BEFORE THE MANDYA DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, MANDYA PRESENT: 1. SIDDEGOWDA, B.Sc., LLB., President, 2. M.N.MANOHARA, B.A., LLB., Member, 3. A.P.MAHADEVAMMA, B.Sc., LLB., Member, ORDER Complaint No.MDF/C.C.No.11/2009 Order dated this the 28th day of May 2009 COMPLAINANT/S 1. Sri.K.S.Jayashankar, Lecturer, Government Polytechnic College, Bangalore. 2. Smt.H.S.Maya W/o Sri.K.S.Jayashankar, Officer, Indian Bank, Mandya. (By Sri.S.Sudarshan., Advocate) -Vs- OPPOSITE PARTY/S The Manager, India Infoline Ltd., No.368, Jayalakshmi Arcade, 1st Floor, Narayana Shasthry Road, Opp. Raghavendra Swamy Mutt, Mysore 570 024. (By Sri.P.T.Ponnappa., Advocate) Date of complaint 28.01.2009 Date of service of notice to Opposite party 09.02.2009 Date of order 28.05.2009 Total Period 3 Months 19 Days Result The complaint is partly allowed, directing Opposite party to refund Rs.25,730/- with interest at 9% p.a. from the date of complaint with cost of Rs.1,000/-. Further, the Opposite party is directed to refrain from indulging in mis-trading of share transaction without consent of the customers. Sri.Siddegowda, President 1. This complaint is filed under section 12 of the Consumer Protection Act, 1986 against the Opposite party for a direction to pay Rs.25,797/- being the loss by mis-trading and Rs.50,000/- towards the compensation and cost with interest at 18% p.a. and further, direction to Opposite party to refrain from indulging in mis-trading of shares. 2. The facts of the complaint are that the complainants had opened a D.Mat account bearing No.JAYAS-195 with view to transact in respect of certain legitimate shares of reputed company and were so transacting by the Opposite party. The Opposite party is a trader of share transactions once established at Mandya. At the request of the Opposite party at Mandya, the complainants were obliged to accept the services of the Opposite party on the condition that the Opposite party should not charge exhorbitant commission and should not trade the shares of the complainants un-authorisedly without informing the complainants. For some time, the complainants were obliged to use the services of the Opposite party without any grouse. One Sri.Jayaram was looking after the transactions of the Opposite party at Mandya till recently and without informing the complainants, the Opposite party Office was shifted to Mysore. Further, the complainants found that the said representative of the Opposite party was unauthorisedly trading in the account of the complainants without informing anything to them only to the benefit of the Opposite party instead of benefiting the complainants which is the essence of the contract and service agreed upon by the parties. The complainants requested the said representative to furnish them the password to their trading account enabling them to know the actual profit and loss and other details in their account. On 22.08.2008, they received a message from the Opposite party firm stating that 184 HDFC bank shares were sold at Rs.1,166.08 per share, but the complainants could not comprehend as to how such a heavy trading of shares of reputed company involving heavy amount could be put through without their knowledge and consent and that too at the time when the capital in the account of the complainants was less than Rs.20,000/- to 25,000/- for such heavy trading. The representative obviously used to avoid the possible telephonic confrontation in spite of several attempts made by the complainants to contact the representative of the Opposite party firm. At last when the complainants were able to get the telephonic connection with the said representatives he admitted and confessed the fact of mistake committed by him in not informing the complainants before trading their shares and assured that he will not repeat the mistake, but despite his undertaking not to repeat the mistake, he sold 185 shares of HDFC bank shares on 28th August. In spite of serious objections raised by the complainants, these mis-tradings were made to believe that the shares were brought on intraday trading where credit and debit were put through on the same day. Then, the complainants called the representative and told him not to transact in their account without their permission and they reserved their right to object to such trading after verifying their profit and loss account. The complainants request to him to forward their password to view their account was ignored by representative. These mis-tradings were repeatedly informed to the Opposite party and office at Bombay through E.mail, as per the print out produced. The officials of the Opposite party office at Bombay informed the complainants on 25.08.2008 that the shares they had sold on 22.08.2008 were not intraday, but forward sale and they were requested to buy back the shares to square the position. The complainants were forced to accept for buying back of the shares on 26.08.2008 itself for the fear of losing much, but the representative of Opposite party Mr.Jayaram, mistraded and treated the account of the complainants as his own and put through the transaction on 27.08.2008 to the financial detriment of the complainants. The complainants registered a complaint about this act over phone to the customer service of the Opposite party firm, on the morning of 28.08.2008 before trading hours. But, again mistradings of the Opposite party firm continued and the complainants on 28.08.2008 received a SMS from the Opposite party stating that it has sold (forward) 185 shares of HDFC Bank without the consent of the complainants. Even to this mistrading, the complainants have lodged a complaint to the customer service centre over phone on 29th before the trading hours. The representative of the Opposite party never intended to allow the complainants to view their account to know the actual tradings made in their demat account and even, the Opposite party firm has not changed the E.mail I.D. and address of the complainants in spite of repeated requests. The unauthorized trading of the Opposite party has made the complainants to sustain a financial loss of Rs.25,797/- and Opposite party company has allowed its representative to do so to its illegal benefit and gains. The complainants have suffered mental agony and they got issued legal notice dated 17.11.2008, the Opposite party has not sent any reply, but the Opposite party called the complainants over phone to discuss regarding the issue in question. So, the complainants personally went to the Opposite party office and after detailed discussion, the Opposite party requested to grant a months time to settle the dispute and admitted to reimburse the financial loss caused by him to the complainants. But, the Opposite party has failed to keep up their promise. Therefore, the Opposite party has committed deficiency in service. Therefore, the present complaint is filed. 3. The Opposite party has filed lengthy version, admitting that the Opposite party is a trading in stock and shares of brokers. The complainant to become a member entered into agreement of broking and depository services, combined risk agreement, GPA etc., and signed the documents on his own accord after going through them and with proper understanding and with initial deposit of Rs.2,555/- by way of cheque towards the opening of his demate account. The details of the transaction from 30.04.2008 to 28.08.2008 have been sent to the complainant and also through E-mail and also informed over phone to know about the day to day transaction. The complainant is not a consumer under the transaction with Opposite party. The complainant entered into an agreement with the Opposite party in dealing in share market on payment of mere brokerage of 0.05% per share and not any service charges. The business was done only with the instruction, direction and permission and with request of the complainant and here it is a personal contract. The complainant has agreed about the profit and loss of the transactions in the share market. The complainants also knows that if any dispute arises, in transaction, the dispute may be settled by referring to the sole Arbitration at Mumbai as per the Arbitration Act and the Courts in Mumbai, shall have the jurisdiction over this agreement and further any dispute between the parties shall be subjected to the grievance redressal procedure of the exchange and shall be subjected to the Arbitration procedure. As per Client Broker Agreement, the complainant has agreed to receive the digital contract notes through internet to his unique client ID or designated E.amil ID and to confirm all the transactions if the same has not been objected within 24 hours to the Opposite party. The complainant has agreed to sell the stock or share in his account if they fail to deposit the additional margin amount by deadline or if an outstanding debt occurs in his account. All the transactions were done with permission and consent of the complainant and Opposite party has not committed any deficiency in service. The Opposite party is diligent and prompt in dealing with transactions and immediately it transfers through its auto generated server to their respective E.mail I.D. and customers trade account. The complainant has no right to seek any relief at Mandya for want of jurisdiction and the complaint is also not maintainable for non-joinder of the head office. The loss occurred only due to the act of the complainants. The share business is highly speculative nature and depending upon the performance of the company which has issued the shares. The complaint is filed to grab and gain illegally from the Opposite party. The complainant is not entitled to any relief and the complaint is to be dismissed with costs. 4. During trial, the 2nd Complainant has filed affidavit and examined and the documents Ex.C.1 to C.8 are produced. The Opposite party has filed affidavit and examined and has produced the documents Ex.R.1 to R.3. At the time of arguments stage, the complainants have filed written arguments, the Opposite party has failed to address arguments and even failed to submit written arguments. 5. We have perused the records. 6. Now the points that arise for our considerations are:- 1. Whether the complainant is a Consumer? 2. Whether this District Forum has no jurisdiction to entertain the complaint? 3. Whether the complainant proves that without knowledge and consent to the complainants, the HDFC Bank Shares were sold and Opposite party has caused loss of Rs.25,797/-? 4. Whether the Opposite party has committed deficiency in service? 