State Consumer Disputes Redressal Commission
Omkam Finvest Pvt. Ltd. vs Inter-Connected Stock Exchange Of ... on 29 January, 2009
IN THE STATE COMMISSION: DELHI IN THE STATE COMMISSION: DELHI (Constituted under Section-9 Clause (b) of the Consumer Protection Act, 1986) Date of Decision: 29-01-2009 Complaint Case No. C-127/2002 Omkam Finvest Pvt. Ltd. 304-306 & 308 Pratap Chambers Gurudwara Road Karol Bagh New Delhi . Complainant Versus Inter-connected Stock Exchange of India Ltd. International Infotech Park Tower 7, 5th Floor, Vashi Mumbai 400 703 Branch Office 886/1, IInd Floor East Park Road, Karol Bagh, New Delhi 110 005 . Opposite Party CORAM JUSTICE J.D. KAPOOR, PRESIDENT MS. RUMNITA MITTAL, MEMBER
1. Whether Reporters of local newspapers be allowed to see the judgment?
2. To be referred to the Reporter or not?
JUSTICE J.D. KAPOOR (ORAL)
1. On the allegation of deficiency in service on the part of the Opposite Party (in short O.P) in as much as it has failed to get the promised membership of ISE even after receipt of consideration causing financial loss and harassment to the complainant, this complainant has been filed by the complainant seeking the following reliefs:-
i) Refund of Rs. 8,37,925/- paid by the complainant alongwith interest amount of Rs. 3,32,491/-
ii) Interest @18% per annum till the date of actual payment.
iii) Loss incurred in relation to membership of ISE at Rs. 7,0,048/-
iv) Rs. 5.00 Lacs as compensation for loss of goodwill, harassment and mental agony.
v) Rs. 25,000/- towards cost of litigation.
2. Briefly stated the allegations are that the O.P-ISE, a corporate body is a SEBI Recognized Stock Exchange formed on November 1998 and started live trading on February 26, 1999. On 22-11-1999, an advertisement was published by the Opposite Party in leading newspapers including Hindustan Times whereby it invited the public (Corporate Bodies and Individuals) for its membership and for acquiring trading rights in a growing National level Recognized Stock Exchange.
3. Advertisement published by the Opposite Party was a public offer whereby it was suggested by the Opposite Party that on getting membership of ISE at an Introductory offer of Rs. 5.00 Lacs one would also get trading rights of NSE (National Stock Exchange) and BSE (Bombay Stock Exchange). Relying on the statement made in aforesaid advertisements, the Complainant applied to the OP to get its dealership and paid a sum of Rs. 1.00 Lac as application fee on 26-11-1999 and after interview and written test, the OP granted dealership to the complainant on 22-12-1999 through its letter dated 22-12-1999. The Complainant specifically mentioned that as they were already having trading rights of NSE and DSE, they are now interested to acquire trading rights of BSE only. The Complainant was assured by the OP that ISE will definitely provide trading rights of BSE to all its dealers soon after the getting of dealership of ISE by the applicants. The Complainant got the dealership of ISE and was being kept on OPs assurance that very soon ISE will provide trading rights of BSE to its dealers. On 4-1-2000, an article/report was published in the Business Standard by BSE in which it was expressly mentioned by the BSE that BSE does not have any kind of tie up/affiliation or intention to provide BSE trading rights to ISE, its subsidiaries of its members. BSE has also raised the matter and registered its objections with authorities on the misleading advertisement by ISE in this regard. The complainant immediately wrote to the OP about the article published on 4-1-2000 and asked the OP to clarify its position. When the complainant did not receive any reply to its letters, the complainant requested the OP for the return of the money deposited so far with OP if OP is unable to provide trading rights of the BSE. However, in its reply, OP denied that BSE has conveyed any such objection and also assured the complainant that very soon they will provide the trading rights of the BSE.
4. That the SEBI through its letter dated 2nd February 2000, also called for the comments of the Opposite Party on the matter as complained by the complainant to SEBI on 20-1-2000. Mr. Josseph Massey, Managing Director of the Opposite Party called the Director of the Complainant Company, Sh. Peeyush Aggarwal and after discussions on length committed that the ISE will very soon provide the Trading rights of BSE, Mr. J. Massey also requested the complainant to withdraw the complaint from SEBI as it was creating problem for ISE and its officers.
Complainant Company has withdrawn its complaint with SEBI on 8-2-2000. No action was taken by the Opposite Party to fulfill its commitment.
5. That the Complainant complied with all the requirements as per specifications made by the Opposite Party and also made all the necessary arrangements for the running of Trading Terminals of BSE (expected to be provided by the Opposite Party). An amount of Rs. 6,85,000/- (Six Lacs eighty five thousand only) has been incurred by the complainant after applying for the membership of ISE. However, without providing trading rights of BSE to the complainant, the OP started continuously issuing various letters to the complainant making unreasonable demands under various heads like Wipro net connectivity recurring charges, annual subscription fee, BMC etc.
6. That on 16-6-2001, complainant requested the O.P. to waive off the weekly recurring charges and to deactivate the trading terminals with immediate effect, as ISE has failed to provide trading rights of BSE. Mr. Anil Sharma asked the complainant to apply/write ISE for disconnection from Wipro net connectivity and that from the date of disconnection ISE would not charge any connectivity charges. On 28th June 2001, complainant again wrote a letter with a request for disconnection of terminal from Wipro Net Connectivity with immediate effect. The O.P. disconnected the terminal from Wipro Net Connectivity but declined to exempt the complainant from recurring charges. They continued to raise the bill for recurring charges and also interest for delay payment.
