PER SHRI. S.B.DHUMAL - HON’BLE PRESIDENT :
1) In brief dispute between the parties as under –
The Complainant is a Sr. Citizen aged about 78 years having retired as GeneralManager of State Bank of India, Mumbai in 1990. The Complainant is a smallinvestor, having Demat Account with Stock Holding Corporation of India, Mumbai numbering in 301330/18661144. The Complainant is a shareholder of Tata Steel Ltd.,the Opposite Party No.2 having 30 shares therein.
2) Opposite Party No.1- HSBC is a foreign bank. The bank was appointed as an authorized collection Bankers by Tata Steel Ltd. for accepting the Applications for Right Shares. Opposite Party No.2 is a Public Ltd. Co. engaged in manufacturing Steel at various factories in India. The Opposite Party No.2 appointed Opposite Party No.1 as its collection banker and therefore, is responsible as principal for the acts and omissions committed by Opposite Party No.1. The Opposite Party No.2 therefore, has been impleaded in this complaint as a necessary party.
3) According to the Complainant, he is a customer as defined under Sec.2(1)(d)(ii) of the Consumer Protection Act and has availed services of Opposite Party No.1 for accepting the Applications and cash deposits deposited by him and forwarding them to the Registrars of Opposite Party No.2 M/s. Intime Spectrum Bhandup for allotment of shares of Tata Steel Ltd. It is alleged that Opposite Party No.1 has failed and neglected to forward the applications of the Complainant to the said Registrars of Opposite Party No.2, as a result no right shares have been allotted to the Complainant by Opposite Party No.2. It is submitted that Opposite Party No.1 has been deficient in rendering the services to the Complainant as per Sec.2(g) of the Consumer Protection Act, and therefore, Opposite Party No.1 should compensate the loss suffered by the Complainant due to non forwarding the applications to Opposite Party No.2 and/or its Registrars.
4) As per the Complainant, sometime in November, 2007, Tata Steel Ltd. came out with rights issues of its shares to its shareholder in the proportion of one share for every 5 shares held at a price of Rs.300/- and 9 CCPs at a price of Rs.100 each for every 10 shares held by the shareholders. The Complainant was having 30 shares of Opposite Party Company and therefore, he was entitled to 6 shares and 27 CCPs under the right issue. Opposite Party No.2 had accordingly sent the Application Form in respect of 6 shares and 27 CCPs to the Complainant with option to subscribe for the same. The Complainant applied for 20 right shares and 30 CCPs and after filling the said applications, lodged them with Opposite Party No.1, alongwith value thereof amounting Rs.6,000/- and Rs.3,000/- respectively in cash at counter no.15 on 26/11/07. The counter clerk directed to fill another form for depositing cash with another counter and thereafter lodged the said application with the receipts at his counter for accepting them to which process the Complainant objected on the ground that the applications are composite one with the acknowledgments provided thereto for receiving the applications alongwith the cash/cheques and it is not necessary to fill another form for depositing cash amount of Rs.6,000/- and Rs.3,000/- and gave acknowledgments to the Complainant. It is submitted that normally allotment of the right shares would have been done by Opposite Party No.2 in a month’s time by credit to the Complainant’s Demat Account with the Stock Holding Corporation and/or refund the excess amount. The Complainant did not receive any communication from the Registrar. On perusal of his Demat Account the Complainant was shocked to observe that no credits of right shares/CCPs were afforded to his account. During relevant period the Complainant was hospitalized in Lilavati Hospital and so he could not check up the matter with the Opposite Party No.2 or its Registrar. The Complainant by his letter dtd.07/04/08 enquired status of his applications from the Registrar Intime Spectrum forwarding the copies of the same to the Opposite Parties. By letter dtd.15/04/08, Opposite Party No.1 asked the Complainant to produce acknowledgments for the cash deposited with the HSBC Bank, as the acknowledgments the copies which were sent to them were only application acknowledgments slips. The Complainant by his reply dtd.17/04/08 confirm that the acknowledgments given by HSBC are for cash deposits also besides for the said applications and that Opposite Party No.1 on fictitious, vexation ground is attempting to wriggle out of its obligations. It is alleged by the Complainant that Opposite Party has committed fraud, criminal breach of trust by a banker by denying receipt of cash amount of Rs.9,000/- by supporting the dishonest act and misappropriation of the said deposit by its representatives.
