State Consumer Disputes Redressal Commission
Pawan Kumar Pawar vs Miss Shanta Khurana & Ors on 31 January, 2011
CHHATTISGARH STATE
CONSUMER DISPUTES REDRESSAL COMMISSION
PANDRI, RAIPUR
Appeal No.676/2010
Instituted on 29.10.10
1. Pawan Kumar Pawar, S/o Late Shri M. S. Pawar
2. Shri Rakesh Pawar, S/o Shri P. K. Pawar,
Both R/o 30 Jal Vihar Colony, Raipur, 492 004,
Tah. & Dist. RAIPUR (C.G.) ... Appellants.
Vs.
1. Miss Shanta Khurana,
449 M. New Generation Apartment, Nr. Railway Crossing,
JIRKAPUR 140 603
2. Shubh Luxmi Finance & Investment Co.,
Opp. Maszid D.M.Z. Plaza, Chhotapara,
RAIPUR (C.G.) ... Respondents.
PRESENT: -
HON'BLE JUSTICE SHRI S.C. VYAS, PRESIDENT
HON'BLE SMT. VEENA MISRA, MEMBER
HON'BLE SHRI V.K. PATIL, MEMBER
COUNSEL FOR THE PARTIES: -
Shri R. K. Agrawal, for appellants.
Shri Jatin Joshi, for respondent no.1.
Respondent no.2, proceeded ex-parte.
ORDER
Dated: 31/01/2011 PER: - HON'BLE SMT. VEENA MISRA, MEMBER This appeal is directed against order dated 28.09.2010, passed by District Consumer Disputes Redressal Forum, Raipur (hereinafter called "District Forum" for short), in Complaint case No. 76 /08, whereby the complaint was dismissed on the ground that complainant is not a consumer.
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2. The matter relates to transfer of shares. Earlier the complainant had filed the complaint with three Ops. Subsequently, by way of amendment name of local sub-broker was added as OP No.4. The complaint was dismissed on 13.04.2009 by the District Forum on preliminary objection of the OP No.1. Against the said order the complainant had approached this Commission under appeal No.238/2009. Complaint against OP-2 and 3 was held to be not maintainable but prima facie it was found to be maintainable against OP No.1 and OP No. 4 so the appeal was partly allowed and the order so far it related to OP No.1 and OP No. 4, was set aside and the matter was remitted back for further proceedings. So, presently there are only 2 opposite parties in complaint No.76/2008.
3. Gist of averments of complaint is that there are several share brokers at Raipur who provide their services to the investors as per norms settled by Indian Securities and Exchange Board. Complainant is the last purchaser of certain number of shares of Era Infra Engineering / Constructions and had purchased said shares through OP-2 who had handed over the share Certificates together with transfer deed. On presentation of original share certificates for lodging transfer in the name of the complainants, Beetel Finance and Computer Services Ltd. raised dispute regarding validity of transfer deed. On getting the same re-validated the complainants again presented the // 3 // shares before Beetal Finance and Computer Services Ltd. for the purpose of lodging transfer, but they were informed by Beetal Co. that earlier duplicate shares had already been issued in favour of the OP No.1 and as such transfer of shares in the name of the complainants is not possible. The complainants after serving legal notice filed complaint before the District Forum for seeking direction to the OP No.1 to provide 750 Shares of Era Engineering / construction of the face value of Rs.2 per share and also to pay to the complainants Rs.10,000/- towards mental harassment and entire amount of dividend declared and paid by the company towards the said shares.
4. OP No.1 raised preliminary objections regarding maintainability of complaint before Consumer Fora, territorial jurisdiction of District Forum and the complaint being barred by limitation.
