D.O.F. 07.02.2009
D.O.O. 15.07.2011
IN THE CONSUMER DISPUTES REDRESSAL FORUM KANNUR
Present: Sri. K.Gopalan : President
Smt. K.P.Preethakumari : Member
Smt. M.D.Jessy : Member
Dated this the 15th day of July, 2011.
C.C.No.39/2009
Tom Thomas,
S/o. Thomas, : Complainant
Kottupalli, Vellarikkundu P.O.
Kasaragod
(Rep. by Adv. C.K. Rathnakaran)
1. The Kotak Securities,
Fort Road, Kannur.
2. The Kotak Securties, : Opposite Parties
Mumbai.
O R D E R
Smt. K.P. Preethakumari, Member.
This is a complaint filed under Section 12 of Consumer Protection Act for an order directing the opposite party to pay the value of shares in his account as on the date of selling the shares and to pay ` 10,000 as compensation with cost.
The case in brief of the complainant is that he is a mobile tower technician and the opposite parties are doing the business as the broker in trading in securities and the complainant is a client of opposite parties with client code No.TXG91. The complainant had invested a total amount of ` 6,64,550 on various occasion by way of cheques to opposite party. The complainant is maintaining a dematt account with the 1st opposite party. At the time of starting the dematt account with the opposite parties, the complainant had specifically directed the opposite parties that he only intends to trade in cash segments and he do not want to trade in derivative segments. The complainant has taken pay out of ` 3,79,063 from his account. On 19.11.2008, the complainant went to 2nd opposite party to sell some shares from his account and to take a pay out of ` 50,000 from his account. But the 1st opposite party informed the complainant that there is no shares in dematt account of the complainant and all the shares lying in his account was sold out and the 1st opposite party represented that derivative trade was done in his account and on that account there was a huge loss and to adjust the loss, the shares lying in his account was sold. The complainant had never authorized the opposite parties to do derivative trade in his account. The opposite parties have done derivative trade in the account of complainant without the written authority and without any kind of instruction. The complainant did not give any margin money for doing the derivative trade in his account. The opposite party did not send any contract note to the complainant for the alleged derivative trade in his account. All the shares in the dematt account of the complainant were in the D.P. account. The opposite party cannot sell the shares without the written consent of the complainant and they did not inform the complainant about the selling of shares from his account. The act of opposite parties amounts to unfair trade practice and deficiency in service and the act of opposite parties caused great mental agony to the complainant and hence the complainant assess ` 10,000 as compensation for the mental agony and the opposite parties are liable to compensate and hence the complainant issued lawyer notice to opposite parties. Eventhough they had acknowledged the notice they neither issued reply nor complied the demands of the complainant. Hence this complaint.
In pursuance to the notice issued by the Forum both opposite parties appeared and filed their version with a contention that the complainant is not a consumer as per Sec 2(1) (d) of Consumer Protection Act, since the complainant was trading in cash and derivative segment of exchange with a speculative motive and thus cannot be termed as consumer. According to the opposite parties the complainant admittedly continue to deploy funds and also took pay-out from his ledger account at regular intervals. The averments of the complainant are contradictory to the facts of the case. The complainant had not approached the Forum with clean hand and had suppressed several facts and information. Since inception of the account opening derivative trades were executed in the account of the complainant by the complainant and before the disputed date of visit, the complainant had taken pay-out of funds from his ledger account which is evident from copy of ledger account. The complainant is claiming the value of disputed securities liquidated. But he had failed to specify the scrip, quantity, price of the securities which the complainant is allegedly entitled to receive from opposite party. The sale proceeds of the securities liquidated were reflected in the ledger account of the complainant and hence he is not entitled to value of shares as claimed in his complaint. The complainant has not disclosed which act or omission of the opposite party amount to the deficiency of service or unfair trade practice. According to opposite party, the complainant approached him during March, 2007 in order to open and operate trading and demat account with the opposite party, accordingly the agreement was signed between the parties dated 29.03.2007 and the complainant issued a cheque of ` 550 towards account opening charges. The opposite party denies the averment that the complainant had issued any direction to the opposite party for not to trade in F & O segment and the complainant is put to strict proof. As per agreement complainant had completed the formalities to do F & O trade in his account. The first trade executed in the account of complainant was in derivative segment with his instruction and confirmation and subsequent to which there were frequent pay-in and pay-out funds in the account of the complainant which proves that the averment of the complainant is false contradictory and far from the facts of the case. The opposite party denies the averment that the complainant has taken pay out of ` 3,79,063 as from the perusal of records, the pay-out of funds amounts to ` 4,59,613 and thus the averment of the complainant is incorrect and devoid of merit.
