DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II

Udyog Sadan, C-22 & 23, Qutub Institutional Area

(Behind Qutub Hotel), New Delhi-110016

Case No.368/2009

Sh. Ram Krishan Garg,

S/o Late Shri Lala Babu Ram Garg,

B-11/5, Krishna Nagar,

Delhi-110051.                                                                ….Complainant

Versus

DLF Limited

(Formerly DLF Universal Limited)

Through

It’s Director/ Managing Director

Registered Office:

Shopping Mall, 3^rd Floor, Arjun Marg,

Phase-I, DLF City,

Gurgaon-122002

Also at:

DLF Centre Sansad Marg,

New Delhi-110001                                                        ….Opposite Party

                                                  Date of Institution        :     2009      Date of Order        :     12.11.2018

Coram:

Sh. R.S. Bagri, President

Ms. Naina Bakshi, Member

Ms. Kiran Kaushal, Member

ORDER

Ms. Kiran Kaushal, Member

Brief facts as stated in the complaint are :

1. The complainant Shri Ram Krishan Garg along with his son Shri Arun Garg jointly possessed 50 shares of face value of Rs.10/- each of DLF Universal Limited(now name changed to DLF Ltd.) hereinafter referred to as OP.
2. OP in the month of December, 2005 to January, 2006 offered debentures of Rs.100/- in the ratio of 1:1 (i.e. one debenture for every one share) held by a shareholder but the complainant  did not receive any letter by which the offer of the rights issue of the debenture was made nor the notices and minutes of the AGM of 2005 was received by him. After knowing about the said offer letter dated 21.12.2005, the complainant immediately wrote a letter dated 14.12.2006 to the company complaining about the same. However, no reply was received from the OP. The complainant sent various reminders to the OP and finally sent a legal notice to OP dated 26.02.2008 wherein complained about the non-receipt of the offer letter.
3. It is further stated that the complainant suffered huge financial loss due to this negligent conduct and defective services of the opposite party. It is alleged that the said offer of issuance of debentures was kept open till 26.9.2007 i.e. even after almost two years of the original offers. The complainant submits that no communication whatsoever even about the corrective offers was ever received by the complainant. It is next submitted by the complainant that irresponsible behaviour of the company by not sending the information must not result in loss to the complainant. The complainant next averred that he also came to know that there were large number of shareholders who did not receive the offer letters and OP had acted upon their complaints and issued debentures to such shares holders. The complainant was further aggrieved by this discriminatory treatment towards the complainant.
4. Being aggrieved, the complainant moved to this forum with the  following prayers:-

1. To issue debentures as per the Rights issue of December 2005 – January 2006 along with converted shares, bonus shares and bifurcated shares in favour of the complainant vide Folio/ Client ID Number A006023 as per the policy and decision of the Board of Directors of the OP.
2. Pay Rs.1,00,000/- towards damages of harassment, mental agony, trauma and physical discomforts suffered  by the complainant along with the costs of the present litigation.

2. OP resisted the complaint inter-alia on the grounds that complainant is not a consumer, on non-joinder of parties, jurisdictional error, limitation, concealment of material facts and abuse of process of law to make unlawful gains etc.
3. Rejoinder and evidence by way of affidavit has been filed by the complainant wherein all the facts in the complaint have been reiterated in the rejoinder as well as in evidence.
4. Affidavit of Ms. Anita Thakur, Dy. General Manager has been filed on behalf of the OP.
5. Written arguments have been filed by the parties.
6.  Arguments of the Ld. Counsel on behalf of the parties are heard and documents placed on record perused.
7. Without going into the details of the pleadings, it is noticed that the core issue of the dispute is about non-issuance of debentures to the complainant. Therefore, question relating to whether the complainant is a ‘Consumer’ has to be decided first. To decide this reference is made to law laid down by the Hon’ble Supreme Court in Morgan Stanley Mutual Fund vs. Kartick Das (1994) which held that:-

“(1) Consumer is one who consumes. As per the definition under Section 2(1)(d)(i), consumer is the one who purchases goods for private use or consumption. The meaning of the word ‘consumer’ is broadly stated in the above said definition so as to include anyone who consumes goods or services at the end of the chain of production. The comprehensive definition aims at covering every man who pays money as the price or cost of goods and services. In order to satisfy the requirement of the definition, there must be a transaction of buying goods for consideration. The definition contemplates the pre-existence of a completed transaction of a sale and purchase of goods.

