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Supreme Court of India19 March 20262026 INSC 264

Sant Rohidas Leather Industries v. Vijaya Bank

Bench of 2 · Justice Pamidighantam Sri Narasimha, Justice Manoj Misra

Why it matters

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Advocates acting for corporate depositors in consumer disputes against banks can now cite this judgment to resist the blanket argument that any FDR earns interest and is therefore "commercial" — the dominant-purpose test governs and the burden lies on the bank. Conversely, where a complaint is rooted in allegations of fraud or forgery (e.g., unauthorised pledge of an FDR), practitioners must advise clients to approach a civil court or criminal forum rather than NCDRC, as such complaints will be dismissed as not maintainable under the 1986 Act.

Summary

Sant Rohidas Leather Industries and Charmakar Development Corporation Ltd., a State of Maharashtra undertaking, filed a consumer complaint before NCDRC against Vijaya Bank, alleging that its Rs. 9 crore fixed deposit was fraudulently pledged by the Bank to create an overdraft facility of Rs. 8.10 crores without the appellant's sanction, and that the Bank thereafter adjusted the FDR's maturity proceeds against the overdraft dues. NCDRC dismissed the complaint holding that since the FDR earned interest, the banking services were availed for a commercial purpose and the appellant was not a "consumer" under s.2(1)(d) of the Consumer Protection Act, 1986. The appellant challenged that dismissal before the Supreme Court.

The Court dismissed the appeal, but on reasoning materially different from NCDRC's. On Issue (i), the Court held that NCDRC was wrong to equate interest-earning with commercial purpose — merely because a fixed deposit earns interest does not mean banking services were availed for a commercial purpose, since all deposits ordinarily yield interest. The correct test is the dominant purpose of the transaction: whether it has a close and direct nexus with profit generation. However, because the Bank had set up a case that the FDR was pledged to leverage a credit facility — a dispute unresolved by any civil or criminal court — it was impossible to determine the true purpose of the deposit without first adjudicating the fraud/forgery allegations. On Issue (ii), the Court held the complaint was not maintainable under the 1986 Act because the core grievance — a fraudulent pledge and consequent adjustment of FDR proceeds — involves complex questions of criminal and tortious liability that cannot be resolved in summary consumer proceedings. The appellant was left at liberty to pursue appropriate civil or criminal remedies.

The Court distinguished NCDRC's reasoning while affirming its conclusion, expressly disagreeing with the view that interest-earning per se imports commercial purpose. It reaffirmed the principles in Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers, National Insurance Co. Ltd. v. Harsolia Motors, and Ravneet Singh Bagga v. KLM Royal Dutch Airlines, and clarified the burden-of-proof framework from Shriram Chits (India) Private Limited v. Raghachand Associates — the burden to prove commercial purpose lies on the respondent, not the complainant.

Key principle

Merely because a fixed deposit receipt earns interest does not mean that banking services were availed for a commercial purpose; the determinative test is the dominant purpose of the transaction, and the burden of proving commercial purpose lies on the respondent. Where the complaint allegations necessarily involve adjudication of fraud, forgery, or tortious/criminal acts, the complaint is not maintainable in summary proceedings under the Consumer Protection Act, 1986 and must be pursued before an appropriate civil or criminal court.

Holding

Dismissed — the consumer complaint was not maintainable because the core allegations of fraudulent pledge and adjustment of FDR proceeds involve complex questions of criminal and tortious liability incapable of summary adjudication under the Consumer Protection Act, 1986, even though NCDRC's reasoning that interest-earning per se constitutes commercial purpose was disapproved.

Statutes invoked

  • Consumer Protection Act, 1986 · 2(1)(d)
  • Consumer Protection Act, 1986 · 2(1)(m)
  • Consumer Protection Act, 1986 · 2(1)(o)
  • Consumer Protection Act, 1986 · 2(1)(g)

Practice areas

consumercommercial
AI-generated summary, written by Claude Sonnet 4.6 from the court's published judgment. Always verify the original before relying on the summary in court. Generated on 21 May 2026.