In a significant order that could influence thousands of small investors, the Kerala High Court on Friday refused to interfere with the Consumer Commissions’ finding that buyers of Non-Convertible Debentures (NCDs) can be treated as “consumers” under the Consumer Protection Act, 2019. The ruling came in a case involving Kosamattam Finance Ltd. and its Managing Director, Mathew K. Cherian, who had challenged the maintainability of a complaint filed by an individual investor from Kollam.
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The courtroom witnessed a slightly tense but steady back-and-forth as Justice Ziyad Rahman A.A. read the matter, often pausing to cross-check earlier orders issued in the same dispute. It was all about one question: Is an NCD investor a consumer?
Background
The dispute began when an individual investor from Kollam purchased NCDs issued by Kosamattam Finance but allegedly did not receive the interest promised under the scheme. The Consumer Commission at Kollam accepted his complaint, following which the company argued that such an investor does not fall under the definition of “consumer.”
Earlier, the High Court had twice directed the District Consumer Commission to first decide the maintainability issue before proceeding. But the Commission initially passed a final order without doing so, forcing the petitioner to return to the High Court. Eventually, both the District Commission and the State Commission examined the issue and held that the complaint was maintainable. Those findings led to the current writ petition.
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Court’s Observations
Justice Rahman’s judgment went into considerable detail, almost narrating a mini-lecture on the definition of “consumer” in the 2019 Act and how the law intends to protect individuals rather than commercial bodies.
The bench noted that even if an NCD is not treated as a “good,” the law clearly covers persons who “hire or avail any service for consideration.” Issuing debentures, the court explained, involves accepting money with a promise of repayment and interest, which reasonably falls under “service.”
At one point, the judge remarked, “The definition of ‘service’ is intentionally wide. It includes financing and banking. When the law says this, the interpretation cannot be narrowed unless the Act itself restricts it.”
The petitioner’s argument that the investment was of a “commercial nature” was rejected as well. Justice Rahman pointed out that earlier Supreme Court rulings cited by the petitioner involved companies, firms, or individuals acting on behalf of commercial entities, whereas the present case involved an individual investing in his personal capacity.
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“The bench observed, ‘A person investing for better returns to secure his future cannot automatically be branded as engaging in commercial activity,’” the judgment reads.
The court emphasised that the Consumer Protection Act aims to safeguard “business-to-consumer” relations, and exclusions must be used sparingly.
Decision
Finding no basis to disturb the orders of the District and State Consumer Commissions, the High Court dismissed the writ petition. However, responding to a request from the petitioner’s counsel, the judge ordered that further proceedings in the consumer case (C.C. 205/2022) be kept in abeyance for ten days, giving the petitioner time to approach a higher forum if desired.
And with that, the court closed the file-at least for now.
Case Title:- Mathew K. Cherian v. State Consumer Commissions & Liji Philip
Case Number:- WP(C) No. 38924 of 2025
Date of Judgment:- 24th October 2025
