INTRODUCTION
In a significant ruling that strengthens the rights of individual financial investors, the Kerala High Court in Mathew K. Cherian v. State Consumer Disputes Redressal Commission & Ors. (WP(C) 38924/2025 held that a person investing in Non – Convertible Debentures (NCDs) in his individual capacity qualifies as a “consumer” under the Consumer Protection Act, 2019. Justice Ziyad Rahman A.A. clarifies that non – payment of interest on NCDs constitutes a deficiency in service, emphasizing that financial transactions provided by entities such as Kosamattam Finance are covered within the definition of “service” under Section 2(42) of the Consumer Protection Act, 2019. The Court upheld the concurrent findings of the District and State Consumer Commissions rejecting the petitioner’s argument that NCDs are commercial investments beyond consumer jurisdiction.
BACKGROUND
The dispute traces back to a complaint filed before the Kollam District Consumer Disputes Redressal Commission by an individual investor alleging non – payment of interest on NCDs purchased from Kosamattam Finance Ltd. The managing director of the company challenged the maintainability of the complaint, claiming that NCDs do not qualify as “goods” and the investment was a commercial transaction. Even though the High Court had earlier instructed the District Commission to decide the maintainability issue first, the Commission went ahead and issued a final order, resulting in successive writ petitions. In the end, both the District and State Commissions concluded that the investor fell within the definition of a “consumer.”
KEY POINTS
- The Court held that an investor purchasing NCDs in his personal capacity does not naturally fall within the “commercial purpose” exclusion under Section 2(7) of the Act, 2019.
- Since the company accepted money promising for repayment with interest, the transaction amounted to a financial service under Section 2(42), of the Act, 2019, which expressly includes banking and financing activities.
- Merely claiming that an investment yields profit does not convert it into a commercial transaction, the petitioner failed to show that the investor acted for business or trade purposes.
- The Court discussed cases like Annapurna B. Uppin and Ors. Vs. Malsiddappa and Another ( AIR 2024 SC 2015), The Chief Manager, Central Bank of India and Ors. vs. AD Bureau Advertising Pvt. Ltd. and Ors. (MANU/SC/0288/2025) and Shrikant G. Mantri v. Punjab National Bank [(2022) 5 SCC 42] were distinguished on the ground that those investments were connected to business entities or commercial ventures.
- The Court reiterated that the Consumer Protection Act is a welfare legislation and exclusions must be applied narrowly, especially in “business-to-consumer” disputes involving individuals.
RECENT DEVELOPMENTS
The ruling connects with the growing judicial approach that widens consumer protection within the financial and investment sphere. Courts nationwide have recognized that individuals investing in deposits, debentures, or other financial products typically aim to secure personal financial stability, not engage in commercial activity. This perspective is in accordance with recent Supreme Court rulings that endorse an expansive reading of “service” and “consumer” to safeguard individuals involved in complex financial dealings. At the same time, the ruling acts as a corrective to companies that attempt to portray investment-related grievances as commercial disputes to avoid the jurisdiction of consumer fora. With rising retail investor participation and growing oversight by the NCDRC and State Commissions, the decision reinforces that financial institutions cannot avoid liability for failing to honour returns promised under structured investment schemes
CONCLUSION
The decision of the High Court of Kerala marks a crucial reaffirmation of consumer rights in financial services. By recognising NCD investors as “consumers” and holding that non – payment of interest constitutes deficiency in service, the Court has widened the protective ambit of the Consumer Protection Act, 2019.
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Written by- Susmita Roychowdhury
