State Consumer Disputes Redressal Commission
, M/S. Kiran Krishna Agro-Tech Ltd., ... vs Pappala Narayana Rao , S/O Ramunaidu. ... on 31 January, 2012
A. P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION : AT HYDERABAD ( Circuit Bench at Visakhapatnam ) FA 582/2010 against CC 31/2005 on the file of the District Consumer Forum, Vizianagaram. Between : 1. M/s. Kiran Krishna Agro-tech Ltd., Rep. by its Managing Director, D. No. 6-3-788/24, II Floor, Opp: Gold spot, Panjagutta, Hyderabad-16, 2. M/s. Kiran Krishna Real Estates & constructions Pvt. Ltd Rep. by its Branch Manager, Regd. Office : 50-40-13/A, TPT Colony, Seethammadhara, Visakhapatnam -13 .. Appellants/opposite parties And Pappala Narayana Rao , S/o Ramunaidu, Hindu, aged 42 years, Kovvada Village and Post Poosapatirega Mandal, Vizianagaram District .. Respondent/complainant Counsel for the Appellants : M/s. P. Veerraju Counsel for the Respondent : served. Coram ; Sri R. Lakshminarasimha Rao Honble Member
And Sri T. Ashok Kumar .. Honble Member Tuesday, the Thirty First Day of January Two Thousand Twelve Oral Order : ( As per Sri R.Lakshminarasimha Rao , Honble Member ) ****
1. This is an appeal preferred by the opposite parties against the order dated 26.10.2009 in CC 31/2005 on the file of the District Consumer Forum, Vizianagaram. For the sake of convenience, the parties are referred to as they have been arrayed in the complaint.
2. The complainant deposited a sum of Rs.10,800/- on 30.01.1998 as per the brochure issued by the opposite parties and the opposite party no. 2 agreed to allot a plot and register the same in favour of the complainant and also issued an advance receipt bearing no. 10205 dt.30.01.1998. Thereafter, the complainant reliably came to know that the 1st Opposite party desirous to wind up and the 2nd respondent stand as Guarantor and also agreed to make the necessary payments to all the depositors. The complainant visited the opposite parties several times for refund of the amount and got issued notice on 17.12.2004.
The amount was not paid nor was there any response from the opposite parties. The complaint sought for direction to the opposite parties to pay the maturity amount of Rs.10,800/- with interest at 24% pa with compensation of Rs.10,800/- and costs.
3. The second opposite party has resisted the claim by way of counter and contended that as per SEBI directions the Agro-Tech company was closed and the same was intimated to all the members and the opposite parties have returned the deposits to the respective members and since SEBI had directed that all the non-banking financial institutions which do not conform to the directions of SEBI to be wound up, the second opposite party company was also wound up and the same was intimated to all its members. They are ready and willing to register the site in favour of the complainant or otherwise return the principal amount as per the SEBI guidelines and that the complainant has not filed any receipt in original.
Hence there is no deficiency in service on their part and thus prayed to dismiss the complaint.
4. No documents were marked on either side.
5. The complainant has filed agreement, receipt and copy of notice, besides, his affidavit. On behalf of the opposite parties, no documents have been filed.
6. The District Forum has awarded an amount of Rs. 10,800/- with interest thereon @ 16% pa from the date of deposit of the amount till payment, besides, a sum of Rs.8,000/- towards compensation and Rs.2000/- towards costs.
7. Feeling aggrieved by the order of the District Forum, the opposite parties have filed the Appeal contending that interest awarded by the District Forum @ 16% PA is highly excessive when compared to the interest @ 7% P.A. as is the prevailing rate of interest with the Nationalized Banks and that in absence of any contract, interest at such rate cannot be awarded , as also, the complainant was requested to surrender his bond and take back his amount as long ago as in the year 1998.
8. The point for consideration is whether the order of the District Forum suffers from mis-appreciation of fact or law ?
9. The admitted fact is that the respondent has deposited an amount of Rs.10,800/- with the appellant on 30.01.1998. The appellants have agreed to allot and register the plot in favour of the respondent and to the effect they issued receipt bearing No. 10205 dated 30.01.1998 and it was contended on behalf of the appellants that the appellant company had wound up its business as per the directions of the SEBI and the appellants are ready to register the sale deed in favour of the appellant in respect of the allotted plot or in the alternative return the principal amount to the appellant.
