The Supreme Court has ruled that complaints seeking the recovery of investments from which the complainant is receiving benefits in the form of interest cannot be entertained under the Consumer Protection Act of 1986.
In a judgment authored by Justice Vikram Nath, the Bench comprising Justices Vikram Nath and Satish Chandra Sharma stated, “It was a commercial transaction (investment) and therefore would also be outside the purview of the 1986 Act. Commercial disputes cannot be decided summarily under the 1986 Act; the appropriate remedy for recovery of the said amount, if any, would be before the Civil Court. The complaint was thus not maintainable.”
The case involved alleged non-payment of an investment amount by the appellants (legal heirs of the partner of the firm) to respondent No.1. The respondent had invested Rs. 5 lakhs in a partnership firm, where the appellant’s husband was a partner, with repayment due after 120 months at an interest rate of 18% per annum. When the amount was not returned even after the maturity period ended, the respondent filed a consumer complaint claiming the said amount.
Forums at various levels had allowed the respondent’s complaint, leading the appellants to approach the Supreme Court.
Arguments presented before the Supreme Court contended that the investment transaction in the partnership firm was commercial, rendering the consumer complaint seeking recovery of the investment made by respondent No. 1 not maintainable under the 1986 Act.
In its observation, the Supreme Court agreed with the appellant’s contentions, ruling that the complaint seeking recovery of the investment was not maintainable under the 1986 Act.
The Court noted that respondent No.1, being a partner of the partnership firm during the investment period, would not benefit from the complaint.
Furthermore, the Court rejected the argument of respondent No.1 (complainant) that the appellants, as legal heirs of the managing partner of the firm, cannot escape liability for the managing partner’s obligations. The Court clarified that the legal heirs of a deceased partner do not inherit the liabilities of the firm upon the partner’s death.