5) It is averred that Opposite Party No.1 by its reply dtd.28/05/08 has denied the receipt of the cash, while admitting issue of the said acknowledgments which it alleges that were given to the Complainant in good faith. The Complainant by his rejoinder dtd.20/08/08 denied all the allegations made by Opposite Party No.1 and confirms, reiterated that acknowledgments given by HSBC are both for applications and cash that receipt of the cash is evidence by said acknowledgment which are conclusive evidence in support.
6) It is alleged that Opposite Party No.1 has mischievously denying receipt of the cash deposit. According to the Complainant, as a result of non forwarding of his applications to Opposite Party No.2/Registrar, the Complainant has suffered the loss of right shares of Tata Steel Ltd which has to be compensated by Opposite Party No.1, as it has been deficient in rendering services to the Complainant.
7) It is submitted that on verbal enquiry with Opposite Party No.2, Opposite Party No.2 confirm that beside 6 right shares, 1 additional share and 27 CCPs an additional 3 CCPs of company would have been allotted to the Complainant. It is submitted that present market value of 7 right shares at the present rate of about Rs.850 per shares and 30 CCPs at present market rate Rs.130 per CCPs comes to Rs.5,950/- and Rs.3,900/-respectively. Opposite Party No.2 as a Principal, is responsible and liable for the acts and omissions of its authorized collecting bankers i.e. Opposite Party No.1.
8) The Complainant has prayed to declare that Opposite Party No.1 is guilty of deficiency of service. The Complainant has requested to direct Opposite Party No.1 to arrange for allotment of 7 right shares and 30 CCPs of Opposite Party No.2 or to reimburse the Complainant with the market value of those right shares amounting to Rs.5,950/- and of 30 CCPs amounting to Rs.3,900/- totaling to Rs.9,850/- and also to refund the amount of Rs.3,900/- being the application money of the balance of 13 right shares @ Rs.300/- per share, thus direct Opposite Parties to pay aggregate amount of Rs.13,750/-. The Complainant has requested to direct Opposite Party No.2 to allot 7 right shares and 30 CCPs to the Complainant or to reimburse jointly and severally with the Opposite Party No.1 the total amount of Rs.13,500/-. The Complainant has prayed for Rs.10,000/- as damages for harassment and mental agony and cost of this complaint from the Opposite Parties. Alongwith complaint, Complainant has filed copies of documents as per list of document.
9) Opposite Party No.1 has filed written statement and thereby resisted claim of the Complainant contending that allegations made in the complaint are contrary to or inconsistent. Complaint is frivolous, vexatious and deserves to be dismissed with cost.
10) Opposite Party No.1 has raised preliminary objection as regards the bar of jurisdiction contending that Opposite Party No.1 has been duly registered with SEBI to undertake the business of banker to an issue. It is registered intermediary with SEBI and the SEBI has sole jurisdiction to try and entertain complaints relating to the investors. In view of Sec.20(A) of SEBI Act, jurisdiction of Civil Court is barred. As per the provision of said Act, SEBI has sole jurisdiction to entertain and try complaint of investors relating to the various securities.