5. It was averred in written version that since 1989 she has been an investor in shares of listed companies and has been conducting all her business of sale / purchase of shares through the leading broker firm M/s. Vikson Finance and Investment Pvt. Ltd. All sales and purchases of shares in the name of OP-1 were done by the said broker firm only through recognized Stock-Exchanges. OP-1 never entered into „Off- Market‟ deal for sale of shares directly to any person including the // 4 // complainant. She further averred that all her saleable shares (including physical shares with blank transfer deeds) were always held by her broker firm. On her telephonic instruction or as per her standing instructions in writing regarding some of the shares the broker firm used to sell or purchase shares in her favour and consideration for the purpose was credited or debited to her trading account with the broker firm. The broker firm has been fully computerized and trading of shares is also done in De-mat form of shares. It is averred in written version that in the books of the company, OP-1 was the registered holder of 100 physical shares of Era Construction Co. since 2.12.1997. As the said shares proved to be a penny stock quoting below face value up to the year 2003 the shares never drew attention of the said OP or her broker firm. As in 2005 the company quoted at around Rs.40/- per share, the OP started tracing the said physical shares with herself as well as the broker firm but the same could not be traced. As neither the shares could be located nor any one came forward as buyer or claimant of said shares which continued in the name of OP-1 it was believed that the said shares were lost or misplaced. The broker firm advised to take up the matter with the company or the RTA to the Company‟s share. In March, 2006 OP-1 contacted the RTA to Company‟s share on telephone and she was told that the shares continued to be in her name and neither any application for transfer was pending with the RTA nor there was any stay order or injunction // 5 // lodged with the RTA regarding the said shares. The person replying the quarry on phone advised that in case of loss of physical shares she should lodge an application with RTA for issuance of Duplicate Shares. Accordingly she applied for duplicate shares and after fulfilling all the formalities duplicate shares were issued in her favour in the month of March, 2007 as no one had surfaced to put a claim regarding the shares in question, despite publication in two newspapers. It is averred in the written version that sale and purchase of shares of listed companies through Registered Brokers and recognized Stock Exchanges are governed by various Acts and Rules. As per provisions validity of Blank Transfer Deed is 12 months but the complainant failed to lodge the shares with the company or their RTA for registering the same in his name. The OP-1 has stated that seller‟s responsibilities and liabilities are limited upto the period of validity of transfer deed as that is the only document of contract between the parties. After validity period the transfer deed becomes void. OP-1 averred that that there is no material to show that the complainant obtained the shares through Recognized Stock Exchange through a regular deal and entries made in the documents appear to be fictitious. Even if it is assumed that acquisition of shares was genuine, the complainant failed to get the shares transferred in his name within the stipulated period. OP-1 prayed that the complaint be dismissed with costs.
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6. OP-2 averred in written version that since 1998 the firm is working as sub-broker to main broker- Joinder Capital Services Ltd., Bombay Stock Exchange. The complainant had instructed them to purchase 100 shares of Era Construction Co. and 100 shares of Crab Bio Chemicals which were purchased by the firm through main broker of Bombay Stock Exchange and the same were handed over to him on 5.8.1998 vide delivery memo No.135. As the shares were validly purchased the OP-1 should not have obtained duplicate shares simply because the purchaser could not get the shares lodged in his name. It is averred that the shares may be directed to be handed over to the complainant.
7. The District Forum dismissed the complaint on the ground that the complainant is not a consumer.
8. Final arguments heard. Learned counsel for the appellant also filed arguments in writing. Record carefully perused.
9. Learned counsel for the appellant submitted as under-
a. He submitted that the District Forum has wrongly dismissed the complaint. OP-1 has not disputed her signatures on the transfer deed. She has not filed affidavit of the broker who could have testified whether he had // 7 // delivered the documents of title to the Stock Exchange or not. She has also not filed copy of ledger nor did she initiate any action against the broker for selling the shares without her knowledge, consent or express order. Learned counsel for appellant submitted that admissions made in written version go to prove that OP-1 is a trader in shares and as such her actions can be scanned under The Consumer Protection Act, for unfair trade practice. b. Learned counsel for appellant submitted that the present matter is also governed by the General Clauses Act, Sale of Goods Act, Securities Contract (Regulations) Act, Companies Act and Contract Act and none of the said Acts specifically bar the applicability of the provisions of Consumer Protection Act.
c. Appellant‟s counsel read out relevant provisions of the aforesaid Acts and submitted that as shares are covered under the definition of goods and come under moveable property and any sale /purchase thereof is under a contract, so in case there is any dispute between the parties the same may be decided under Consumer Protection Act. He submitted that so far as objection of OP-1 / // 8 // Respondent-1 regarding territorial jurisdiction is concerned, it is nowhere mentioned on the Transfer Deed that jurisdiction would be limited to the place where the transferor resides. He submitted that as exercise of jurisdiction also depends on the cause of action, so the complaint may be heard also at Raipur. As such the District Forum has arrived at a wrong finding that it does not have jurisdiction.
d. Appellant‟s counsel further submitted that as sale of shares backed by share certificates and blank transfer deed amounts to sale of goods there is an implied warranty that the buyer shall have and enjoy quite possession of the goods and unless otherwise agreed, goods are at seller‟s risk. Learned counsel submitted that in the instant matter risk continued to be that of the seller up to the time the purchaser lodged the shares in his name. Till such time seller held the shares only as trustee of the purchaser and not as rightful owner. Voluntary act of the respondent No.1 in obtaining duplicate shares and then selling the same amounts to rescinding the contract.
// 9 // e. Learned counsel for the appellant further submitted that the share certificates and the transfer deed were not treated as bad delivery because they were not defective in respect of quality, quantity, mutilation etc. and bore due signatures. Because of delay in lodging the shares in his name the complainant had to get the deed revalidated. Cause of action for filing complaint arose when the company refused to transfer the shares in the name of the complainant because the seller had obtained duplicate shares.
f. Appellant‟s counsel further submitted that in the facts of the case OP No.1 is prohibited from raising any objection or obstacle after receiving contractual consideration. He submitted that SEBI does not have power to adjudicate the matter where a fraud has been played by the OP. Learned counsel further submitted that S.3 of the Consumer Protection Act provides additional remedy to the consumer. He prayed that the impugned order be set aside and directing respondent No.1 to deliver 150 shares of face value of Rs.10 or 750 shares of face value of Rs.2, with compensation and costs.