10. Much reliance has been placed upon the guidelines framed by the SEBI. Relevant guidelines are essential to be appreciated for the purpose of coming to the conclusion as to the propriety of the reliefs sought for vis--vis the award passed by the District Forum.
11. New SEBI Guidelines for Mutual Funds The Securities and Exchange Board of India (SEBI) has brought in sweeping changes for the mutual fund industry. The impact of which will be felt on the investor in more ways than one.
1) First, for New Fund Offers (NFOs): They will only be open for 15 days.
(ELSS funds though will continue to stay open for up to 90 days) It will save investors from a prolonged NFO period and being harangued by advisors and advertisements. The motivation behind the rule seems to be simple if you can invest anytime, why keep NFO period long?
2) NFOs can only be invested at the close of the NFO period. Earlier, Mutual funds would keep an NFO open for 30 days, and the minute they received their first cheque, the money would be directly invested in the market; creating a skewed accounting for those that entered later since they get a fixed NFO price.
The market regulator has corrected this by extending Application Supported by Blocked Amount (ASBA) to mutual funds. This will become effective starting July 1st this year.
By the ASBA process (Application Supported by Blocked Amount) one can continue to earn interest in the bank account until the NFO closes (remember there is usually no rejection or oversubscription in a mutual fund NFO) which means that the cheque goes for clearing after the NFO has closed irrespective of when it was sent. The fund manager will be able to invest once the NFO closes.
3) Dividends can now only be paid out of actually realized gains. Impact: it will reduce both the quantum of dividends announced, and the measures used by MFs to garner investor money using dividend as a carrot to entice new investors.
4) Equity Mutual funds have been asked to play a more active role in corporate governance of the companies they invest in. This will help mutual funds become more active and not just that, they must reveal, in their annual reports from next year, what they did in each vote. SEBI has now made it mandatory for funds to disclose whether they voted for or against moves (suggested by companies in which they have invested) such as mergers, demergers, corporate governance issues, appointment and removal of directors. MFs have to disclose it on their website as well as annual reports.
5) Equity Funds were allowed to charge 1% more as management fees if the funds were no-load; but since SEBI has banned entry loads, this extra 1% has also been removed.
6) SEBI has also asked Mutual Funds to reveal all commission paid to its sponsor or associate companies, employees and their relatives.
7) Regarding the Fund-of-Fund (FOF) The market regulator has stated that information documents that Asset Management Companies (AMCs) have been entering into revenue sharing arrangements with offshore funds in respect of investments made on behalf of Fund of Fund schemes create conflict of interest. Henceforth, AMCs shall not enter into any revenue sharing arrangement with the underlying funds in any manner and shall not receive any revenue by whatever means/head from the underlying fund.
These guidelines set by the SEBI will lead to greater transparency for the common investor. SEBI formulates policies and regulates the mutual funds to protect the interest of the investors.
12. The rate of interest @ 16% pa as demanded by the respondent is highly excessive and out of all proportions as reflected by the circumstances which ld to the winding up of the first appellant/complainant. Relief has to be granted based upon the evidence on record. Compensation awarded in the form of interest has to be just and proportionate to the requirement of facts which form the basis for filing the complaint. At any rate, interest @ 16% pa as demanded by the respondent is not reasonable nor sustainable.
13. For foregoing reasons, the rate of interest awarded by the District Forum , i.e.,16% pa on the amount is reduced to 9% P.A. and as far as the rest of the order is concerned, it is confirmed. In a similar case, between the very same parties in FA 348/2010 to 352/2020 and 1081/2010, this Commission after taking into consideration of various aspects of the case and the prevailing circumstances, reduced the rate of interest as awarded by the District Forum from 16% to 9% P.A.
14. In the result, the Appeal is allowed and the order of the District Forum is modified by reducing the rate of Interest from @ 16% to 9% PA while confirming the rest of the order of the District Forum, Time for compliance four weeks.
Member Member Dated : 31.01.2012.