1. Introduction

The rapid growth of financial instruments such as non-convertible debentures (NCDs) and corporate fixed-income products has created new complexities in the domain of consumer protection law. A recurrent question that courts and tribunals have grappled with is whether individual investors who subscribe to such financial products can be regarded as “consumers” under the Consumer Protection Act, 2019 (CPA, 2019).

On 24 October 2025, the Kerala High Court delivered a significant judgment in Mathew K. Cherian v. State Consumer Disputes Redressal Commission & Ors., addressing precisely this issue. The decision clarifies the legal position on whether an individual who invests in NCDs issued by a finance company avails a “service” and whether such investment constitutes a “commercial purpose”. The ruling has far-reaching consequences for financial service providers and for investors seeking redress before consumer forums.

2. Factual Background

The petitioner, the Managing Director of Kosamattam Finance Ltd., challenged orders of the District Consumer Disputes Redressal Commission (CDRC), Kollam, and the State Consumer Disputes Redressal Commission, which had held that a consumer complaint filed by an individual debenture holder was maintainable.

The complainant had subscribed to Non-Convertible Debentures (NCDs) floated by the company and alleged deficiency in service due to non-payment of the promised interest. He approached the consumer commission seeking redress. The company contested the maintainability of the complaint, asserting that:

1. The investor was not a “consumer”;

2. NCDs did not constitute “goods”;

3. The investment amounted to a commercial activity, not protected by the Act.

Earlier, the High Court had directed the District Commission to decide the maintainability as a preliminary issue. The District Commission held the complaint maintainable, and the State Commission affirmed this conclusion. These concurrent findings were challenged through the present writ petition.

3. Issues Before the High Court

The High Court examined three principal questions:

1. Does subscribing to Non-Convertible Debentures amount to availing a “service” under Section 2(42) of the Consumer Protection Act, 2019?

2. Can an individual debenture holder be regarded as a “consumer” under Section 2(7)?

3. Does such an investment amount to a “commercial purpose”, thereby excluding consumer jurisdiction?

4. Whether NCD Subscription Amounts to a “Service”

A central argument by the petitioner was that NCDs do not fall within the definition of “goods”, and therefore, the complainant was not a consumer. The Court held that even if NCDs are not goods, the transaction undeniably constitutes a financial service.

4.1. Statutory Basis

Section 2(42) of CPA, 2019 defines “service” in expansive terms, expressly including facilities in connection with banking and financing. When a company accepts money in exchange for a promise to repay with interest, it engages in a financial service for consideration.

4.2. Judicial Support

The Court relied on Supreme Court precedents such as:

• Vodafone Idea Cellular Ltd. v. Ajay Kumar Agarwal (2022)

• Standard Chartered Bank v. Dr. B.N. Raman (2006)

Both decisions emphasise the wide amplitude of the term “service”, intended by Parliament to cover a broad spectrum of consumer transactions. The Court held that debenture issuance fits comfortably within this definition.

5. Whether an Individual Debenture Holder Is a “Consumer”

The petitioner argued that the complainant was not a consumer, as the transaction was essentially commercial. The Court rejected this argument.

5.1. Definition Under Section 2(7)

A consumer includes any person who hires or avails any service for a consideration, unless such service is obtained for a “commercial purpose”.

Since the complainant invested his personal funds in return for interest, he availed a financial service for consideration, thereby satisfying the statutory definition.

6. Whether the Investment Was for a “Commercial Purpose”

This was the most contentious question. The petitioner relied on Supreme Court rulings such as:

• Annapurna B. Uppin v. Malsiddappa (2024)

• AD Bureau Advertising Pvt. Ltd. v. Central Bank of India (2025)

In these cases, the Court held that investments made for earning profit could amount to commercial transactions. However, the High Court distinguished these decisions.

6.1. Distinguishing Commercial Investments

The Court noted that in all the cited Supreme Court decisions:

• The investments were made by companies, firms, or professionals,

• Or they were directly linked to business operations.

In the present case, the complainant invested in his individual capacity, and there was no evidence linking the investment to any business activity. The Court stressed that individual investments aimed at financial security or better returns do not automatically convert into commercial activity.

6.2. Interpretation of “Commercial Purpose”

The Court invoked classic precedents:

• Laxmi Engineering Works v. PSG Industrial Institute (1995)

• Lilavati Kirtilal Mehta Medical Trust v. Unique Shanti Developers (2020)

These cases clarify that a “commercial purpose” must involve a direct connection with a profit-generating activity. The Court emphasised that “livelihood” under the Act should be understood broadly, covering efforts to secure financial stability or improve living standards.

Thus, unless the investor is operating in a business capacity, his investment cannot be excluded from the protection of CPA, 2019.

7. A Liberal, Consumer-Friendly Interpretation

The judgment reiterates the beneficial nature of consumer protection legislation. The Court highlighted that:

• CPA, 2019 is designed to protect individual consumers;

• It primarily governs business-to-consumer (B2C) transactions;

• Exclusions should be narrowly interpreted;

• The Court must adopt a policy of inclusion rather than exclusion.

Therefore, in the absence of clear evidence of commercial intent, an individual investor must be treated as a consumer.

8. Final Decision

The High Court upheld the findings of the District and State Commissions and dismissed the writ petition. It refused to interfere with the conclusion that the complaint was maintainable.

However, acknowledging the petitioner’s request for time to pursue further remedies, the Court directed that the proceedings before the District Commission be kept in abeyance for ten days.

9. Significance of the Judgment

This ruling is notable for several reasons:

1. Clarifies legal position regarding individual investments in NCDs.

2. Strengthens investor rights by categorising debenture subscription as a financial service.

3. Reinforces the principle that consumer law protects individual investors, not just buyers of consumer goods.

4. Distinguishes between personal investment and commercial investment, providing clearer boundaries.

5. Provides guidance for consumer commissions dealing with financial disputes.

In an era where corporate financial products are widely marketed to individuals, this decision ensures that investors retain access to the protective mechanisms of consumer forums.

10. Conclusion

The Kerala High Court’s judgment in Mathew K. Cherian v. SCDRC & Ors. marks an important affirmation of consumer rights in the financial sector. By recognising individual debenture investors as consumers and treating debenture subscription as a “service”, the Court has expanded the protective ambit of the Consumer Protection Act, 2019. The judgment strikes a careful balance between commercial investment disputes and genuine consumer grievances, ensuring that individuals seeking safe, interest-bearing financial products are not deprived of legal remedies. It is a significant step in aligning consumer protection jurisprudence with contemporary financial practices.