11) It is submitted by Opposite Party No.1 that there is no privity of contract between the Complainant and Opposite Party No.1. The Complainant has admittedly been trying for rights issue shares from Opposite Party No.2. As there is no privity of contract between the Complainant and Opposite Party No.1 present complaint is not maintenable against the Opposite Party No.1. Complaint is bad of non joinder of parties as Registrar – Intime Spectrum appointed by Opposite Party No.2 is not joined as a party. The Complainant has not paid any consideration/money for availing services from Opposite Party No.1. Therefore, in the absence of consideration and privity of contract, Complainant cannot be treated as a ‘Consumer’ under the Consumer Protection Act, 1986. It is submitted that the Complainant is dealing in buying and selling shares which amounts to business activities and for commercial purpose. The Complainant has availed services of the Opposite Party for commercial purpose and therefore, Complainant is not a consumer under Sec.2(1)(d)(ii) of the Consumer Protection Act. Therefore, present complaint is not maintenable under the Consumer Protection Act and deserves to be dismissed.
12) It is alleged by the Opposite Party No.1 the Complainant without paying any cash to the casher of Opposite Party No.1 had left premises of Opposite Party No.1. He had walked away with 2 acknowledgments of the applications addressed to Opposite Party No.2 without having paid cash to the cashier. The said applications received by the counter staff were further forwarded to the Registrar in compliance of the SEBI rules & regulations.
13) It is submitted by Opposite Party that ordinarily all the cheques collected by Opposite Party No.1 against all applications of the respective applicants are realized all cheque information given to the Registrar with its issue. All cash deposits against applications through cashier of Opposite Party No.1 also credited in the account of Opposite Party No.2. The acknowledgment receipts of the applications which given in good faith to the Complainant by Opposite Party No.1 cannot be treated as a proof of cash deposit made against the applications for subscribing rights issue. Opposite Party no.1 has verified its ledger account for cash deposits which do not indicate any cash deposit made by the Complainant on any counter.
14) It is submitted that after closure of the rights issue upto the month of April, 2008, the Complainant did not approach Opposite Party No.1 or to the Registrar to an issue appointed by Opposite Party No.2. About 5 months thereafter the Complainant had made inquiry about the applications and its subscription status. That itself shows that the Complainant had conveniently tried to get its rights shares without paying cash deposit under the pretention that the mere submission of the application and obtaining acknowledgment in respect thereof would get him shares credited in his Demat Account. The Complainant being retired General Manager of State Bank of India and practicing Advocate, is not and cannot be accepted that he is not aware of the ordinary procedure relating to deposit of cash by customer and acceptance of cash by bank. For depositing cash it is necessary to fill the require cash deposit slip/form and as to submit the same to the cashier. It is alleged that Complainant has tried to fabricate story by way of correspondence with Opposite Party No.1 that Complainant has handed over cash to the counter staff where the application are issued and acknowledgment receipt thereof given to the Complainant.
15) It is contended that there is no cause of action to the complaint and complaint is not maintenable. The Complainant has filed this complaint with intention to extract money from the Opposite Party and therefore, compliant deserves to be dismissed. The Complainant is not a consumer under the Consumer Protection Act, as the Complainant has failed to prove that he has hired or availed services of Opposite Party No.1 for consideration which has been paid or promised or partly paid and partly promised or under any system of differed payment. The Complainant has availed services for commercial purpose and therefore, Complainant is not a Consumer. Opposite Party No.1 has denied all the allegations made in the complaint and submitted that complaint deserves to be dismissed with cost.
16) Opposite Party No.2 has filed written statement and thereby resisted claim of the Complainant contending that complaint does not disclosed any cause of action against Opposite Party No.2 and hence, compliant deserves to be dismissed with cost.
17) Opposite Party No.2 has raised contention that Complainant is not a consumer within the meaning of Sec. 2(1)(d)(ii) of the Consumer Protection Act, 186. Present dispute is also not a Consumer Dispute within the meaning of Sec. 2(e) of the Consumer Protection Act, 1986 and therefore, complaint deserves to be dismissed.