The complainant had not specified as to which shares the complainant claims in his account which were lying in the demat account and allegedly sold or liquidated by the opposite party without the consent. The opposite party denied the averment that the complainant visited the office of opposite party on 19.11.2008 in order to take a pay-out and also denies the averment that the complainant had no knowledge of any trade executed in derivative segmentor that the complainant was made aware of F & O trades on 19.11.2008. The sale proceeds of the securities liquidated were reflected in the ledger account of the complainant and thus the claim amount of the complainant is false. The opposite party denied the averment that the securities were liquidated in cash segment against the loss reflected in F & O segment. There was no protest, objection, or demur. The allegation raised by the complainant are after thought false, malafide, contradictory and devoid of merit. The opposite party further denies the allegation that the trades executed in F & O segment were without any authority and against the direction of the complainant and also denies that there was no margin money to trade in derivative segment as the complainant had deployed funds in his account at regular interval and the allegation contrary there to are devoid of merit. The allegation that the complainant was never in receipt of copy of any contract note for trades in F & O segment are false and denied. The opposite party further denies the allegation that the complainant was not aware of any sale or liquidation of securities from his demat account or that the securities were sold against the desire and directions of the complainant. The opposite party further denies the allegation that the act or omission of the opposite party caused mental agony to the complainant and hence the complainant is not entitled to any amount towards compensation or value of the share. The opposite party have not received any notice from any lawyer.
Moreover the Forum has no jurisdiction since the both parties have agreed to Court in Mumbai shall have jurisdiction and hence the complaint is liable to be dismissed.
Upon the above contentions the following issues have been raised for consideration.
1. Whether the complainant is a consumer and the Forum has jurisdiction to try the case.
2. Whether there is any deficiency of service on the part of opposite party.
3. Whether the complainant is entitled to any relief.
4. Relief and cost.
The evidence in the above case consists of oral testimony of PW1 and Ext. A1 to A5.
Issue No.1 :
The opposite party raised preliminary issue of question of maintainability contending that the disputes raised by the complainants against opposite party is to be referred for arbitration and the issue was found in favour of the complainant as per detailed order dated 18.08.2009. The opposite party again raised the contention that the complainant is not a consumer, since he was trading in cash and derivative segment of exchange with a speculative motive. Sec 2(i)d(ii) of Consumer Protection Act defines a consumer as a person who “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 the services for consideration. Paid or promised or partly paid and partly promised or under any system of deferred payments, when such services are availed of with the approval of the 1st mentioned person (but does not include a person who avails of such services for any commercial purpose).
Explanation :- For the purpose for 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 purpose of earning his livelihood, by means of self-employment). But in this case admittedly the complainant is a mobile tower technician by profession and had invested a total amount of ` 6,64,550 to the opposite party and is maintaining a dematt account. As per the explanation to Sec 2 d(ii) of the Consumer Protection Act, a person can be included in the purview of consumer, only when the services availed by him is exclusively for the purpose of earning his livelihood by means of self-employment. The complainant in this case has no case that he is engaged in the trading share business for getting additional income so as to enable himself for his livelihood by means of self-employment. In Laxmi Engineering Works Vs P.S.G Industrial Institute which was reported in 1995(3) SCC 583 the Hon’ble Supreme Court pointed out that “commercial purpose” shall be governed by the facts of each case. The Hon’ble National Commission in Punjab Agricultural University Vs U.T.I and another observed that “the word ‘commercial purpose’ would cover an undertaking, the objective which is to make a profit”. In the instant case also, while going through the pleadings, it is seen that objective of trade business of the complainant is to make profit. Moreover Reghubir Singh Vs India Bulls Securities Ltd and others, the Chandigarh State Commission held that large scale of sale and purchase of shares had been done through the account of the complainant for earning huge profit. In this case the complainant opened a demat account with opposite party and paid ` 3,45,000 in total. So from the above discussion we are of the opinion that the complainant is not a consumer as per Sec 2 d(ii) of Consumer Protection Act. Since he is engaged in business for commercial purpose and hence the complaint is dismissed and the parties have to bear their own cost. Since issue No.1 is found against the complainant, we are not going deep into the other issues.
In the result the complaint dismissed. No cost.
Sd/- Sd/- Sd/-
President Member Member
APPENDIX
Exhibits for the Complainant
A1. Lawyer notice dated 22.11.2008.
A2. Postal receipt dated 24.11.08.
A3. Postal receipt dated 24.11.08.
A4. Postal acknowledgment 26.11.08.
A5. Postal acknowledgement dated 01.12.08.
Exhibits for the opposite parties
Nil
Witness examined for the complainant
PW1. Complainant
Witness examined for opposite party
Nil
/forwarded by order/
SENIOR SUPERINTENDENT
