BEFORE THE A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION: AT HYDERABAD.
FA.No.1299/2010 against C C.No.657/2008 District Forum-I Hyderabad.
Between
Sri Hari Krishna Soma S/o.Achaiah
Aged about 34 years, Indian,Occ:Private
Service H.No.9-71/1, Vikasnagar,
New Dilsukhnagar, Hyderabad-500 060. ..Appellant/
Complainant
And
1. Motilal Oswal Securities Ltd.,
81/82, 8th floor, Bajaj Bhavan,
Nariman Point, Mumbai
Rep. by its Managing Director.
2. M/s.Motilal Oswal Securities Ltd.,
201, Lumbini Amrutha Chamber,
Near Nagarjuna circle, Road No.3,
Banjara Hills, Hyderabad-82
Rep. by its Regional Manager.
3. Smt.Jampana Jyothi
W/o.Jampana Narasimha Murthy Raju,
(Former Branch Manager, Bhimavaram Branch
M/s.Motilal Oswal Securities Ltd.,)
Flat No.301 Swathi Apartments,
Near Gurudwara, Ameerpet, Hyderabad.
4. Sri Jampana Narasimha Murthy Raju,
S/o.Krishnamurthy Raju
(Former Branch Manager, Bhimavaram Branch
M/s.Motilal Oswal Securities Ltd.,)
Flat No.301 Swathi Apartments,
Near Gurudwara, Ameerpet, Hyderabad. Respondents/
O.Ps.
Counsel for the Appellant : M/s M.Hari Babu
Counsel for the Respondents : M/s K.Upender Reddy R1 & R2
service of notice on R3 and R4 held
sufficient.
QUORUM: THE HON’BLE SRI JUSTICE D.APPA RAO, PRESIDENT,
SMT.M.SHREESHA, HON’BLE MEMBER,
AND
SRI S.BHUJANGA RAO, HON’BLE MEMBER.
FRIDAY, THE THIRTEENTH DAY OF JULY,
TWO THOUSAND TWELVE
Order (Per Smt.M.Shreesha, Hon’ble Member)
Aggrieved by the order in CC 657/2008 on the file of District Forum-I, Hyderabad, the complainant preferred this appeal.
The brief facts as set out in the case are that the complainant applied to opposite parties for opening a demat account on 23-9-2006 and was informed that the demat account number and operation manual would be furnished in due course and reposing confidence upon the opposite parties, the complainant purchased the following shares and paid Rs.1,70,803/- inclusive of commission from 09-10-2006 to 11-1-2007.
Date | Name of the scrip | Quantity of shares | Cash of the share Rs. | Total value with service charges | Payment Encashed on |
09-10-2006 | Reliance Petroleum Ltd.. | 1000 | 67.25 | 67,567.90 | 10-10-2006 |
16-10-2006 | ERA Constructions India Ltd., | 20 | 455.50 | 9,153-00 | 20-10-2006 |
29-12-2006 | Noida Toll Bridge Co. | 100 | 34-95 | 3,510.71 | 10-01-2007 |
03-1-2007 | GMR infrastructure Ltd., | 50 | 378.80 | 18,997.00 | 10-1-2007 |
03-1-2007 | Niveli Lignite Corp. | 100 | 57.20 | 24,581.99 | 10-1-2007 |
04-1-2007 | Nagarjuna constructions Ltd., | 100 | 226.80 | 22,787.50 | 10-1-2007 |
10-1- 2007 | Reliance Com. Ltd., | 100 | 415.95 | 41,793.72 | 11-1-2007 |
The complainant submits that this was the first time he was investing with any share consultancy and was not aware of the procedures. He was informed by opposite parties 3 and 4 at Bhimavaram that the link with their head office from Mumbai failed and they did not furnish even a statement of account to the complainant. Having lost confidence in the opposite parties, the complainant opened another demat account in Stockholding Corporation at Bhimavaram during May 2007 and requested opposite parties 3 and 4 to transfer his shares to this demat account at Stockholding Corporation. With great difficulty, he was provided with a statement of account for the period 01-4-2006 to 22-1-2007 wherein the closing credit balance was shown as Rs.808.75. Thereafter the opposite parties closed their branch at Bhimavaram. Thereafter the complainant got to know that the opposite parties purchased shares to the tune of Rs.17,19,338.45 and sold shares to the tune of Rs.16,83,035.39 and a debit balance of Rs.36,303.06 was shown. The complainant personally visited opposite party No.2 and requested for settling his claim. Opposite party 4 also wrote a letter promising the complainant that they would pay Rs.2,75,000/- within 10 days i.e. by 10-8-2007 and issued two post dated cheques one for Rs.1,40,000 and another for Rs.1,35,000/-. When the complainant presented these cheques both were dishonoured due to insufficient funds.