18) According to the Opposite Party No.2, it was proposed to issue Equity Shares and Cumulative Convertible Preference Share (CCPS) on rights basis in the shareholders of the Company. This issue was made pursuant to resolutions passed by Board of Directors of the Company in its meeting held on 17/04/07, 30/07/07 and 05/10/07. The said offer opened for subscription on 22/11/07 and closed on 22/12/07. Accordingly Equity Shares and CCPs were offered to subscription of cash to those existing shareholders of Opposite Party No.2. 5 Equity sharers held on Record Date and 9 CCPs for every 10 Equity Shares held on Record Date. Each Equity share of face value of Rs.10, each was offered at Rs.300/- for cash at a premium of Rs.290/- per equity share. Each CCPs of face value of Rs.100/- was offered an at issue price of Rs.100/-.
19) Opposite Party No.2 has denied allegations made in the complaint and submitted that as per the guidelines of the Offer that, if the CAF together with the amount payable is not received by the Banker to the Issue/Registrar to the issue on/or before close of banking hours on the record date the offer contending in the letter of Offer shall be deemed to have been declined and the Board of Directors shall be at liberty to disposed off Equity Shares/CCPs hereby offered as provided under the terms of ‘Basis of allotment’. Since the Complainant CAF was not received by the Registrar within the last data/extended date of Offer. The Complainant’s offer was liable to be declined. It is alleged by the Opposite Party that Complainant has filed this complaint with malafide intention to accrue undue benefits by harassment causing to the Opposite Party and therefore,complaint be dismissed with cost.
20) The Complainant has filed rejoinder and thereby denied allegations made in the written statement of Opposite Party No.1 & 2. The Complainant then filed affidavit of evidence. Opposite Party No.1 & 2 has also filed affidavits of evidence respectively. The Complainant has filed written argument. Opposite Party No.1 & 2 has also filed their respective written argument. Heard Complainant who is practicing Advocate and Ld.Advocate Mr. Ashutosh Marathe for Opposite Party No.1 and Ld.Advocate Ashish Dalvi for Opposite Party No.2 and complaint was closed for order.
21) Following points arises for our consideration and our findings thereon are as under -
Point No.1 : Whether the Complainant is a ‘Consumer’ as defined under Sec.2(1(d)(ii) of the Consumer Protection Act,
1986 ?
Findings : No
Point No.2 : Whether the Complainant is entitled to reliefs from Opposite Party as prayed for ?
Findings : No
Reasons :-
Point No.1 :- Both the Opposite Parties in their written statement have raised contention that present complaint is not a ‘Consumer’ as defined under Sec. 2(1)(d) of the Consumer Protection Act and therefore, complaint is liable to be dismissed.
In the complaint, the Complainant has averred that he is a senior citizen aged about 78 years being retired as General Manager of State Bank of India, Mumbai in 1990. It is contended that he is a ‘Consumer’ as defined under Sec.2(1)(d)(ii) of the Consumer Protection Act, 1986 and has availed services of Opposite Party No.1 for accepting Application and the cash deposits tendered by him and forwarding them to the Registrar of Opposite Party No.2 for allotment of shares of Tata Steel Ltd. It is alleged that Opposite Party No.1 has failed and neglected to forward his application to the said Registrar of the Opposite Party No.2 as a result, no right shares have been allotted to the Complainant by Opposite Party No.2. The claim of the Complainant described in the complaint has arisen out of deficiency of services rendered by Opposite Party No.1 to the Complainant. The Complainant has requested to direct Opposite Party to allot 7 right shares and 30 CCPs to the Complainant or to reimburse jointly and/or severally with Opposite Party No.1 total amount of Rs.13,750/-. Now Complainant is practicing as an advocate. He has submitted that he is small investor and as such, he is a ‘Consumer’ as defined under Sec. 2(1)(d)(ii) of the Consumer Protection Act.