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10. Learned counsel for respondent No.1 reiterated the plea raised by the said respondent in written version and submitted that the District Forum has rightly dismissed the complaint because the complainant is not a consumer. Learned counsel for respondent No.1 referred to S.82 and S.108 of The Companies Act, 1956 and articles mentioned at No.23 and 62A of SEBI Guidelines for Good and Bad Deliveries and submitted that from bare perusal of Transfer deed it would be evident that it does not fulfill legal requirements and amounts to Bad delivery. Learned counsel submitted that as the relevant physical shares were not traceable respondent No.1 consulted their broker and also companies RTA and on being advised by them she applied for duplicate shares and after completing all necessary formalities duplicate shares were issued in her favour as no one came forward to claim the shares despite advertisement in newspapers. Learned counsel prayed that neither there was any direct dealing between the present appellant and respondent No.1 nor the shares appear to be sold through recognized sub-broker of recognized stock exchange as per provisions in this regard. Learned counsel prayed for dismissal of appeal.
11. None appeared for respondent No.2.
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12. The basic question that is required to be considered is as to whether in the facts of the case the complainant is entitled to prefer a complaint under the Consumer Protection Act? For preferring complaint before Consumer Fora, it is necessary that the complainant should be a „Consumer‟ within the meaning of the Consumer Protection Act, 1986 and should also have paid some consideration for availing the services or for purchasing the goods. The OPs/respondents had taken the plea that the complainant is not a consumer as purchase of shares is for commercial purpose. It is apparent from record that the complainant had purchased the shares in question in the year 1997 but had filed the complaint in the year 2008. So the question is to be decided in the light of legal provisions as applicable at the time of filing of complaint. Earlier, the matters relating to dispute of sale and purchase of shares involving the question of deficiency in service was within jurisdiction of the Consumer Fora. However, the Consumer Protection Act, 1986 was amended in the year 2002. After the aforesaid amendment Section 2 (1)
(d) of the Act reads as under:
"(d) "consumer" means any person who, -
(i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment, when such use is made with the // 12 // approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
(ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purpose."
[Explanation.-For the purposes of this clause, "commercial purpose" does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment]
13. It is a matter of common knowledge that shares are purchased with the object of earning profit by selling the same at proper time. There is no doubt that the very purpose of purchase of shares is commercial. Yet, it appears from the provisions of S.2 (1) (d) that a person can be a consumer even if the goods are purchased or the services are availed for commercial purpose in case the same have been availed for the purpose of earning livelihood by means of self- employment. In the matter under consideration, the complainant has not at all averred in his complaint that he purchased the shares exclusively for the purpose of earning livelihood by means of self- employment. It is well settled that in the aforesaid circumstances the // 13 // complainant is not a consumer as defined under Consumer Protection Act. We have earlier decided Appeal No.91/2009 between Ajay Parakh Vs. Rakesh Jain & others involving similar facts of purchasing share certificates in the year 1997 but failing to lodge the same in the name of purchaser for years together. In that case also we had returned the finding that the complainant is not a consumer and there is no material in the present case to make us change our view.
14. Further, the complaint under Consumer Protection Act is to be with regard to defect in goods, deficiency in service or unfair trade practice. The complainant has not made any allegations of deficiency in service against OP-2 i.e. the sub-broker through whom he had purchased the shares in question but has made allegations of fraud against the OP-1. Learned counsel during course of arguments himself submitted that there was no defect in the transfer deed but due to lapse of time it was to be revalidated, so it is abundantly clear that there was no defect in the share certificates and the transfer deed. As OP-1 had neither provided any service nor was there any defect in the transfer deed or the share certificates, the said OP cannot be said to be at fault. So the dispute does not fall under defect in goods or deficiency in service. So far as the allegations of fraud are concerned we have no jurisdiction to probe into the matter in summary proceedings. Hence // 14 // the finding of the District Forum that complainant is not a consumer is absolutely correct and does not call for any interference.
15. As we have come to the conclusion that the complainant is not a consumer, we do not find it necessary to make observations and give findings on various questions such as territorial jurisdiction, good or bad delivery of shares, authenticity of transfer certificate and so on and so forth.
16. In view of observations contained hereinabove, we find no merits in the appeal, the same is hereby dismissed and the order of the District Forum is affirmed. No order as to cost. However the complainant / appellant shall be free to avail any other remedy, if available under law.
(Justice S.C. Vyas) (Smt. Veena Misra) (V.K. Patil)
President Member Member
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