KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION VAZHUTHACADU THIRUVANANTHAPURAM
CC:NO: 9/2005
JUDGMENT DATED:27..09..2010
PRESENT
SHRI.M.V. VISWANATHAN : JUDICIAL MEMBER
Sri.Mathew Pallithanam,
Pallithanam House, Kainady.P.O,
Alleppey.
Now residing at:
502 Sunny Brook Terrace # 928, : COMPLAINANT
Maryland 20877, USA-Repd. by his
Power of Attorney – Sri.Subash Lukose-
Pallithanam, S/o Lukose,
Pallithanam House, Kainady.P.O,
Alleppey.
(By Adv:Sri.Roy Varghese & Sreekumar)
Vs.
The Federal Bank Ltd.,
H.O.Alwaye, Repd.by its
Portfolio Accounts Manager, : OPPOSITE PARTY
Cathelic Centre, Broadway,
Ernakulam.
(By Adv.Sri.Mohan Jacob George)
JUDGMENT
SHRI.M.V. VISWANATHAN : JUDICIAL MEMBER
Complaint filed under Sec.17(1)(a)(i) of the Consumer Protection Act.
2. The above complaint is filed against the Federal Bank, Catholic Centre, Broadway, Ernakulam claiming compensation of Rs.30.lakhs for the loss caused to the complainant by the breach of contract and negligence on the part of the opposite party due to the failure of the opposite party in following the instructions and specific directions of the complainant in the purchase and sale of shares of various companies.
3. The opposite party/Federal Bank entered appearance and filed written version challenging the very maintainability of the complaint. The opposite party contended that the complainant is not a consumer and the controversy involved in the complaint is not a consumer dispute; that the transaction entered into between the complainant and opposite party is a commercial one and the complainant cannot claim any relief under the Consumer Protection Act. It is further contended that the complaint is barred by limitation and that the complaint is a frivolous and vexatious one liable to be dismissed under section 26 of the Consumer Protection Act.
4. The opposite party insisted for hearing the preliminary issue regarding maintainability of the complaint in OP.9/05. Thus, the preliminary issue is regarding maintainability of the complaint is heard. The learned counsel for the complainant argued for the position that the complainant availed the service of the opposite party by operating a port-folio account with the opposite party bank and that the opposite party bank failed to render the aforesaid service availed by the complainant. It is also submitted that the complainant hired/availed the services of the opposite party bank for consideration and so the complainant is a consumer coming within the ambit of the Consumer Protection Act, 1986. On the other hand, the learned counsel for the opposite party/Federal Bank relied on the averments in the complaint regarding the transaction of buying and selling of shares and securities of various companies by the complainant. It is also submitted that the complainant was doing business of buying and selling of shares and securities of various companies for the purpose of earning profit and that the aforesaid transaction of buying and selling of shares and securities was carried out through the opposite party bank. Thus, the opposite party contended that the complainant who was doing the business of buying and selling of shares and securities of various companies for earning profit cannot be considered as a consumer coming within the purview of the definition, ‘Consumer’ as defined under Section 2(1)(d) of the Consumer Protection Act, 1986.
5. There is no dispute that the complainant opened port-folio account with the opposite party bank, the Federal bank for doing the transaction of purchase and sale of shares and securities of various companies. Admittedly, the complainant had a port-folio account with South Indian Bank and that the said account was transferred to the opposite party, the Federal Bank with effect from 1997 onwards. There is also no dispute that the aforesaid port-folio account has been maintaining for doing the transactions of buying, selling and dematting of his shares and securities which the complainant is having with various companies. It is categorically averred in the written complaint that the complainant proceeded and honestly believed the opposite party bank for getting the assured services for purchasing and selling specific shares of specific companies and for that purchase and sale the complainant used to give instructions to the opposite party bank and those instructions were given for the complainant’s benefit and safeguarding his interest as an NRI investor in shares and securities. It is further stated in paragraph 3 of the complaint that the complainant used to send instructions to buy specific shares when the market is very low and to sell the shares when the market for them is very high. The very averments in the written complaint would make it crystal clear that the complainant invested his money for doing business by purchase and sale of specific shares of specific companies for the purpose of earning profit and that the complainant opened the port-folio account for the purpose of doing the said business of purchasing and selling of specific shares of various companies. Thus, it can be seen that the complainant has been availing the services of the opposite party bank for doing business to effect purchase and sale of shares of various companies and thereby to earn profit. It is also categorically averred in the written complaint that the complainant paid service charges for opening and maintaining the complainant’s the aforesaid port-folio account with the opposite party bank, for carrying out his instructions to buy/sell shares in various companies. Thus, it can be seen that the opposite party bank has been purchasing and selling shares of various companies on behalf of the complainant on the specific instructions of the complainant. In other words, the complainant was doing the transactions of purchasing and selling shares of various companies through the opposite party bank. Therefore, it can be concluded that the agreement or understanding between the complainant and the opposite party bank was for carrying out the transactions of purchasing and selling of specific shares of various companies for deriving profit. If that be so, it can very safely be concluded that the transactions which had been carrying out by the complainant through the opposite party bank were nothing but commercial transactions. It can also be concluded that the complainant availed or hired the services of the opposite party bank for the purpose of doing commercial transactions/business transactions. The disputes involved in the present complaint are also directly related to the aforesaid commercial or business transactions conducted by the complainant through opposite party bank. In such a situation, the complainant who availed the services of the opposite party bank for commercial purpose cannot be considered as a consumer as defined under Section 2(1)(d)(ii) of the Consumer Protection Act, 1986 and that the disputes involved in the present complaint cannot be treated as consumer dispute or disputes.
