A) ABSTRACT / HEADNOTE

This analysis examines The Chief Manager, Central Bank of India & Ors. v. M/s Ad Bureau Advertising Pvt. Ltd. & Anr., [2025] 2 S.C.R. 1445 : 2025 INSC 288, focusing on whether a borrower of a project loan qualifies as a consumer under Section 2(1)(d)(ii) of the Consumer Protection Act, 1986. The dispute arose after Central Bank of India accepted a One-Time Settlement, issued No-Dues Certificates and filed a full-satisfaction memo under the RDDBFI Act, yet reportedly continued to classify and report the borrower as a defaulter to RBI/CIBIL, resulting in reputational and commercial losses for the borrower, including the loss of an Airports Authority of India advertising tender.

The NCDRC found deficiency in service and awarded compensation of ₹75,00,000; the Supreme Court allowed the Bank’s appeal on jurisdictional grounds, holding that the borrower’s loan was availed for a commercial purpose with a dominant intention of profit generation and therefore did not fall within the statutory definition of consumer. The Court relied on precedents that require a close and direct nexus between the service availed and profit-generating activity (Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers; National Insurance Co. Ltd. v. Harsolia Motors; Shrikant G. Mantri v. Punjab National Bank).

The appeal on the quantum of compensation by the borrower was dismissed. This case clarifies the dominant-purpose test for consumer status in business-to-business loan transactions and emphasizes that self-branding or livelihood arguments cannot override an objective commercial nexus to profit generation.

Keywords: consumer, commercial purpose, project loan, deficiency in service, dominant intention, one-time settlement, No-Dues Certificate, wilful defaulter, CIBIL reporting.

B) CASE DETAILS 

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The case tests the boundary between consumer protection and commercial lending regimes when a corporate borrower alleges deficiency in banking services arising out of credit reporting. Ad Bureau Advertising Pvt. Ltd. obtained a project loan of ₹10 crores from Central Bank of India for post-production of a film; the loan was secured by property, became an NPA, and recovery proceedings under SARFAESI and RDDBFI Act followed. The parties ultimately entered into a One-Time Settlement (OTS) accepted by the Bank, the borrower paid delayed period interest, and the Bank issued No-Dues Certificates and filed a full-satisfaction memo before the DRT.

Despite this, the Bank reported the borrower to RBI/CIBIL as a defaulter with an outstanding amount, allegedly causing loss of reputation and inability to obtain a bank guarantee, which in turn led to losing a lucrative AAI advertising license. The borrower therefore approached NCDRC under the Consumer Protection Act, 1986, claiming negligence and deficiency in service. NCDRC found for the borrower on the merits and awarded substantial compensation. The Supreme Court’s background analysis engages the statutory text of Section 2(1)(d)(ii), focusing on the exclusion for persons availing services “for any commercial purposes”, and the Explanation that carves out self-employment for livelihood.

The Court situates this factual matrix within precedents that extract a dominant intention or close nexus test to determine whether an activity is commercial, thereby framing the central legal question: does availing a project loan for film post-production, partly used for self-branding, amount to non-commercial self-use, or is it a profit-oriented commercial enterprise excluding the borrower from consumer forum jurisdiction?

D) FACTS OF THE CASE

On 28.04.2014, Central Bank of India sanctioned a project loan of ₹10 crores to Ad Bureau Advertising Pvt. Ltd. for post-production of the film “Kochadaiiyaan”; the loan was secured by property registered in the Chairman-MD’s name. The borrower defaulted and the account was classified as NPA on 04.02.2015. The Bank issued Demand Notice and subsequently a Possession Notice (21.05.2015) under SARFAESI, taking symbolic possession.

The Bank filed recovery proceedings under Section 19(1) RDDBFI Act and obtained an order (05.12.2016) for recovery of ₹4,65,39,715 with interest @12% p.a. The borrower offered an OTS of ₹3.56 crores, which the Bank accepted. The borrower paid delayed period interest (~₹14.43 lacs); the Bank issued No-Dues Certificates on 13.01.2017 and 20.03.2017 and filed a full-satisfaction memo before the DRT. Despite these formal clearances, the Bank reported the borrower as a defaulter to RBI/CIBIL with an outstanding amount of ~₹4.17 crores; such reporting allegedly prevented HDFC Bank from issuing a required Bank Guarantee, causing cancellation of an AAI advertising license initially granted to the borrower.

The borrower filed a consumer complaint (CC No.23/2021) alleging deficiency in service and unfair trade practice; NCDRC awarded ₹75 Lakh compensation and ₹20,000 litigation costs, and directed issuance of a corrective certificate. The Bank challenged maintainability before the Supreme Court, contending the borrowing was commercial and outside the scope of Section 2(1)(d)(ii).

E) LEGAL ISSUES RAISED 

i. Whether a corporate borrower who avails a project loan for film post-production qualifies as a consumer under Section 2(1)(d)(ii) of the Consumer Protection Act, 1986?
ii. Whether self-branding or use for earning livelihood by self-employment can convert a clearly commercial loan into a non-commercial service for the purpose of consumer jurisdiction?
iii. Whether wrongful reporting by a bank to RBI/CIBIL, after issuance of No-Dues Certificates and filing of full-satisfaction memo, constitutes deficiency in service actionable under consumer law where the complainant is a commercial entity?