5. Whether the complainants are entitled to the relief sought for? 7. Our findings and reasons are as here under:- 8. POINTS NO.1 & 2:- The Opposite party has taken contention that the complainant is not a Consumer, because the contract entered into is a personal contract dealing in share market on payment of mere brokerage per share and not any service charges. The brokers are selling or purchasing shares in their own name and the contract between the seller and the broker are principal to principal, while selling / purchasing the shares, also the price or purchase price include the commission, the relationship between the seller and the broker is the relationship providing service for consideration by charging commission. Therefore, the complainant also Consumer within the meaning of Section 2(1)(d) of the Act, as per the decision reported in 1993(2) CPR page 463 Gujarat, in the case of Indravadan Choksey Vs- Hitesh Dinesh. In 1993(1) CPJ page 3 in the case of Rama Narayan Iyer Vs- Larson and Turbo Ltd., it is held that the share holder can approach the Consumer Court if has suffered loss due to deficiency in service and negligence on the part of the Opposite party. 9. Admittedly in this case, the Opposite party is the authorised agent of the complainant by way of agreement to conduct trade in respect of the shares of the complainant and admittedly for such transaction, the Opposite party collects brokerage at 0.05% per share. Therefore, the transaction of the shares on behalf of the complainant by the Opposite party receiving the brokerage amounts to providing service on payment. Therefore, the complainant is a Consumer. 10. The Opposite party has taken contention that the District Forum, Mandya has no jurisdiction to enter the complaint in view of the agreement that all the disputes arising out of the agreement shall be subjected the arbitration and subjected to the jurisdiction courts in Mumbai, but nowhere in the agreement, we find that specifically the complainant is barred from approaching any other authority provided under law. As per Section 3 of the C.P. Act, 1986, the provisions of this Act in addition and not in derogation of the provisions of any other law for the time being in force. The provisions of the Consumer Protection Act are in addition to not in derogation of the provisions of any other law. The rights and remedies are under the Act cannot be curbed either by arbitration provision agreement entered into the parties themselves. Therefore, the complainants being the Consumers of the Opposite party and the agreement was entered into at Mandya and some transaction was done at Mandya by the Opposite party, this Forum has jurisdiction to entertain the complaint. 11. So, the defence of the Opposite party that the complainant is not a Consumer and this Forum has no jurisdiction to entertain the complaint is devoid of merits and hence, they are rejected. 12. Admittedly, the Opposite party is trading in stock and shares of the customers by entering into an agreement with the customers and Ex.R.1 agreement between the Opposite party and the complainant is produced. The Opposite party is a member of National Stock Exchange of India depository participant and also a member of stock exchange of India and Bombay stock exchange as per Ex.R.2. It is an admitted fact that the Opposite party company opened a Branch office at Mandya in 2006 and one Jayaram was looking after the branch at Mandya and the office was closed in September 2008. It is an admitted fact that the complainants have opened demate account and trading account with the Opposite party at Mandya. The 1st Opposite party has admitted that on behalf of the customers they do transaction and obtain commission for their service and the intention of share business is to get profit. R.W.1 has admitted that in order to sell or purchase the shares, the permission of the customer is required. The main grievance of the complaint is that one Jayaram was looking after the Branch Office at Mandya and Office was shifted to Mysore and the complainants found that said person was unauthorized by trading in the account of the complainants without informing anything to them. Though, the complainants requested him to furnish their password to their trading account to know the actual profits and loss and other details of their account. On 22.08.2008 they received a message from Opposite party firm stating that 184 HDFC bank shares were sold at Rs.1,166.08 per share and the representative of the Opposite party used to avoid telephonic conversation and finally confessed the fact of mistake committed by him in not informing the complainants before trading their shares and assured that he would not repeat the mistake. In spite of undertaking, he sold 185 shares of HDFC bank on 28th August, in spite of serious objections and these mistradings were made to believe that the shares were brought on intraday trading where credit and debit were put through on the same day. In spite of request, the Opposite party representative did not provide password and also the higher officers did not provide. According to the complainants, the Opposite party at Bombay informed the complainants on 25.08.2008 that the shares they had sold on 22.08.2008 were not intraday, but forward sale and they were requested to buy back the shares to square the position. Due to this unlawful act of the Opposite party, the complainants were forced to accept for the buying back of the shares on 26.08.2008 itself for the fear of losing much. But Mr.Jayaram mistraded and treated the account of the complainants as his own and put through the transaction on 27.08.2008 to the financial detriment of the complainants. In this regard, the complainants have registered the complaint before the Opposite party Office and Opposite party firm. Ex.C.1 reveals, the complaint of complainants about the unauthorized trading and requiring to furnish the details and the discussion had with the Mr.Jayaram