Supreme Court Rules Consumer Complaints Unfit for Investments Yielding Interest, Deems Commercial Transactions Beyond Consumer Protection Act Jurisdiction

In a significant ruling, the Supreme Court has declared that complaints seeking recovery of investments generating interest cannot be entertained under the Consumer Protection Act of 1986. The decision, delivered by a Bench comprising Justices Vikram Nath and Satish Chandra Sharma, has far-reaching implications for consumer grievances related to commercial transactions.

The judgment was passed in response to a civil appeal filed by the legal heirs of a partner of a firm, challenging a decision of the National Consumer Dispute Redressal Commission (NCDRC). The case revolved around an investment dispute wherein the respondent had invested Rs. 5 lakhs in a partnership firm, with the expectation of repayment after 120 months at an interest rate of 18% per annum.

Despite the maturity period ending, the investment amount was not returned, prompting the respondent to file a consumer complaint seeking recovery. However, the appellants contended that the transaction was commercial in nature and thus fell outside the purview of the Consumer Protection Act.

The Supreme Court, in its observation, concurred with the appellants' argument, emphasizing that the complainant, who was also a partner of the firm during the investment period, would not benefit from the consumer complaint. The court highlighted the absence of evidence indicating the dissolution of the partnership deed, thereby deeming the complainant as a partner of the firm at the time of investment.

Furthermore, the court rejected the respondent's argument regarding the liability of the legal heirs of the managing partner, stating that legal heirs do not inherit the liabilities of the partnership firm upon the partner's death unless expressly mentioned in a reconstituted partnership deed.

Consequently, the appeal was allowed, and the complaint filed by the respondent was set aside. The ruling underscores the distinction between consumer disputes and commercial transactions, providing clarity on the jurisdiction of the Consumer Protection Act. It also establishes a precedent regarding the liability of legal heirs in partnership firms, contributing to the legal framework governing business transactions in India.