State Consumer Disputes Redressal Commission
M/S.Axis Bank Ltd., Cuffee Parada ... vs . Indumathi Venugopal,Old No.35, New ... on 5 April, 2010
BEFORE THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHENNAI BEFORE THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION, CHENNAI Present Hon'ble Thiru Justice M. THANIKACHALAM PRESIDENT Tmt.Vasugi Ramanan, M.A., B.L., MEMBER I F.A.NO.196/2005 [Against order in C.C.No.305/2001 on the file of the DCDRF, Chennai (South)] DATED THIS THE 5th DAY OF APRIL 2010 1.
M/s.Axis Bank Ltd., | (Formerly known as M/s.UTI Bank Ltd.,) | Maker Towers "F" 13th Floor, | Cuffee Parada Colaba, | Mumbai - 5. | | Appellants/1 & 2 OPs.
2. M/s.Axis Bank Ltd., | (Formerly known as M/s.UTI Bank Ltd., | 82, Dr.Radhakrishnan Salai, | Chennai 600 004. | | Both the appellants are rep. by its | Assistant Vice President K.Suresh Kumar.
Vs.
1. P.S. Raghavachari, | S/o.P.R. Srinivasan, | |
2. Indumathi Venugopal, | 1 & 2 Respdts/Complainants W/o.K.Venugopal, | both residing at: | Old No.35, New No.4, Sripuram First Street, | Royapettah, Chennai-14. |
3. M/s.Hindalco Industries Ltd., | 3rd Respondent/3rd O.P. rep. by its Company Secretary, | Century Bhavar III Floor, | Dr.Annie Besant Road, Mumbai - 25. | The respondents 1 & 2 as complainants filed a complaint before the District Forum against the opposite parties praying for the direction to the opposite parties to pay a sum of Rs.10,000/- towards loss incurred by the complainants, to pay Rs.50,000/- towards mental agony and trauma, to pay Rs.750/- towards telephone calls, to pay Rs.50,000/- towards deficiency in service, to pay Rs.5,000/- towards legal expenses, to payRs.1,95,750/- to the complainants with interest at 18% per annum from the date of complaint till the date of realization. The District Forum allowed the complaint, against the said order, this appeal is preferred praying to set aside the order of the District Forum dt.28.01.2005 in C.C.303/2001.
This appeal coming before us for hearing finally on 19.03.2010, upon hearing the arguments of the counsels on eitherside, this commission made the following order:
Counsel for the Appellant /1 & 2 OPs : Mr.V.P.Krishnamurthy, Advocate.
Counsel for the R1 & R2/Complainants : Senior Counsel Mrs.Hema Sampath argued for Mr.A.Palaniappan, Advocate.
For the R3/3rd OP : Absent.
M. THANIKACHALAM J, PRESIDENT
1. The first and second opposite parties, having failed before the District Forum in resisting the claim of the complainants/respondents 1 & 2, have come before this Commission as appellants.
2. The complainants having number of shares in their joint name of different companies, availing the services of the depository system, opened an account through the second opposite party, a branch of the first opposite party, who is a depository participant. It is their duty as and when instructions were delivered, to follow the instructions and complete the transactions.
3. The complainants held 100 shares of the third opposite party in their Demat Account with the second opposite party, branch of the first opposite party and the account number is 10024390.
4. In the month of May 2000, the third opposite party offered to acquire the equity shares of INDAL at Rs.190/-, which was higher price than the prevailing market rate. Therefore, the complainant and their relatives wanted to avail the said offer and pursuant to the same, they sent the delivery instructions for transfer of their 100 shares in the third opposite party, to their depository participant on 23.5.2000. The offer was closed on 24.6.2000.
5. Though it is the duty of the first and second opposite parties to carry out the delivery instructions, they have not informed of the fate of their instructions and meantime, the price of the share as heavily come down.
In order to avert further loss, the complainants were forced to transfer their shares to Renukeshwar Investments and Finance Ltd., on 11.10.2000 at Rs.90/- per share, thereby, loosing an income of Rs.100/- per share and in this way, the loss comes to Rs.10,000/-.
6. The complainants have issued a lawyer's notice, demanding compensation for the deficiency in service and negligence on the part of the opposite parties, which has not brought any positive result, except informing that the matter is under consideration. Because of the failure on the part of the opposite parties, the complainants were compelled to sell their shares for lesser price and the depository participant are bound to compensate the loss caused to the complainants, by their ineffective service. Hence, the claim for loss, compensation for mental agony and for other reliefs as enumerated in Para 16 of the complaint.