F) PETITIONER / APPELLANT’S ARGUMENTS

i. The Bank submitted that the loan was a business-to-business commercial transaction, availed with the dominant intention of profit generation and therefore the borrower is excluded from the definition of consumer under Section 2(1)(d)(ii).
ii. Reliance placed on this Court’s precedents (e.g., Lilavati, National Insurance, Shrikant G. Mantri) to show that where services are availed with a close nexus to profit-making activities, such services are commercial and not within consumer law.
iii. Emphasised that procedural and statutory recovery steps (SARFAESI, DRT) and subsequent settlement remove NCDRC jurisdiction to entertain the grievance as a consumer complaint.

G) RESPONDENT’S ARGUMENTS

i. The borrower argued that the loan was for self-use — specifically self-branding by placing its name on the film and promotional material — which falls within the Explanation to Section 2(1)(d) excluding commercial purpose where services are availed exclusively for earning livelihood by self-employment.
ii. Alleged gross negligence and deficiency in service by the Bank in continuing to report it as a defaulter despite No-Dues Certificates and full-satisfaction memo, causing quantifiable reputational and economic loss (loss of tender).
iii. Contended NCDRC’s award was appropriate given the seriousness of wrongful reporting and downstream commercial harm.

H) JUDGEMENT

The Supreme Court allowed the Bank’s appeal on the narrow ground of lack of jurisdiction of the NCDRC, holding that Ad Bureau did not qualify as a consumer under Section 2(1)(d)(ii). The Court analysed the statutory exclusion for commercial purpose and the Explanation for self-employment and applied the dominant intention and close nexus tests from precedent. It rejected the borrower’s contention that the loan was purely a self-branding exercise for livelihood: the Court found that even branding aimed at increasing market visibility ultimately serves profit-making ends and that post-production of a film is a commercial activity.

Drawing on Lilavati and National Insurance, the Court emphasised that the objective character of the transaction loan for a commercial venture was determinative. The Court also cited Shrikant G. Mantri to show analogous rejection of self-employment claims where the overdraft financed business expansion. As a consequence, the NCDRC order awarding compensation was set aside for want of jurisdiction; however, the Court expressly refrained from expressing any view on the merits of alleged wrongful reporting and left open other remedies.

In the separate appeal by the borrower challenging quantum, delay was condoned but the appeal was dismissed as there was no scope to interfere with quantum given the jurisdictional ruling. The Court directed disposal of pending applications.

a. RATIO DECIDENDI

The dispositive legal ratio is that a person who avails services for a commercial purpose is excluded from the definition of “consumer”. The correct test examines whether the service has a close and direct nexus to profit-generating activity and whether the dominant intention was to facilitate profit generation. Self-branding employed as a means to attract customers is, objectively, within the ambit of commercial purpose and cannot be treated as solely for livelihood by self-employment. Precedents cited establish that business-to-business credit facilities taken to expand or sustain commercial operations do not fall under consumer protection jurisdiction.

b. OBITER DICTA 

The Court noted in obiter that it had not adjudicated upon the substantive merits of the allegation that the Bank wrongly reported the borrower as a defaulter after issuing No-Dues Certificates and filing a full-satisfaction memo; it recognised the gravity of such wrongful reporting but limited its decision strictly to jurisdictional competency. The judgment invites appropriate civil or administrative remedies without foreclosing conventional legal recourse against alleged unjustified credit reporting.

c. GUIDELINES

1. Apply the dominant-purpose and close-nexus tests from Lilavati and National Insurance to determine consumer status in commercial lending contexts.

2. Where services are availed by corporate entities connected to profit-making ventures, treat the transaction as commercial unless exceptional evidence proves exclusive self-employment use for livelihood.

3. Consumer fora must first satisfy themselves of jurisdiction under Section 2(1)(d)(ii) before deciding merits where commercial activity is involved.

4. Wrongful credit reporting, while serious, may require relief through alternative fora if the complainant falls outside consumer jurisdiction.

I) CONCLUSION & COMMENTS

The decision reinforces a restrained approach to consumer jurisdiction in the face of commercial lending. It clarifies that corporate borrowers who use bank credit for projects with an inherent profit motive cannot convert the relationship into a consumer-service dispute by subjective assertions of self-branding or livelihood rationale. Practically, the ruling underscores the need for claimants to evaluate jurisdictional viability before approaching consumer fora and signals that banks remain subject to other legal checks for wrongful reporting though not via consumer adjudication in such circumstances. The judgment aligns with precedents applying objective tests to discern dominant purpose and preserves space for claimant remedies under civil, administrative, or regulatory mechanisms when consumer jurisdiction is absent.

J) REFERENCES

a. Important Cases Referred

1. The Chief Manager, Central Bank of India & Ors. v. M/s Ad Bureau Advertising Pvt. Ltd. & Anr., [2025] 2 S.C.R. 1445 : 2025 INSC 288.

2. National Insurance Company Ltd. v. Harsolia Motors & Ors., (2023) 8 SCC 362.

3. Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers, (2020) 2 SCC 265.

4. Shrikant G. Mantri v. Punjab National Bank, (2022) 5 SCC 42.

b. Important Statutes / Instruments Referred

1. Consumer Protection Act, 1986, Section 2(1)(d)(ii).

2. Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

3. Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (RDDBFI Act).

4. RBI Master Circular on Wilful Defaulters, DBOD No. BC/CIS/47/20.16.002/94 dated 23.04.1994.