7. That the complainant on 29-1-2000 paid Rs. 1,09,000/- to Opposite Party which included Rs. 16,500/- as charges against ISDN line, which was later on refunded.
8. That the complainant feeling dissatisfied and aggrieved of the deficiency in service on the part of the O.P. wrote a letter son 7th July 2001 and on 13th August 2001 to the O.P. for refund of money paid by him and withdrawal of service but the O.P. refused to refund any money. A legal notice was sent to the O.P. on 15-12-2001 and 29-12-2001 calling upon the O.P. to settle the grievances of the complainant/refund the amount paid so far by the complainant/and suspend, keep in abeyance all the recurring charges but to no avail. Feeling aggrieved the complainant filed the present complaint seeking the aforementioned reliefs. It is also stated by the complainant that the earlier it had filed a complaint against the OP for deficiency of service before the Honble National Commission which was withdrawn with liberty to file a fresh complaint before the appropriate Forum.
9. In its defence the O.P. while raising the objection that the Complainant is not a consumer qua the Opposite Party as the dispute is between a Dealer which is also a SEBI Registered Stock Broker of the Opposite Party, and the Opposite Party which is purely a contractual/civil matter and that the complaint is premature as the OP has been trying to acquire membership rights of BSE right form the beginning and BSE were in the process of taking a final decision and the ISS, a subsidiary company of the Opposite Party has been admitted as a Corporate Member in the Equity Segment of BSE. BSE has forwarded application of ISS to SEBI for registration as a Stock-Broker and result of which is awaited.
10. On merits it was contended that the Opposite Party had always maintained NSE segment be initiated first for which all compliance have been completed. While live trading in Capital Market Segment of NSE and the Futures and Options Segment of NSE commenced from May 2000 and May 2002 respectively, live trading on BSE segment will commence after registration of ISS as Stock Brokers is done by SEBI and Registration of Traders and Dealers of the Opposite Party as Sub-brokers (affiliated to ISE Securities & Services Limited (ISS) member of BSE) is done by SEBI and all necessary arrangement for connectivity with BSE for trading and compliance with all the requirements and Guidelines of SEBI, BSE and ISS as may be prescribed from time to time for the purpose are made.
11. It was further contended by the O.P. that Opposite Party is providing trading platform for trading in the larger Stock Exchanges through ISS, as its wholly-owned Subsidiary Company at a very reasonable price of Rs. 5 Lacs only. This price of Rs. 5 Lacs paid by a Dealer is Non-refundable, however, as the Dealership of the Opposite Party is transferable without any lock in period and hence appreciates or depreciates based on market conditions. The Dealers are entitled to transfer their Dealership right in favour of other eligible person who is otherwise eligible to be admitted as a Dealer of the Opposite Party. Opposite Party is very serious in its efforts to acquire the membership rights of both NSE and BSE. Live Trading on BSE will be implemented after Registration of the ISE Securities & Services Ltd. (ISS) as Stock Brokers is done by SEBI and Registration of Traders and Dealers of the Opposite Party as Sub-brokers is done by SEBI and all necessary arrangement for connectivity with BSE for trading. The Opposite Party has in fact tried its level best to provide trading facilities to all its Traders, Dealers and sub-brokers of ISS in a most economical and effective way which is being used by hundreds of its traders and dealers all over and across the country.
12. In nutshell, the OP denied any deficiency in service or unfair trade practice on its part as according to the O.P. it had clearly stated that they had applied to the NSE and BSE and would be provided the rights of BSE only after approval is received from them.
13. Complainant filed its rejoinder and affidavit in evidence reiterating its claims and contentions against the OP and refuting the contentions raised in the written statement. Similarly the OP also filed its affidavit in evidence in support of its defence.
14. We have heard the parties at length and have accorded careful consideration to the material on record. The objection that the complainant is not a consumer as it is a stock trader and the relation with OP is purely contractual is without any force. The complainant was having the membership of OP-1 Stock Exchange against consideration and was having a small company having turnover of Rs. 4.00 Lacs and these are services known as financing services and such services used by potential users come under the definition of service as defined by Sec. 2(1)(o) of the Consumer Protection Act, 1986, and the complainant thus comes within the definition of consumer as defined by Sec. 2(1)(d) of the Act.
15. The main grievance of the complainant is that even inspite of advertisement offering membership to the public at large of BSE as well as NSE by 2000 but till 2004 the OP did not provide the membership of BSE to the complainant and he has suffered losses. Admittedly the complainant had made the payment of Rs. 8,37,925/- to the OP and therefore the complainant seeks the said amount as the services which were advertised were not provided. It is contended on behalf of OP that out of the said amount Rs. 5.00Lac were fees which was non-refundable. The condition of non-refundability of such fees was only applicable if the OP had fulfilled its own part of obligation by giving the complainant the trade rights of BSE by year 2000 as advertised and failure to do so clearly amounts to deficiency in service in terms of Sec. 2(1)(g) of the Act which means:-
any fault, imperfection, shortcoming or inadequacy in the quantity, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service.
16. In view of the foregoing, we allow the complaint in the following terms:-
i) OP shall refund the amount of Rs. 8,37,925/- as the complainant is no more interested in becoming the member of the OP.
ii) OP shall pay Rs. 25,000/- as compensation for the mental agony, harassment and loss suffered by the complainant which shall also include cost of litigation.
17. Complaint stands disposed of in aforesaid terms. Order shall be complied with within one month from the date of receipt of a copy of this Order.
18. Copy of Order, as per statutory requirement be forwarded to the parties and thereafter the file be consigned to record.
(JUSTICE J.D. KAPOOR) PRESIDENT (RUMNITA MITTAL) MEMBER HK