State Consumer Disputes Redressal Commission
M/S Acumen Capital Market (India) ... vs K.Viswanathan, on 7 February, 2013
Daily Order
Kerala State Consumer Disputes Redressal Commission Vazhuthacaud,Thiruvananthapuram First Appeal No. A/11/297 (Arisen out of Order Dated 16/02/2011 in Case No. CC/07/145 of District Palakkad) 1. M/s Acumen Capital Market(I) Ltd S.T Reddiar & Sons Building,Veekshanam Road,Kochi Ernakulam Kerala ...........Appellant(s) Versus 1. K.Viswanathan Sudharma,Neduvakadu,Kannadi,Palakkad Palakkad Kerala ...........Respondent(s) BEFORE: HON'ABLE MR. JUSTICE SRI P.Q.BARKATH ALI PRESIDENT PRESENT: ORDER
KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION VAZHUTHACAUD, THIRUVANANTHAPURAM.
APPEAL NO. 297/11
JUDGMENT DATED:07.02.2013
(Against the order in CC.145/07 on the file of CDRF, Palakkad dtd:16.02.11.)
PRESENT:
JUSTICE SHRI. P.Q.BARKATH ALI : PRESIDENT
M/s Acumen Capital Market ( India) Limited,
(formerly M/s Peninsular Capital Market Ltd.)
(Trading Member, National Stock Exchange
& Depository Participant, National Securities : APPELLANT
Depository Ltd.)
S.T. Reddiar & Sons Building,
Veekshanam Road, Kochi-682 035.
(By Adv: M/s Menon & Menon)
Vs.
K.Viswanathan,
Sudharma, Neduvakadu, : RESPONDENT
Kannadi.P.O, Palakkad-678 701.
(By Adv:Sri.K.K. Menon)
JUDGMENT
JUSTICE SHRI.P.Q. BARKATH ALI : PRESIDENT This is an appeal filed by the opposite party in CC.145/07 on the file of CDRF, Palakkad challenging the order of the Forum dated, February 6, 2011 directing the opposite party to pay Rs.89,531/- to the complainant being the value of the shares entrusted to them along with Rs.20,000/- as compensation and Rs.2000/- as cost with interest.
2. The appellant/opposite party is M/s Accumulative Capital Market (India Limited), Kochi formerly known as M/s Peninsular Capital Market Limited and is represented by its Chairman. The appellant/company is engaged in buying and selling of shares. The case of the respondent/complainant as testified by him as PW1 before the Forum and as detailed in the complaint in brief is this. PW1 the complainant and the appellant/opposite party entered into an agreement on January 07, 2000 for the purpose of holding shares in dematerialized form and for buying and selling shares on specific instructions. Ext.A1 is the copy of the said agreement. PW1 authorised the appellant/opposite party to sell his few shares and received the sale proceedings Rs.54521.70 PW1 again authorized the appellant to sell his 2000 shares of various companies. Ext.A2 copies of Delivery Instruction Slips (DIS) were handed over to the franchisee of appellant company at Palakkad on August 28, 2003. Though the appellant sold the shares they did not give PW1 the value of the shares. On March 12, 2004 when PW1 approached the appellant some contract notes were handed over to PW1 evidencing transaction. PW1 never authorized the appellant to indulge in speculative trading. Therefore PW1 issued a stop memo to the appellant to stop all transactions. Thereafter PW1 was laid up. On December 31, 2004 appellant issued Ext.A5 letter to the General Manager as well as Head Office of the appellant company. They sent Ext.A6 reply stating that the shares were sold for Rs.89,531/- and that there was a loss of Rs.66,150.62 on speculative trading during the period from 2003-2004 and 2004-2005. The appellant issued a cheque for Rs.16,669/- after adjusting the DD charges, penal charges etc. PW1 complained to the National Securities Depository Limited and SEBI and no action was so far taken. Complainant then applied before Regional Arbitration Centre and an arbitrator was appointed. The arbitrator closed the proceedings stating that the claim is barred by limitation as per bye-laws governing the National Security Deposit. Hence the complainant has filed this complaint claiming the value of the shares.
3. The appellant/opposite party in their version contended thus:
The complainant is not a consumer as defined under the Consumer Protection Act, 1986. The arbitrator has already rejected his claim. Claimant has to prefer an appeal against that award. Further, the claim is barred by limitation. It is true that claimant was a client of the appellant by Ext.A1 agreement dated, July 31, 2003. The complainant has opened a demat account with opposite party on January 21, 2000 to keep his delivery share in demat form. After executing the agreement Ext.A1 the claimant opened an account with the opposite party on January 24, 2000 to keep his delivering shares in demat form. After executing the agreement Ext.A1 July 31, 2003 he opened a trading account with the opposite party. It is not correct to say that complainant has disposed of the share on August 28, 2003. Delivery intimation will be of those shares were issued and executed in December 2003. It is also not correct to say that complainant has not authorized the opposite party to conduct speculative trading. Margin money deposit may be either in cash or delivery of shares kept in demat account or in the margin account. As there was enough shares in the TP account, the appellant has not insisted for any separate margin deposit. Even after the disposal of the shares by the complainant, the sale proceeds were retained in the margin account so as to enable the complainant to conduct daily trading as per the instructions of the complainant. The complainant has also signed consent letter for keeping his delivery shares/credit of funds in the margin account and to treat it as his margin with the companies. The said letter is part of Ext.A1 agreement. The opposite party used to issue contract notes one or two days after the transaction. Usually the client comes and collects the contract notes. Complainant has not requested for sending those notes by post. It is not stated in Ext.A4 series the copy of stop memo dated, March 12, 2004 that any amount is due to the complainant. The financial statement for the period from 1.4.2003 to 31.3.2005 shows that Rs.10,108.21 is due from the opposite party. Even after issuance of stop memo the opposite party disposed of shares. On April 19 and September 9 complainant has also made a payment of Rs.6500/- by cheque dated:11.9.2004. Thus, the opposite parties prayed for the dismissal of the complaint.