On the contrary, it is submitted on behalf of Opposite Parties that Complainant is a retired General Manager of State Bank of India, who is practicing as an advocate. The Complainant has Demat Account with Stock Holding Corporation of India, Mumbai, numbering in 301330/186611144. According to the Opposite Parties, the Complainant is trading in shares and has availed services of Opposite Parties for purchase of shares of Opposite Party No.2 – Tata Steel Ltd. Trading in share is a commercial activity. The Complainant has availed their services for commercial/ business purpose and therefore, the Complainant is not a ‘Consumer’. The Opposite Parties have relied upon amended definition of Sec.2(1)(d)(ii) which runs as
“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 or avails of the services 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 the first mentioned person (but does not include a person who avails of such services for any commercial purpose).”
[Explanation – For the purposes 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 his livelihood by means of self-employment;]
The aforesaid amended provision came into effect on 15/03/03. After the amendment, the Complainant has availed their services for commercial purpose. After amended “a person who avails services for commercial or business purpose is not a consumer” as defined under Sec. 2(1)(d). It is further pointed out that in the entire complaint, nowhere it is averred by the Complainant that income from trading in shares is the only source of his livelihood. In support of his contention, Ld.Advocate for the Opposite Parties has relied upon following 3 decisions of the Hon’ble State Commission -
1)Mr. Ganpathi Parmeshwar Kashi & Ors. V/s. Bank of India & Ors., in Complaint No.9/162 decided on 18/01/2011. The Hon’ble State Commission has observed that “At the first instance, we find that, admittedly, the alleged banking service of Demat Account of the Bank being hired for the commercial purpose, namely, to trade in shares, the Complainants are not consumers. It is not a case of the Complainants that they fall within the exception theory.”
2)Second case relied upon by the Opposite Party is Suresh Naraidas Khatri V/s. The Branch Manager, Anand Rathi Share & Stock Brokers, etc. In First Appeal A/10/944 decided on 16/12/2010. In the aforesaid judgment the Hon’ble State Commission has held that “the Complainant was dealing with shares to earn profit, so this was commercial transaction of the Complainant and for such transaction the complaint should not have been filed in the Forum itself.”
3)In the third judgement in F.A.No.A/10/1207 decided on 29/11/2010, the Hon’ble State Commission has observed that “Further more, it is a case of hiring services, utilizing facility of Demat Account for trading in shares or investment for commercial purpose. Thus, the Complainant’s are not consumers within the meaning of Sec.2(1)(d)(ii) of the Consumer Protection Act, 1986.
In the instance case, admittedly the Complainant has Demat Account with the Stock Holding Corporation of India. The Complainant is a shareholder of Tata Steel Ltd. He had availed services of Opposite Party No.1 for purchase of 7 rights shares and 30 CCPs of Opposite Party No.2 of Tata Steel Company. Even according to the Complainant, he has a trading in shares but it is submitted that he is a small investor. As mentioned above the Hon’ble State Commission in above cited judgments have clearly laid down that trading in shares is a commercial activity. Therefore, the Complainant had availed services of Opposite Party No.1 & 2 for commercial activity. The Complainant has clearly stated that he is a retired General Manager of State Bank of India and presently he is practicing as an Advocate. His livelihood is not dependant on the income of trading of shares so complainant is not covered under the explanation below Sec. 2(1)(d)(ii). Hence, we hold that the Complainant is not a ‘Consumer’ as defined under Sec. 2(1)(d)(ii) of the Consumer Protection Act, 1986. Hence, we answer point no.1 in the negative.
Point No.2 : As the Complainant is not a consumer as defined under the provisions of Sec. 2(1)(d)(ii) of the Consumer Protection Act, 1986, therefore, present complaint is not maintenable before this Consumer Forum. As Complainant is not a consumer, he is not entitled to claim any relief from Consumer Forum against the Opposite Parties as prayed for. Hence, we answer point no.2 in the negative.
For the reasons discussed, complaint is liable to be dismissed therefore, we pass following order -
O R D E R
i.Complaint No.100/2008 is hereby dismissed with no order as to costs.
ii.Certified copies of this order be furnished to the parties.
