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TMI Blog2014 (7) TMI 1267X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Unit Trust of India (hereinafter referred to as "UTI"). Civil Appeal No. 4664 of 2009 filed by the UTI arises against the impugned order dated April 17, 2009 passed by the National Commission in Original Petition No. 51 of 2005, which has been filed by the complainant Punjab Agriculture University against the opposite party being the UTI. 3. As the consumer complaint filed in both the matters pertains to the same scheme being the "Institutional Investors Special Fund Unit Scheme, 1998" (hereinafter referred to as "IISFUS-98") in which the Punjab University (complainant in Original Petition No. 97 of 2004) and Punjab Agriculture University (complainant in Original Petition No. 51 of 2005) invested and the National Commission while passing the order in Original Petition No. 51 of 2005 relied upon its earlier decision rendered in Original Petition No. 97 of 2004, all the matters were heard together and are being disposed of by means of this common judgment. 4. To understand the controversy in these appeals, we will briefly discuss the factual matrix, which for the sake of brevity is limited to the facts extracted from Civil Appeal No. 400 of 2007 and is stated as under: 4.1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 crores from the UTI, the Appellant University was surprised and shocked as according to the "Terms of Offer" of IISFUS-98, the maturity proceeds would be Rs. 48,76,88,935.12/- which is higher than the amount received. The University served a legal notice to the UTI for the deficit payment of Rs. 18,31,65,024.89 and Rs. 4,21,93,558/- along with interest. On November 10, 2004, the University filed a complaint, being Original Petition No. 97 of 2004, before the National Commission. The contention of the Appellant-University before the National Commission was that they were assured that the dividend income would be reinvested in further units at Net Asset Value (hereinafter referred to as "NAV") and on those units also, in any case, they were assured that they would get minimum return @ 13.5% per annum and that it would be repurchased at par i.e. @ Rs. 10/-. The Respondents filed a response to the said complaint filed by the Appellant University. 4.6. The National Commission vide its order dated October 10, 2006 dismissed the said complaint filed by the Appellant-University on merits. However, the Commission held that the complaint of the Appellant-University is maintainable under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant, improving its balance-sheet", there was no question of the University making any profit and even if the University was making any profit after paying the statutory dues to its employees, it cannot be called a commercial purpose as it had invested the money on the basis of the promise made by UTI that the University would be paid interest at the rate of 13.5% per annum for the investment made in the IISFUS-98, for the reason that the scheme was open only to the institutions, the UTI was charging a consideration for the scheme floated by it. 8. It was further submitted by the learned Counsel for the Appellant University that the investors who deposited their money in the UTI Scheme are the consumers and in the event of a breach by the UTI in respect of the promise made by it, it would be open to them to approach the Consumer Forums for "deficiency" of service, and the UTI cannot take a plea that the investments were made for profit and not for earning livelihood. The counsel of the Punjab Agriculture University concluded his arguments by submitting that a distinction has to be made as to how the goods are further used; merely because institutions at the invitation of the UTI ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it is clear that "consumer" means any person who hires or avails of any services for a consideration, but does not include a person who avails of such services for any commercial purpose and the "commercial purpose" does not include services availed by him exclusively for the purposes of earning his livelihood by means of self-employment. Learned senior Counsel submitted that the services of participating in the Schemes of the UTI are for commercial purpose if the same are not availed by any person exclusively for the purposes of earning his livelihood by means of self-employment. He further submitted that as the University invested the money in the UTI's Scheme for the purpose of getting higher returns through the Stock Market for commercial enrichment of its fund, and no consideration was charged by the UTI for the returns on investment, the University is excluded from the definition of "consumer". 11. Mr. Sharan, learned senior Counsel further submitted that the University is not availing the Schemes exclusively for the purposes of earning its livelihood by means of self-employment inasmuch as the University's livelihood is by imparting education for consideration fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the fact that the investments were being made from the funds generated by Employees Pension and Provident Funds and that the instant investment made by the University for a commercial consideration, is itself a commercial venture. He concluded his arguments by submitting that there was no direct investment by the individual employees nor they were beneficiaries of higher income and it was purely an Institutional investment and the beneficiary of such investment was only the Institution. Individual employees would not have been paid the higher rate of interest on their EPF and pension contribution but they would have been entitled to fixed rate of interest as per the applicable Provident Fund Schemes, irrespective of whether the funds were invested or not. In support of his arguments, Mr. Sharan relied upon the decisions of this Court in Morgan Stanley Mutual Fund v. Kirtick Das (1994) 4 SCC 225, and Laxmi Engineering Works (supra). 