4. Exts.A1 to A23 were marked on the side of the complainant. Exts.B1 to B3 were produced by the opposite parties before the Forum. On an appreciation of the evidence the Forum found that complaint is not barred by limitation and allowed I.A.163 A/07 condoning the delay in filing the complaint, that complainant is a consumer as defined under section 2(1)(d) of the Act and that there is deficiency in service on the part of the opposite party and directed the opposite party to pay Rs.89,531/- along with a compensation of Rs.20,000/- and cost of Rs.2000/- with interest. The opposite party has come up in appeal challenging the said order of the Forum.
5. Heard the counsel for the appellant and the counsel for the respondent.
The following points arise for consideration:
1. Whether there was any delay in filing the complaint and if so whether the Forum is justified in condoning the said delay?
2. Whether the complaint is barred by limitation?
3. Whether the complainant is precluded from approaching the Forum in the light of the award passed by the arbitrator?
4. Whether there was any deficiency in service on the part of the appellant/opposite party?
5. Whether the impugned order of the Forum can be sustained?
Point Nos.1 & 2:-
The counsel for the appellant argued that complainant issued stop memo, Ext.A4 series on March 12, 2004 and the complaint is filed only on December 17, 2007 and that therefore complaint is barred by limitation and that there is no sufficient ground for condoning the said delay. But it is seen from the records that complainant approached SEBI and arbitrator was appointed and the arbitrator dismissed the petition of the complainant as time barred on July 26, 2007 which is evident from Ext.A22, copy of arbitration award. Therefore actually there is no delay in filing the complaint. That apart even after the issuance of the stop memo the appellant conducted speculative trading of the shares and to the letter of the complainant dated, December 31, 2004 the opposite party sent a reply on January 18, 2005 and the appellant has issued a cheque for Rs.16,669/- to the complainant on September 24, 2004. Therefore it cannot be said that there was any delay in filing the complaint. Even if there was any delay in filing the complaint there was sufficient cause for condoning the same. Therefore the finding of the Forum in the order dated, February 6, 2011 in I.A.163A/07 is hereby confirmed.
Point No.3:-
The counsel for the appellant argued that the complainant has approached SEBI and arbitrator was appointed and the arbitrator dismissed the complaint of the complainant and therefore he has precluded from approaching the consumer Forum. There is no substance in the above contention. The arbitrator has dismissed the complaint as barred by limitation which is not a decision on merits. Further section 3 of Consumer Protection Act clearly provides that the remedy available in this Act is in addition to not in derogation of the provisions of any other law for the time being in force. Therefore the apex court has held in The Sky Pack Couriers Private Limited Vs. Tata Chemicals Limited AIR 2000 SC 2008 existence of arbitration clause in the agreement is no bar to entertaining of complaint by the redressal agency under the Act. Therefore the Forum is perfectly justified in rejecting the contention of the appellant that as complainant has approached arbitrator he is precluded from approaching this Forum.
Point No.4:-
It was contended by the appellant that complainant is not a consumer as defined under the Consumer Protection Act. There is no substance in the above contention. Section 2(1)(o) of the Consumer Protection Act clearly provides that service provided with respect to the financial transaction comes within the purview of the Consumer Protection Act. In Ext.A1 agreement it is clearly stated that the appellant is providing financial service. The appellant is therefore a service provider if there is any deficiency of service complainant can approach this Forum. Therefore the complainant is a consumer as defined under section 2(1)(d) of the Act. Finding of the Forum on this point is confirmed.
Point No.5:-
Next point to be considered is whether there is any deficiency in service on the part of the appellant. The case of the complainant is that he authorized the appellant to sell a few shares of various companies by way of delivery scripts handed over to them which was cancelled on August 28, 2003 and that though the appellants sold the shares sale proceeds were not handed over to the complainant. The counsel for the appellant would argue that Ext.A9 the copy of the ledger extract shows that appellant has sustained a loss of Rs.66,150.62 on speculative trading for the period 2003-2004 and 2004-2005, and that therefore complainant is entitled to only Rs.16,669.14. But no other document was produced by the appellant to show that the appellant has sustained any loss in the transaction. Further this speculative trading of shares conducted by the appellant is without any authorization from the complainant. Before this Commission the complainant produced copy of the circular issued by Deputy General Manager, Market Intermediary Regulation Supervision Department dated, December 3, 2009. The said circulation was issued under Sec.11(1) of Securities and Exchange Board of India Act, 1992 wherein it is clearly stated that for conducting speculative trading they must enter into an agreement and one copy of agreement made available to the client and that there must also be specific authorization from the client. The appellant did not obtain any such authorization. That apart even after issuing stop memo dated, March 12, 2004 the appellant has conducted speculative trading in shares without the authorization of the complainant. There were also serious anomalies noted in Ext.A6 the contract notes. That being so the finding of the Forum that appellant has conducted speculative trading of shares without the authorization of the complainant and that appellant has failed to prove that they have sustained any loss have only to be confirmed. Even if any loss is sustained by the appellant complainant cannot be made responsible for the same.
That being so I am in complete agreement with the finding of the Forum that complainant is entitled to the value of the shares.
The Forum has ordered compensation of Rs.20,000/- and Rs.2000/- as costs. I find no specific reason to interfere with the said finding of the Forum.
In the result I find no merit in this appeal and the same is dismissed with a cost of Rs.5000/-.
JUSTICE P.Q.BARKATH ALI: PRESIDENT VL.
[HON'ABLE MR. JUSTICE SRI P.Q.BARKATH ALI] PRESIDENT