DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II
Udyog Sadan, C-22 & 23, Qutub Institutional Area
(Behind Qutub Hotel), New Delhi- 110016
Case No. 225/12
Shri Kalyan Prasad Mathur
S/o Shri Ram Prasad Mathur
Hasanpur Road, Opposite Partyala, Gajroula
Distt.-J.P. Nagar (UP) 244235. …Complainant
VERSUS
1. Infrastructure Leasing &
Financial Securities Services Ltd.
10, Community Centre, 2nd Floor
East of Kailash, New Delhi-110065.
2. Sterlite Industries India Ltd.
7, Kirol Road, Vidhya Vihar (West)
Mumbai-400 099.
3. Karvy Computershare Private Limited
Plot No.17-24, Vittal Rao Nagar, Madhapur
Hyderabad – 500081. …Opposite Party
Coram:
Ms. Monika A Srivastava, President
Ms. Kiran Kaushal, Member
Sh. U.K. Tyagi, Member
ORDER
Date of Institution : 04.05.2012
Date of Order : 28.02.2023
Ms. Monika A Srivastava, President
Complainant has filed the present complaint seeking addition of 11 shares of the complainant in the Demat Account with bonus and compensation of Rs.1,20,000/- as well as litigation charges of Rs. 37,000/- OP1 in the complaint is Infrastructure Leasing & Financial Securities Services Ltd., OP 2 is Sterlite Industries India Ltd. and OP 3 is M/s Karvy Computershare Private Limited. OP-3 is the Registrar and Transfer Agent of OP-2 and is incharge of all the record and data of OP-2.
- It is stated by the complainant that he is the DEMAT account holder of OP-1 vide client ID No.10512196. It is stated by the complainant that he had purchased 11 shares of OP-2 company in his Demat Account.
- It is further stated that OP-1 had sent 11 shares of the complainant to OP-2 on 09.08.2002 under “buy back policy” but without any information and consent of the complainant. This information came to the knowledge of the complainant when he got the NCD cancellation draft. Immediately, the complainant filed a complaint with the consumer society of Gajroula. The consumer society sought OP-1’s response wherein it was stated that OP-2 had sent a cheque of Rs.1100/- for the value of 11 shares under Buy Back Scheme. It was also stated that the form of Buy Back Scheme was sent by post with the Option Form to repurchase the shares and continue to be a shareholder of OP-2 which decision had to be intimated in the Option Form within 21 days of its dispatch.
- It is stated by the complainant that he never received any such Option Form or information regarding Buy back Scheme from OP-2. The complainant then complained to SEBI and the same was forwarded to the OPs for resolving it within reasonable time but no action has been taken by the OPs. The complainant made two more complaints to SEBI on 08.08.2005 and 17.09.2005. But the OPs did not resolve the issue and it was reiterated by them that on account of failure of not receiving the post containing the Buy Back Scheme Option Form, the shares of the complainant were returned to OP-2 who then sent a cheque of Rs.1100/- as the value of 11 shares. To this, the complainant had stated that he did not want to sell the shares to OP-2 because the present value of 11 shares was about Rs.95,000/- and that is why the complainant had returned the cheque of Rs.1100/- to OP 2.
- It is alleged by the complainant that the value of his shares is Rs.95,000/- and the OP wants to grab the hard earned money of the complainant which amounts to deficiency of services and on account of which the complainant has suffered mental agony and financial crisis. It is further stated that left with no alternative the complainant filed a consumer complaint in J.P. Nagar on 2008 but the same was returned to be filed in the appropriate forum for want of territorial jurisdiction vide order.
- It is further stated by the complainant that he again complained to the SEBI on 23.03.2012 but till date OPs have not taken any action to resolve the complaint. However, in response of this complaint OP-3 sent a letter in which it is stated that OP-3 has been appointed as Registrar and Transfer Agent of Sterlite Industrial India Ltd. i.e. OP-2. It was also stated by OP-3 that since the Option Form was not returned within 21 days of its dispatch from Mumbai, the share stands extinguished.
- It is grievance of the complainant that when he did not get any Option Form he could not have returned the same to OP-1 and in the absence of this, his shares could not be extinguished without his consent and the act of OPs is totally illegal and OPs are deficient in their services.
- In their reply, OP-1 have stated that the present complaint is barred by time as it has been filed after a period of two years from the accrual of date of cause of action. It is stated by OP-1 that the main complaint is between the complainant and OP-2 & 3 as the scheme of arrangement of the Buy Back offer was between the complainant and OP-2 & 3.
- It is stated by OP-1 that after opening DEMAT account with them in October 2000 complainant submitted to replace for dematerialisation of 11 shares of OP-2 held by the complainant. The shares were then forwarded to OP-3 who is Registrar and Transfer Agent of OP-2 and shares were credited to the accounted of the complainant in January 2001. It is further stated by OP-1 that OP-2 had intimated NSDL (National Securities Depository Ltd.) about the scheme of arrangement of Buy Back offer between OP-2 and its shareholders. It is further stated that in the NSDL Circular dated April 30, 2002 bearing reference No. NSDL/PI/2002/06/97 the following was arrangement :-
- SIL will make an offer to buy the shares of SIL from the shareholders holding shares is of the record date. (The record date for the said offer was fixed on May 20,2002).
- In lieu of shares SIL will pay cash consideration of Rs.100 per share purchased by it. Also the shareholders will receive five debentures of Rs.10/- each in lieu of each share purchased.