16. The broad arguments of Mr. Sharan on merits are that UTI had instituted a closed ended IISFUS-98 for five years for Institutional Investors who wanted to invest large amounts in an exclusive Scheme and that as per IISFUS-98, there were two opti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the "services" hired by them are not for any "commercial purpose". Based on the answer in the aforementioned question we need to consider whether the learned Commission has correctly dismissed the complaint on merits. 18. We noticed that in the explanation given Under Section 2(1)(d), by means of an amendment in 2003 (w.e.f. March 15, 2003) the term "sub-clause (i)" was substituted with "clause" to further widen the scope of the applicability of the explanatory clause. The quandary which exists thus in light of the amendments is whether services availed by the complainants (being investment in the IISFUS-98 made through UTI) precludes them from being consumers under the Act by virtue of those being availed for "commercial purpose". To determine the same we will discuss the various interpretation of the term "commercial purpose". 19. This Court in Laxmi Engineering Works (supra) has dealt with the meaning of the term "commercial purpose" vis-à-vis the definition of "consumer" most exhaustively and the position remains the same till date. We will refer to the relevant portion of the said decision as under: Now coming back to the definition of the expression 'consu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority v. M.K. Gupta (1994) 1 SCC 225, observed as under: In Lucknow Development Authority v. M.K. Gupta the question was whether a public authority engaged in constructing and selling houses can be said to be rendering a 'service' and whether the person purchasing such houses can be called a 'consumer' within the meaning of the said definition. While answering the question in the affirmative, a Bench of this Court (Kuldip Singh and R.M. Sahai, JJ.) also examined the scheme and object of the Act and the ambit of the definition of the expression 'consumer'. The following observations are apposite: (SCC pp. 251-54, paras 2 and 3) To begin with the preamble of the Act, which can afford useful assistance to ascertain the legislative intention, it was enacted, 'to provide for the protection of the interest of consumers'. Use of the word 'protection' furnishes key to the minds of makers of the Act. Various definitions and provisions which elaborately attempt to achieve this objective have to be construed in this light without departing from the settled view that a preamble cannot control otherwise plain meaning of a provision. In fact the law mee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Laxmi Engineering Works (supra), the term "commercial purpose" must be interpreted considering the facts and circumstances of each case. 21. Under Section 20(6) of the Consumer Protection Act, 1987 of the United Kingdom, the definition of the term "consumer" is thus: Consumer-- (a) in relation to any goods means any person who might wish to be supplied with the goods for his own private use or consumption; (b) in relation to any services or facilities, means any person who might wish to be provided with the services or facilities otherwise than for the purposes of any business of his; and (c) in relation to any accommodation, means any person who might wish to occupy the accommodation otherwise than for the purposes of any business of his; As per Stroud's Judicial Dictionary the term "commercial" is defined as under: Commercial- (1) Commercial action includes any clause arising out of the ordinary transactions of merchants and traders and, without prejudice to the generality of the foregoing words, any cause relating to the constructions of a mercantile document, the export or import of merchandise, affreightment, insurance, banking, mercantile agency and merc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at par value of unit, i.e. Rs. 10 and not at NAV. Thereafter, the terms and conditions are provided in offer document. One of the highlights provides that capital invested in the scheme will be protected on maturity and the units would not to be redeemed below par. However, it is made clear that there is no such guarantee for units purchased from the return/dividend. It is true that there is vagueness in this term. There is no clarification whether the said term is applicable to premature repurchase of the units or repurchase of units purchased from the yearly return, i.e. dividend. However, this is to be read along with para-X which provides method of repurchase of units. In this also, the same phraseology is used as stated above. However, the clause makes it clear that return or dividend at the rate of 13.5% p.a. is to be reinvested on the basis of NAV, that means, if the price of the unit is Rs. 9/-, the income would be invested in units and the purchase price for each unit would be Rs. 9/- even though its face value is Rs. 10/-. Thereafter, para XXVII provides for reinvestment of income distributable in further units. It specifically provides that: "A unit holder who has rep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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