The complainant made a complaint to SEBI on 01-11-2007 and on 19-11-2007, NSEI requested the complainant to send some information and the complainant sent all the documents on 15-11-2007. SEBI on 27-12-2007 forwarded the reply of opposite party No.1 in which opposite party No.1 stated that the agreement was between the complainant and opposite parties 3 and 4 who resigned on 15-5-2007. The complainant submitted that no copy of member client agreement was furnished to the complainant and no demat and ID numbers were furnished. Hence the complaint seeking direction to pay Rs.2,75,000/- with interest, compensation and costs.
Opposite party No.1 filed counter stating that the complainant on his own has executed the member client agreement along with the risk disclosure document to commence dealing in shares and was allotted client ID WBVMH001 and the complainant was informed about the risks involved in the securities market. The complainant also held a demat account with DP ID No.1201090001308681. As a normal practice, opposite parties issue a welcome letter at the time of opening of the account with details of their login ID and password through which the clients can access their transaction details. The DP account number was clearly provided to the complainant vide his account opening letter dated 25-9-2006. Clauses 13 and 14 of the agreement between stock broker and client reads as follows:
Clause 13
“The Stock broker shall send digital contract notes, bills, ledgers,
transaction statements, reports, letters, circulars, notices, etc. to the Client for the trades/transactions done on the Exchange, to the email id of the client”
Clause 14
“The clients shall provide the email id to enable the Stock broker to send the digital contract notes, bills, ledgers, transaction statements, reports, letters, circulars, notices, etc. from time to time to the client through the software installed at the stock broker end and the client shall initially download the specified software (signature verifier utility) or any other software as may be advised by Stock broker from time to time on the Clients computer and the same shall be used for receiving, viewing, storing the digital contract notes, bills, ledgers, transaction statements, reports, letters, circulars, notices, etc. that shall be sent by the Stock broker from time to time in respect of the trades/transactions/transfer of securities Derivative that have been executed for the Clients through the terminal of the stock broker and/or Depository Participant”.
Clause 15 specifies the procedure, if there is any dispute and this reads as follows:
Clause 15
“It is hereby specifically agreed that the client will call the stock broker office and take confirmation from the stock broker or access the same on his its email ID. The client confirms the acceptance of contract note through email ID and in the event of non receipt of the same, for any reasons within 24 hours accepts to
Download from the website WWW.motilaloswal.com. Any discrepancies in the trades for the day must be pointed out at the time of confirmation or latest before the opening of the market the next day failing which the stock broker will not be liable Jbr the resultant financial loss, In case the client does not point out discrepancy of any within 24 hours of receiving the contract note, the same shall be treated as correct, it shall be the responsibility of the client to send the original contract note in case of discrepancy to the stock broker within 48 hours of receipt”.
