D.O.F. 23.03.2009
D.O.O. 31.05.2012
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 31st day of May, 2012.
C.C.No.77/2009
K.N. Sidhique,
S/o. Moideen,
Ashraf Manzil, Kunhipalli, : Complainant
Kannur.
(Rep. by Adv.C.K. Rathnakaran)
1. The Kotak Securities,
Fort Road, Kannur.
2. The Kotak Securities,
229, First Floor, Bakhtawar, : Opposite Parties
Nariman Point,
Mumbai – 400 021
(Both rep. by Adv. M.K. Santhosh)
O R D E R
Smt. K.P. Preethakumari
This is a complaint filed under Section 12 of Consumer Protection Act for an order directing the opposite party to pay ` 4,00,000 being the value of shares in his account as on the date of selling the shares along with `10,000 as compensation and cost.
The case of the complainant is that he is a client of 2nd opposite party having share certificate of 300 shares of Canara Bank and 1000 shares of Indian Overseas Bank. The complainant started a dematt account with 2nd opposite party through 1st opposite party. At the time of starting the account with 2nd opposite party the complainant transferred 300 shares of Canara Bank and 1000 shares of Indian Overseas bank in the dematt account. Besides this the complainant paid `1,00,000 on various occasions by way of cheques to opposite parties Mr. Prabhu, the previous Manager of 1st opposite party informed the complainant that he had purchased share in his account by using the amount. The complainant could not say the name of the share since the share certificate was not issued to the complainant. At the time of starting the dematt account with opposite parties the complainant had specifically directed the opposite party that he only intended to trade in cash segments and he do not want to trade in derivative segments. As the complainant was in need of money he went to 1st opposite party and asked the Manager, Vinod to sell some shares from his account and to give a payout of `50,000 from his account. But the payment was delayed without any reason. The Branch Manager of the opposite party, Mr. Vinod had issued a cheque for `50,000 from his personal account, when the complainant threatened that he will inform the matter to the head office.
Again during October, 2008, the complainant was approached the 1st opposite party to give `1,00,000 by selling his shares from his account. At that time opposite party, informed the complainant that there is no shares in the demat account of the complainant and all the shares lying his account was sold out by doing derivative trade and on that account there was a huge loss and to adjust the loss, the share lying in his account was sold. The complainant issued a lawyer notice on 08.11.2008, but omitted to mentioned about the receipt of the cheque for `50,000 from the personal account of Vinod. Eventhough opposite parties received the notice they have neither complied the notice nor issued any reply. The complainant had never authorized the opposite parties to do derivative trade in the account and opposite parties have done derivative trade without the written consent or without any instruction from opposite party. The opposite parties did not send any contract note to the complainant for the alleged derivative trade done in his account. All the shares in the dematt account of the complainant were in the opposite party 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. The act of opposite party caused great mental agony to complainant and the complainant assess the compensation as `10,000. Value of the shares sold from the account of the complainant will be `4,00,000. Opposite parties are liable to pay the said amount to the complainant along with `10,000 as compensation. Hence the complaint.
In pursuance to the notice issued by the Forum all opposite parties appeared and filed their version admitting that the complainant is a client of 2nd opposite party under Code No. SGHTO as per an agreement dated 23.04.2004. The opposite parties had sent digital contract noties on the e-mail address of the complainant as available in records as and when the trades were executed in the derivative segment, the client is liable to pay an initial margin upfront on or before creating a position, which shall be decided by the maker or exchange. The complainant has accepted the creation and sending of contract notes and all communication electronically on his e-mail address. The opposite party sent contract notes and all ledger statements, communication, debit e-mails, on the mail address or postal address of the complainant as and when the complainant carried out trades. The complainant despite being aware of the trading position never disputed the same and continued to ratify and confirm trades. The said act of complainant makes it crystal clear that the complainant had not disputed or raised by grievance against the trades at any time during which the trades have been carried out and the entire trade were executed as per the instruction or consent of complainant. Whenever there were transactions carried out by the opposite party, the same were posted in the ledger account and at that time the opposite party sent system generated SMS of amount due from or due to complainant for the trades posted in his account.
The complaint is bad for mis-joinder of party. The complainant had arranged branch office as party. The branch office cannot be treated as different from the company and hence the complaint is bad for mis-joinder of party.
The complainant is not a consumer as per Section 2(1)(d) of Consumer Protection Act. The complainant is a Spectacular who trade in securities with an intention to make profit. The complainant had failed to provide break-up calculation as to how the complainant has arrived at a claim of `4,00,000. He has not disclosed the scrip, quantity, price etc of the securities for the above said amount. The F and O trades were placed and executed in the account of the complainant since September, 2007 with the consent, assent, knowledge and information of the complainant. The sale proceeds of the disputed securities are reflected in the ledger account of the complainant.