        In view of Section 2(1)(i) of the Consumer Protection Act, the meaning of goods is the same as defined in Section 2(7) of the Sale of Goods Act, 1930 (“’‘goods’ means every kind of movable property other than actionable claims and money; and includes stock and shares…”). All actionable claims and money are thus excluded from the definition. Since, till the allotment of shares takes place, the shares do not exist, the shares for which an application is made for allotment can never be called goods. Therefore, at the stage of application it will not be goods. After allotment different considerations may prevail. A fortiori, an application for allotment of shares cannot constitute goods. Rights may arise as per the contract (Article of Association of Company). But certainly not before allotment. At that purchase of goods for a consideration nor again could be called the hirer of the Section (2)(1)(c) shows that no prospective investor could fall under the Act.

        In the definition of ‘complaint’ in Section 2(1)(c), clauses, (iii) and (iv) do not arise in this case. Therefore, question is whether any unfair trade practice has been adopted. The expression unfair trade practice as per Section 2(1)® shall have the same meaning as defined under Section 36-A of Monopolies and Restrictive Trade Practices Act, 1969. That again cannot apply because the company is not trading in shares. The share means a share in the capital. The object of issuing the same is for building up capital. To raise capital, means making arrangements for carrying on the trade. It is not a practice relating to the carrying of any trade. Creation of share capital without allotment of shares does not bring shares into existence. Therefore, a prospective investor like the respondent or the association is not a consumer under the Act.”

Similarly in the present case an offer of the rights issue of debentures cannot constitute goods and no prospective investor like the complainant can be considered to be a consumer under the Consumer Protection Act, 1986.

In another case decided by the Hon’ble NCDRC titled Dr. Goutam Das Vs. Sun Pharmaceuticals Industries Ltd. & Anr. CC No. 30/10, decided on 05.05.10 in a dispute between the share holder and a company the view taken was that a shareholder cannot be a consumer.

8. Further in section 2(1)(d) (ii) of Consumer Protection Act, 1986, in the definition of Consumer, the explanation appended to this clause further lays down, “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 purposes of earning of his livelihood by means of self-employment”.  No averment has been made by the complainant stating that he was availing the services of OP for the purpose of earning the livelihood, by means of self-employment. No evidence was also placed on record to the same effect.
9. This view is further supported by Hon’ble NCDRC in Nagarag Narayan Katti and Anr. vs. ITC Ltd. and Ors. I(2014)CPJ485(NC) that “certainly clauses (iii) and (iv) of Section 2 (1) (c) do not arise in this case. Therefore, what requires to be examined is, whether any unfair trade practice has been  adopted. The expression ‘unfair trade practice’ as per rules shall have the same meaning as defined under Section 36A of Monopolies and Restrictive Trade Practices Act, 1969. That again cannot apply because the company is not trading in shares. The share means a share in the capital. The object of issuing the same is for building up capital. To raise capital, means making arrangements for carrying on the trade. It is not a practice relating to the carrying of any trade. Creation of share capital without allotment of shares does not bring share into existence. Therefore, our answer is that a prospective investors like the respondent or the association is not a consumer under the Act….

Explanation appended to this Clause further lays down, “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”. There is no evidence that the Complainants Nagaraj Narayan Katti and Smt. Sushma Nagaraj Katti were availing services for the purpose of earning their livelihood, by means of self-employment. No such averment was made.”

10. Hence, in view of the aforementioned discussion, the Forum is of the opinion that complainant is not a ‘Consumer’ within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986. The present complaint is, therefore, not maintainable Hence, the complaint is dismissed with no order as to costs.

Let a copy of this order be sent to the parties as per regulation 21 of the Consumer Protection Regulations.  Thereafter file be consigned to record room.

Announced on 12.11.18