loan was taken purely for a business purpose (financing a film for profit, with brand-building as at most a secondary benefit) the transaction was a "business-to-business" one entered for a "commercial purpose," which the Act expressly excludes from consumer protection, regardless of the size or identity of the borrower. As a result, the company was not a "consumer" and the NCDRC lacked jurisdiction to entertain its complaint at all; the compensation order was set aside, though the company remained free to pursue other legal remedies for the alleged wrongful credit reporting.

Lesson Learnt

A business that takes a loan or service purely to generate profit for its commercial operations cannot use the Consumer Protection Act's simplified forums to seek compensation, however genuine the grievance, and must instead pursue ordinary civil remedies, since consumer protection law is reserved for non-commercial, personal use of goods and services.

Official source (sci.gov.in)View Judgment (PDF)

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