and she came to know the sale of shares through Bombay Office and requested Opposite party representative not to deal with the transaction without her permission as per Ex.C.1 dated 01.09.2008. As per Ex.C.2 dated 30.10.2008, the complainants have sought for new E.mail I.D. and change of address as per Ex.C.3. As per Ex.C.4 dated 07.09.2008 letter is addressed to Opposite party at Mandya Branch, she has sought for to furnish password to her account complaining about the unauthorisedly trading in her demat account, when request to provide password in her letter dated 01.09.2008 was not responded. As per Ex.C.5 also on 07.11.2008, the complainant has sent the complaint through E.mail to the Bombay Office and also on August 29th and October 17th complaining against the illegal trading of her shares account at Mandya Office. Even on 07.09.2008 as per Ex.C.6 she has sought for providing the password for Jayas195 account and has sought for written clarification about her account and Ex.C.7 is the profit and loss report for the financial year 2008-09. According to the Opposite party objections and the evidence, the complainant was contacted through phone, E.mail and with her consent the shares were sold and bye back, but the complainant has denied the same. The attitude of Opposite party in not replying and responding to the loss and complainats go to show that all is not well and without the consent and knowledge of the complainant the shares were sold at lesser rate and buy backed and collecting Rs.19,000/- from her working place. The very complaints letters of the complainants clearly established that the Opposite party has not furnished E.mail to the complainant at all and he was not in a position to look after transaction done by the Opposite party day to day and kept in darkness and the evidence of the complainant only after telephonic message from the Bombay Office of the Opposite party, she came to know the transaction cannot be doubted at all. Though, the Opposite party witness has deposed that through S.M.S. and E.mail and also phone, the transaction was informed, but when no password of E.mail I.D. was not furnished to the complainant, there is no question of opening the E.mail to know the share transaction operated by the Opposite party. No documents of sending S.M.S. or phone calls to the complainant about the share transactions are produced. It is admitted that the complainant had filed a petition, complaining the loss without informing the transaction and the witness has admitted that no action was taken about the petition of the complainant. Admittedly, no reply was sent to the legal notice. It is admitted in the affidavit evidence of the Opposite party witness that the total loss occurred is Rs.25,729.80/- excluding taxes, but the contention is that the Opposite party is not responsible. Though, the share business is subject to fluctuation depending upon the share market, but the share holders take the service of the brokers like Opposite party to conduct transaction in a beneficial way to show the profit to the customer and it is not expected the broker company to deal with the share transaction, when the share market has fallen down. When there is no evidence by the Opposite party with the consent of the complainant, the HDFC shares were sold and it is established clearly the negligence of the Opposite party in share trading business. Though, the Opposite party contended that the complainant gave the cheque of Rs.19,000/- to adjust the account, but the complainant deposed that the Opposite party person came her working place bank and showing the profit and loss statement asked to balance statement of accounts and to pay the amount and hence, she issued the cheque for Rs.19,000/-. Therefore, the analysis of the evidence and the documents of the complainant and also the evidence of Opposite party present Manager and documents clearly established that without the consent and approval of the complainant, the earlier Manager of the Opposite party has sold the shares of the complainant causing loss and her complaints were not at all replied at all. Therefore, the Opposite party has committed deficiency in service. 13. The complainant has sought for refund of Rs.25,797/- being the loss caused to the complainants and Rs.50,000/- as compensation for the intentional loss with interest at 18% p.a. and cost and also direction to Opposite party to refrain from indulging in mistrading acts. In view of our finding on point no.3 when the Opposite party has admitted there is a loss of Rs.25,729.64/- excluding taxes, the Opposite party is liable to refund this loss of Rs.25,730/- on account of deficiency in service with interest. Though, the complainant has sought for compensation of Rs.50,000/-, but when the complainants sought for interest, there is no question of awarding compensation as sought for by the complainant. The Opposite party is to be directed to refrain from illegal trading of the shares of the customers without their consent. 14. In the result, we proceed to pass the following order; ORDER The complaint is partly allowed, directing Opposite party to refund Rs.25,730/- with interest at 9% p.a. from the date of complaint with cost of Rs.1,000/-. Further, the Opposite party is directed to refrain from indulging in mis-trading of share transaction without consent of the customers. (Dictated to the Stenographer, transcribed, corrected and then pronounced in the open Forum this the 28th day of May 2009). (PRESIDENT) (MEMBER) (MEMBER)