Opposite party no.1 did not receive any request to transfer the shares in his DP account to that of the Stockholding Corporation of India. All transactions between October, 1st 2006 till February 2nd , 2008 have been executed on the specific instructions of the complainant and no trades appear in the account of the complainant after February, 2nd 2008. Satisfied with the actual facts, both SEBI and NSE have closed the complaint and opposite party No.1 also denies issuance of any cheques on behalf of opposite parties 1 and 2 and deny all other allegations and submit that there is no deficiency in service on their behalf.
Opposite party No.2 remained exparte.
Opposite parties 3 and 4 filed their counter affidavit stating that they are employees of opposite party No.1 and that they were paid their monthly salaries upto March, 2007 only though they worked upto May, 2007 and after the Bhimavaram branch was closed, they have no knowledge with regard to subsequent acts. Opposite parties 3 and 4 contend that they have paid an amount of Rs.1 lakh in the second week of August, 2007 and another amount of Rs.25,000/- in the month of December, 2007 and the complainant and his father acknowledged this on the reverse of an empty white paper which was manipulated as debt certificate dated 30-7-2007. They contend that they have no personal knowledge of the transactions between the complainant and opposite parties 1 and 2. It was only with the consent of the complainant that purchase and sale of transactions was done and transfer of shares into new demat account has to be done by the company only and not by the branches and submit that there is no deficiency in service on their behalf.
The District Forum based on the evidence adduced i.e. Exs.A1 to A14 and the pleadings put forward, dismissed the complaint on the ground that irregularities, fraud and cheating do not fall within the ambit of Consumer protection Act, 1986.
Aggrieved by the said order, the complainant preferred this appeal.
Before we address the merits of this case, we address ourselves to the question whether the complainant is a consumer or not. Admittedly the complainant executed a member client agreement with the opposite parties for transaction in market securities. Ex.A8 is the client statement of account for the period October, 1st, 2006 to December 31st, 2006 which shows several transactions of the capital market which have taken place. Ex.A10 is the loan deed/promissory note dated 30-7-2007 executed by opposite party no.4 for an amount of Rs.2,75,000/- to the complainant undertaking to pay the amount within 10 days. Keeping in view that this is a total commercial transaction dealing in shares and market securities and the complainant had taken the services of opposite parties to deal in these share transactions for the purpose of making profit, we are of the considered view that this is a purely commercial transaction which does not fall within ambit of Section 2(1)(o) of the Consumer Protection Act, 1986. If the cheques issued by opposite party no.4 were dishonoured, it is open to the complainant to file a case under Negotiable Instruments Act. The complainant is silent about this aspect. Moreover, keeping in view the judgement of the National Commission in VIJAY KUMAR v. INDUSIND BANK reported in II (2012) CPJ 391 (NC) in which it was held as follows:
Petitioner has nowhere pleaded in its entire complaint that he is doing share trading business as “self employment for livelihood”. Nor it has been alleged that the services provided by the respondent, were being availed of exclusively for the purpose of earning of his livelihood by means of self employment by the petitioner. Dispute between the parties relating to commercial purpose are excluded under the Act.
Since, petitioner has been trading regularly in the shares which is a commercial transaction and for which he has also availed the ‘over draft facility” from the respondent , as such he would not be a consumer as per Section 2(1)(d)(ii) of the Act. Moreover, regular trading in the purchase and sale of shares is a commercial transaction and the only notice is to earn profit. Thus, this activity is purely commercial one and is not covered under the Act. There are concurrent findings of facts also with regard to the service of notice upon the petitioner.
We are of the considered view that this is a Commercial transaction and we dismiss this appeal confirming the order of the District Forum.
In the result this appeal is dismissed however with a liberty to the complainant to approach the appropriate court, if so advised and exclusion of time spent before Fora under Section 14, Limitation Act in view of the judgement of the Hon’ble Supreme Court in the case of Laxmi Engineering Works v. P.S.G.Industrial Institute II (1995) CPJ 1 (SC). There shall be no order as to costs.
Sd/-PRESIDENT.
Sd/-MEMBER.
Sd/-MEMBER.
JM Dt.13-7-2012
