Supreme Court Rules: Borrowers of Profit-Generating Loans Not 'Consumers'

The Supreme Court ruled that borrowers of loans for profit-generating purposes are not 'consumers' under the Consumer Protection Act. The case involved the Ad Bureau Advertising Pvt Ltd, which alleged reputational damage after being marked as a defaulter by the Central Bank of India, despite settling its dues.

The Supreme Court has ruled that borrowers using loans for profit-generating activities cannot be termed 'consumers' under the Consumer Protection Act. This decision arose from a case involving the Central Bank of India and Ad Bureau Advertising Pvt Limited. The Ad Bureau accessed a loan for the post-production of a film but was marked as a defaulter despite settling a one-time payment.

The Central Bank's marking of Ad Bureau as a defaulter led to reputational damage claims. The National Consumer Disputes Redressal Commission (NCDRC) sided with the Ad Bureau, directing the bank to compensate Rs 75 lakh and issue a clearance certificate.

The bank appealed to the Supreme Court, which clarified that although the Ad Bureau could be considered a consumer, the loan’s purpose - facilitating a profit-making venture - excluded it from consumer jurisdiction. The court's verdict underscores the nuances in commercial dealings and consumer rights.