The complainant has not stated the date of starting demat account and the date of transferring the shares of Canara Bank and Indian Overseas Bank and also the date on which he has paid `1,00,000 to opposite party. The complainant has not state whether he has paid `10,000 to Mr. Prabhu or Kotak Securities. Mr. Prabhu was not the Manager and has no direct connection with the Kotak Securities. The opposite parties are not aware of the shares purchased using `1,00,000. Since September 2007, the complainant was executed trades in derivative segment as well as cash segment through opposite party which was not opposed by the complainant. The complainant has always confirmed and ratified the trades executed. The complainant was in receipt of quarterly statement of account as and when due. The opposite party denied further contention that complainant approached opposite party to sell some shares in account and to give a pay out of `50,000 and opposite party delayed payment without any reason, and later when complainant threatened, the Branch Manager Vinod issued cheque for `50,000 for his personal account etc. The opposite party again denies the averments that during 2008, the complainant approached opposite party, with a request to sell out shares from his account and give an amount of `1,00,000, they informed the complainant that there is no shares in the account of the complainant and all the shares was sold out. The complainant made averments as an after thought without any basis and the motive is to extract exhorbitant amount from opposite party. The complainant had borrowed `50,000 from Mr. Vinod and issued a cheque for `50,000 in favour of the complainant in his personal capacity which is the outside dispute between the complainant and opposite party. There is no nexus with that dealing with the dealings of the complainant. The case put up in lawyernotice and the case put up is the present case is contrary. After receiving lawyer notice complainant talked over the opposite party and he was convinced about the transaction and he was informed that he is not intending to proceed further. That is why the opposite party has not issued reply to lawyer notice. The complainant in his complaint had never denied the receipt of copies of contract notes for trades in cash segment and thus it is beyond imagination. The sale proceeds of the disputed securities sold are duly reflected in the ledger account of the complainant.
All the traders were done with the knowledge and information of the complainant, and the complainant was in receipt of copies of contract note. The complainant had failed to furnish details of securities which were allegedly sold without the consent of the complainant. There was no fault, in perfection or any shortcoming in performance of contract on the side of the opposite party. The complainant is not entitled to any amount as value of shares from opposite party.
The Forum has no jurisdiction to try the complaint because there exists member client agreement between parties. So 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 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 as prayed?
4. Relief and cost.
The evidence in the above case consists of the oral testimony of PW1 and Exts. A1 to A3 and B1 to B4.
Issue No.1 :
Opposite party contended that the complainant cannot be treated as a consumer, since the trades were executed with speculative motive to earn profit. So the complainant falls under the exceptions to the general rule and cannot be termed as a consumer U/s 2 (i) (d) of Consumer Protection Act, 1986. The complainant in this case is admittedly a fisherman. The Section 2(i) d (ii) of Consumer Protection Act defines a consumer as a person who hires or avails of any service for consideration which has been paid or promised or partly paid or partly promised or under any system of deferred payment and includes any beneficiary of such services other than the person who hires the service 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 first mentioned. Person, but does not include a person who avails of such services for any commercial purpose.
Explanations for the purpose 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 purpose of earning his livelihood by means of self employment. The opposite party has not produced any document to show that he is getting enough income from his job as a fisherman. So we are of the opinion that the complainant has engaged in the share trade as an additional income to meet the two ends of his life. In Laxmi Engineering Works Vs. PSC 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. So while going through the pleadings it is seen that the objective of the trade business of the complainant is his livelihood. So we are of the opinion that the complainant is a consumer.
The opposite party further contended that the Forum has no jurisdiction to try the case since there exists an arbitration clause in the agreement. But this issue was considered as preliminary issue and found that the Forum has jurisdiction to try the case and order pronounced on 18.08.2009. So we hold the view that the complainant is a consumer and the Forum has ample jurisdiction to try the case and hence issue No.1 is found in favor of the complainant.
The further case of the complainant is that he had entrusted `1,00,000 to opposite party and also 300 shares of Canara Bank and 1000 shares of Indian Overseas Bank by starting demat account with a special instructions to trade only in cash segments and do not trade in derivative segments and opposite party sold shares worth `4,00,000. In order to prove his case he has produced copy of lawyer notice dated 02.11.2008, postal receipts and acknowledgment cards. The opposite parties have produced documents such as contract notes, desktop address, copy of message and details of account etc. The complainant contended that the opposite party had done derivative trade without informing and without his confirmation and had transferred 300 shares of Canara Bank and 1000 shares of Indian Overseas Bank in the dematt account and also given `1,00,000 to opposite party. But he has not produced any documents or receipts to show that he had given `10,000 to opposite party. Similarly no documents are produced by the complainant to show that he has transferred 300 shares of Canara Bank and 1000 shares of Indian Overseas Bank. It is true that opposite party has produced certain documents, but nothing is produced to show the trades conducted by the complainant during the relevant period. The complainant has not stated any where regarding the value of shares kept by him and what are the shares in their account while going through the pleadings and facts and circumstances of the case, there feels some doubtful act of opposite party about the dealings of others. But nothing is before us regarding the value of share and about the trade. So we are not in a position to calculate or to assess deficiency of service on the part of opposite party. So the complainant failed t substantiate his case by producing cogent and convincing evidence and hence we are not in a position to attribute deficiency of service on the part of opposite party and hence the complaint is liable to be dismissed and order passed accordingly.
In the result complaint dismissed. No cost.
Dated this the 31st day of May, 2012.
Sd/- Sd/-
President Member
APPENDIX
Exhibits for the Complainant
A1. Copy of lawyer notice dated 02.11.2008.
A2. Postal receipt.
A3. Acknowledgment card.
Exhibits for the opposite party
B1. Contract note
B2. Copy of UCP issued to complainant and others.
B3. Copy of Mobile log issued to complainant.
B4. Ledger report
Witness examined for the complainant
PW1. Complainant
Witness examined for the opposite party
Nil
/forwarded by order/
SENIOR SUPERINTENDENT