7. The first and second opposite parties admitting the instructions given by the complainants dated 23.5.2001, would contend that on receipt of the instructions, the same were duly carried out by the opposite parties on 24.5.2001, however "Instructions failed due to not matched status", that first 100 shares were rejected for the negligence of the first complainant as the signature on the instruction slip did not tally, which was later confirmed and sent for transaction, but failed, that at no point of time, the complainants have pointed out either expressly or even impliedly, the date of offer opened, though it is alleged, offer opened from 26.5.2001, that the opposite parties have acted with due diligence and utmost care and in conformity with their norms and practice, which should follow, they have not caused any deficiency at any point of time and that Consumer Forum has no jurisdiction, praying for the dismissal of the claim, denying specifically other allegations in the complaint also.
8. The third opposite party addressed a letter to the District Forum dated 17.7.2001, denying its liability, further informing that they had settled the complaint of the complainant, praying the dismissal of the case, as far as they are concerned.
9. The District Forum considering the rival contentions of the parties, based upon the pleadings, affidavits as well perusing the documents relied on by either side, came to the conclusion as per the order dated 28.1.2005, that the service provided by the first and second opposite parties were not to the satisfaction of the complainants, that because of the conduct of the first and second opposite parties, in not carrying out the delivery instructions, the complainants have suffered per share, a loss of Rs.100/- and not only, that should be compensated, but they also compensated for mental agony. Thus concluding, a direction came to be issued, directing the first and second opposite parties alone to pay a sum of Rs.10,000/- being the loss incurred by way of difference in selling price of the shares with interest at 12% per annum from 24.6.2000 till the date of realization, in addition to, pay a sum of Rs.2,500/- towards deficiency and Rs.2,500/- towards mental agony, further directing the first and second opposite parties to pay a cost of Rs.1,000/-, thereby, causing grievance to the opposite parties, compelling them to come before this Commission as appellants.
10. Heard, the learned counsel appearing for either side, perused the documents, written submissions as well as the order of the District Forum.
11. The learned counsel for the appellants would contend that even before the offer was opened by the third opposite party, delivery instructions were given on 23.5.2000 without informing the date of opening of the offer, that as and when the instructions were delivered, they acted pursuant to the same, which failed, for which, if at all, the third opposite party alone could be held responsible, which was not properly considered by the District Forum.
It is the further submission of the learned counsel for the appellants, that the complainants had given delivery instructions, much earlier to the opening of the offer to the third opposite party that is 23.5.2000 itself, on which basis first and second opposite parties have acted immediately and even rectified the mistake pointed out regarding the difference in signature and in this way, they did their service to their best, not giving any room for deficiency, which was not properly analyzed by the District Forum. It is the further submission of the learned counsel for the appellants, that the District Forum has failed to take note off the improper follow up of the complainants based upon the accounts submitted by the first and second opposite parties, then and there and having failed to do so, they cannot attribute deficiency upon the first and second opposite parties.
12. Opposing the above submissions and other points raised in the Written Arguments also, the learned senior counsel appearing for the complainants/respondents 1 & 2 would contend that as such the transaction was charged to the consumer and in this case having collected, failed to perform the duty and in this view, there was definite deficiency of service of the appellants, that for the loss incurred by the complainants, first and second opposite parties alone should be held squarely responsible, since they failed to transfer the shares in one month period available for doing so, that even after the confirmation of the signature on 27.5.2000, difference in the signature is not available for the first and second opposite parties to evade the responsibilities, that the next statement dated 1.7.2000 was given after the offer was closed on 24.6.2000 and this being the position, the complainants had no opportunity to find out whether their instructions were carried out or not and that under Section 16 of the Depositories Act 1996 as well as under the provisions of SEBI Regulations 1996, every depository shall extend all such cooperation to the beneficial owners as is necessary for the effective, prompt and accurate clearance and settlement of securities, transactions and conduct of business, which the first and second opposite parties failed, and violated the statutory provisions and therefore, the award granted by the District Forum cannot be faulted with.
13. After hearing the elaborate arguments of either side, then by going through the documents, as well as provisions applicable to the case on hand, we are of the considered opinion that the District Forum has not committed any error, except the conceded fact, which we will discuss infra and therefore we hesitate and decline to interfere with the findings of the District Forum, though no reasons are elaborately assigned and we are constrained to confirm the findings of deficiency in service.