6. The complainant has been maintaining the port-folio account with the opposite party bank for doing the commercial transactions of buying and selling of shares of various companies and that the said account has been maintaining from 1997-1998 onwards. It is the definite case of the complainant that he invested a sum of Rs.2,93,175/- in October 2001 by buying shares of 14 companies and he obtained benefit to the tune of Rs.25,68,145/- by August 2004. The grievances of the complainant against the opposite party bank are that the opposite party bank failed to follow his instruction to sell 1000 shares of ROLTA Company and due to the said failure on the part of the opposite party bank in selling the said shares, the complainant suffered loss of Rs.3.lakhs. It is also the speculation of the complainant that by reinvesting the aforesaid 3 lakhs he would have earned the profit of Rs.26.lakhs as additional income. But, it is not stated as to when the complainant gave the instructions for the purchase and sale of shares of various companies. It is also not stated as to when the complainant suffered the loss of Rs.26.lakhs. There is only a vague statement that the complainant suffered loss of Rs.26.lakhs on account of the failure of the opposite party bank in following his instructions for purchase and sale of various shares of different companies.
7. The complainant has also got a case that he had given instruction to the opposite party bank to sell 500 shares in ROLTA out of 1500 ROLTA shares he had and that the complainant suffered loss of Rs.2,50,000/-, because of the failure on the part of the opposite party bank in effecting sale of the aforesaid 500 shares in ROLTA company. Likewise the complainant has also got a case that the opposite party bank unauthorisedly converted 500 shares of NALCO and thereby he suffered loss of Rs.33,000/-. But nowhere it is stated the date on which the aforesaid instructions were given to the opposite party bank to deal with 500 RLTA shares. It is also not stated when the unauthorized conversion of 500 NALCO shares had been effected by the opposite party bank.
8. In paragraph 8 of the complaint it is specifically averred that the opposite party bank is liable to pay to the complainant the loss of profit calculated at 5% per year on the aforesaid amounts of Rs.2,83,000/- which the complainant would have earned if that amount was invested in shares. The aforesaid averments or allegations would make it clear that the complainant was doing the aforesaid transactions for profit and because of the breach of contract or negligence on the part of the opposite party bank he suffered loss of profit. This would give a clear indication that the complainant was not a mere investor but he was doing commercial transactions for earning profit. Hence, it can be concluded that the complainant is not entitled to invoke the provisions of Consumer Protection Act.
9. The complainant has got a case that he had given instructions to the opposite party bank for the purchase of 1000 shares of Vedeocon appliance at Rs.34/- per share and that the complainant could have earned profit of Rs.28,000/-. The aforesaid allegation would show that the alleged negligence or deficiency of service occurred on 10/10/2001. But the present complaint is filed only on 22/8/2005. The cause of action had arisen in 2001 but the claim is filed after the lapse of 4 years. Thus, the aforesaid claim based on the failure or omission in purchasing Vedeocon appliance shares can be treated as barred by limitation.
10. The complainant has also alleged negligence or lapse on the part of the opposite party in purchasing 300 shares of LIC housing finance and 500 shares of ROLTA India. The aforesaid failure to purchase the aforesaid shares occurred on 10/10/2001. Then the complainant ought to have claimed the compensation for the aforesaid negligence or omission occurred in 2001 within two years from 10/10/2001. But the present claim for compensation for the aforesaid negligence or omission is made only in 2005. Thus, the aforesaid claims for Rs.64,200/- and 61,500/- respectively are also barred by limitation.
11. The complainant has alleged loss of Rs.31,40,000/- and he limited his claim to Rs.30.lakhs. The case of the complainant is that he came to know about the aforesaid negligence, laches or breach of contract by the opposite party bank only in November 2003. If that be so, the cause of action for the present claim has arisen only in November 2003. There can be no dispute that the amendment to Sec.2(1)d(ii) of the Consumer Protection Act came into force on 15/3/2003. By the aforesaid amendment “a person who avails or hires services for commercial purpose is outside the purview of the Consumer Protection Act, 1986”. In other words, “a person who avails or hires services for commercial purpose cannot be treated as a consumer as defined under Section 2 (1)d (ii) of the Consumer Protection Act”. In this case the complainant herein had the cause of action for the present complaint in November 2003. By that time he has been thrown out of the purview of the Consumer Protection Act, 1986. In other words, the complainant was not a consumer as defined under Sec.2(1)d of the Consumer Protection Act when the cause of action for the present complaint has arisen. Thus, in all respects the complainant in OP.9/05 will not come within the purview of the Consumer Protection Act and that the dispute involved in the complaint is not a consumer dispute.
12. The foregoing discussions and that the findings and conclusions thereof would make it abundantly clear that the complaint in OP.9/05 is not maintainable under the Consumer Protection Act, 1986. The complainant has to approach the Civil Court or other authority like the authority under SEBI Act for redressal of his grievances against the opposite party bank. The complainant herein cannot be considered as a consumer coming within the purview of the Consumer Protection Act, 1986. Thus, the contentions adopted by the opposite party, the Federal Bank regarding maintainability of the complaint under the provisions of Consumer Protection Act, 1986 are upheld.
In the result, the above complaint is dismissed as not maintainable. The parties to the complaint are directed to suffer their respective costs. This order will not prejudice the right of the complainant to approach a Civil Court or other authorities and also to get the period of limitation excluded under Sec.14 of the Limitation Act as held by the Hon’ble Supreme Court in Lekshmi Engineering Works Vs. P.S.G.Industrial Institute reported in II (1998) CPJ 1 (SC).
M.V. VISWANATHAN : JUDICIAL MEMBER
VL.