14. It is the common case of the parties that the complainants owned / possessed/ held 100 shares of Indian Aluminium Co. Ltd., a subsidiary of the third opposite party. It is also an admitted fact that in order to avail the service of the depository the complainants have opened an account through the second opposite party, which is a depository participant. The duties and liability of the depository participant are also admitted in the sense that as and when instructions which are commonly known as 'delivery instruction', the depository participant namely first and second opposite parties, should take follow up action and it is their duty also to complete the transactions. Under Section 16 of the Depositories Act 1996, any loss caused to the beneficial owners due to the negligence of the depository or the participant, the depository shall indemnify such beneficial owner. It is the specific case of the complainants, that the depository participant namely the first and second opposite parties have failed in their duties to carry out the instructions negligently due to their deficiency in service, thereby, the complainants were put to loss to the extent of Rs.100/- per share, which should be compensated. In this context, we have to see the shares owned by the complainants, when the third opposite party offered to purchase the same, what was the market value offered then etc.,
15. The complainants held 100 shares of the third opposite party, not in dispute. It is also not seriously disputed that in May 2000, the third opposite party offered to acquire the equity shares of HINDALCO. Ltd., at Rs.190/- and the offer was opened on 26.5.2000, closed on 24.6.2000 and the offer remained for one month. The complainants realizing that the offer was beneficial to them, they have decided to transfer, for which, they have given delivery instructions to first and second opposite parties on 23.5.2000, not in dispute. It is also not under serious challenge that immediately the first and second opposite parties took follow up action, but instructions failed, probably because of the fact, actually the offer was opened only on 26.5.2000. But, unfortunately, first and second opposite parties have not taken any steps pursuant to the delivery instructions, though the offer was opened for one month. The contentions of the complainants that they contacted the first and second opposite parties periodically, not under challenge and when a written demand was made, reply emanated as if under consideration, on reply, they would advise. The delivery instructions given to the appellants not in dispute though they have not given actual date of offer. The first and second opposite parties being the depository participant, they should have followed the instructions till the offer was opened, but in this case, they have not followed and we would say, admittedly, since not proved otherwise. In this way, it should be held that they have committed deficiency in service, though have collected charges also.
16. The contention of the first and second opposite parties that it is the duty of the complainants also to take note of the account and on that basis, realizing that their instructions were not followed, would have taken immediate action, which they failed and having failed, they cannot accuse the first and second opposite parties. As rightly submitted by the Senior Counsel for the complainants/respondents 1 & 2, we do not have the materials that the periodical statements were sent once in 15 days, whereas during the relevant period, only one statement dated 31.5.2000 by the first and second opposite parties, which was after 5 days from the opening, which would not have disclosed the transaction failed.
According to the complainants, the next statement was received by them only on 1.7.2000 after the offer was closed on 24.6.2000. Therefore, there was no opportunity to know, by going through the statement, that their delivery instructions had failed. In this view, the first and second opposite parties cannot escape from their responsibilities and service ought to have been provided, as if there was fault on the part of the complainants. Hence, accepting the contentions of the complainants, we are inclined to hold that the first and second opposite parties had neglected to perform their service as per the standard expected from them.
17. After closure of the offer, according to the complainants, in order to avert further loss, they were forced to transfer the shares to Renukeshwar Investments and Finance Ltd., on 11.10.2000 at Rs.90/-, which is also evidenced by documents. If really, the first and second opposite parties had acted diligently, had did their service effectively as expected in the ordinary course, the shares held by the complainants would have been transferred or sold as per the offer made then at Rs.190/-. Because of their negligence, the complainants were compelled to sell their shares only for Rs.90/-. The difference in the shares alone claimed as compensation as loss.
19. True, immediately after delivery instructions, the appellants have acted, but instructions failed because of the fact, offer opened from 26.5.2000. It is the duty of the appellants to inform the complainants that for what reasons the instructions failed, seeking further instructions also if necessary, which in our considered opinion, first and second opposite parties/appellants have failed. No defence also has been taken, that they have informed the failure of delivery instructions and despite the complainants have failed to take further action. On the other hand, it is the submission of the appellants that the complainants have failed to follow the fortnight statement of accounts and to give further instructions, which was not taken into consideration by the District Forum. As we have already adverted to above, no materials have been placed, indicating fortnight statement of accounts were delivered. On the other hand, it is the case of the complainants that the statement dated 1.7.2000 was received by them after the offer was closed and therefore, there was no opportunity for the complainants to give further instructions. The first and second opposite parties having failed in their duty, would contend that due to the negligence of the complainants, the shares were not debited to their demat account and credited to Escrow account of HINDALCO Industries Ltd., is not acceptable to us, since no such negligence was available on the part of the complainants.
20. The District Forum had granted interest at 12% per annum and at the same time, granted compensation for deficiency and mental agony also, which in our opinion, may not be proper, considering the facts and circumstances of the case. In this view, we are inclined not only to reduce the rate of interest from 12% to 9% and also we are inclined to set aside the order of compensation for mental agony and deficiency and to this extent, the order of the District Forum has to be modified. For the foregoing reasons, the appeal deserves acceptance only to the above said extent, otherwise it requires confirmation.
20. In the result, appeal is allowed in part, directing the first and second opposite parties to pay a sum of Rs.10,000/- being the loss incurred by way of difference in selling price of the shares with interest at 9% p.a. from 24.6.2000 till the date of realization and the order of the District Forum in granting the sum of Rs.2,500/- towards deficiency and Rs.2,500/- towards mental agony are set aside, confirming the cost of Rs.1,000/-. Considering the facts and circumstances of the case, there is no order as to cost in this appeal.
VASUGI RAMANAN M.THANIKACHALAM MEMBER I PRESIDENT INDEX : YES / NO Ns/mtj/Shares/fm