- In case the shareholders wishes to continue as the shareholders, it has to intimate its decision to SIL in the Option Form (which will be sent by SIL to every shareholder on or after record date) within 21 days of its dispatch. In case, the shareholders does not respond to the offer, the shareholders shall be deemed to have accepted the form. Accordingly, shareholders will be debited from its account and consideration as mentioned above shall be remitted.
- OP-1 denies sending the share to OP-2 under buy back policy. It is stated that the shares of OP-2 is held by the complainant with OP-1 in electronic form and OP-1 as a depository has been merely maintaining the record of shares held by its clients in electronic form in their Demat accounts. It is further stated that Buy Back Scheme was purely handled by OP-2 and OP-3 and OP-1 has no role to play. Option Form provided an option to repurchase the shares or continue as an existing shareholder was dispatched by the OP-2 and OP-3 to their shareholders.
- It is further stated by OP-1 in terms of the scheme of arrangement, the shares were automatically, without any instructions debited back to its corporate account from the account of the complainant without any action on the part of the OP-1 and therefore loss, if any, to the complainant cannot be attributed to OP-1. OP-1 further states that letter dated 17.10.2004 was received by them from the complainant enquiring about the status of the shares. It is stated that OP replied to the letters clarifying that he is depository participant and was not in a position to provide any assistance in the matter and the complainant would be required to take up the matter with OP-2 & 3. The letter is annexed as Exhibit-3. It is stated by OP-1 that there has been no deficiency in service on their part.
- Both the OP 2 and 3 have raised preliminary objection that the complainant is not a consumer within the meaning of the expression as defined under section 2(1)(d)(ii) of the Consumer Protection Act, 1986 and therefore was not entitled to invoke the jurisdiction of District Consumer Disputes Redressal Forum. It is further stated that the shares and stocks of a duly incorporated company under the Companies Act, 1956 are not goods, within the meaning of Consumer Protection Act, 1986 as held in CIT v. Standard Vacuum Oil Co. AIR 1966 SC 1393 while defining shares, the Hon’ble Supreme Court has observed:
“A share is not a sum of money; it represents an interest measured by a sum of money and made up of diverse rights contained in the contract evidenced by the articles of association of the Company.”
- It is further stated that there is no relationship of Consumer-Service provider between OP-2 company and the complainant shareholder. The complainant is not a consumer as the shares held by him were for purely commercial purpose and further since that the allegations do not constitute a deficiency as defined under the Consumer Protection Act, 1986.
- It is also stated that the complaint is barred by law of limitation under the provisions of Section 24-A of the Consumer Protection Act, 1986 and is liable to be dismissed on that court alone. The Scheme of Arrangement has been duly approved by the Hon’ble High Court in the year 2002 and has not been interfered by the Apex Court in the circumstances when the entire Scheme has been worked upon and implemented in the year 2002 itself and the Respondent cannot have any grievance against the subject Scheme at this belated stage.
In this regard, OP-2 has placed reliance on the judgments passed in:-
- Mahant Bikram Das Chela Vs. Financial Commissioner, Revenue, Punjab, Chandigarh & Others [1977 AIR 2221]
- U.P. Awas Evam Vikas Parishad Vs. Brij Kishore Pandey & Anr. [2009 (3) CPC 595]
- Collector, Land Acquisition Vs. Katiji (supra)
- Mahant Bikram Das Chela Vs. Financial Commissioner (supra)
- State Bank of India Vs. B.S. Agriculture Industries (I) [(2009) 5 SCC 1211]
- It is also stated that Section 10 of the Companies Act, 1956 specifically laid down the jurisdiction of Courts for matters under the Companies Act and therefore, the present complainant before the Consumer Disputes Redressal Forum, South Delhi was not situated within the territorial jurisdiction of the Forum as required under Section 10 of the Companies Act, 1956. It is further stated that in any event if the Complainant is aggrieved of this repurchase and cancellation of his shares under the Scheme, he ought to have filed an Appeal under section 392 of the Companies Act, 1956 before the Hon’ble Bombay High Court and not any complaint before this Forum. OP -2 further states that in aforesaid circumstances, present complaint is barred by the principles of waiver, acquiescence and estoppel and is also barred by the principles of re-judicata and/or constructive res-judicata and/or provisions analogous thereto. The OP humbly submits that the complaint is wholly frivolous, vexatious and baseless and as such the same should be dismissed with cost.
- OP-2 in their reply, have stated that SIL has been merged with SESA Goa Ltd. in terms of Co. Petition No.203/2002 in High Court of adjudicature of Bombay which was filed under Section 391/394 and Section 100 of Companies Act 1956. OP-2 has stated that as per the directions of the Hon’ble High Court of Bombay, the OP-2 have caused sufficient notices to all its shareholders by release of advertisements in newspapers and sent Option Forms along with repurchase consideration, warrants to all the shareholders pursuant to the above Scheme of Arrangement. The proof of posting is evident from the fact that a majority of shareholders have responded to the Scheme.
- It is further stated that if the complainant had any grievance or did not receive the Option Form and/or the repurchase warrant, he could have taken up the matter with the OP-2 Company or at least written to the Company within the extended period upto 20.10.2002 stating that he desires to continue as shareholder of the Company and accordingly did not desire to offer his 11 equity shares to the company for purchase, which he failed and neglected to do.
- It is further stated that the complainant has not shown any interest in the subject shares for more than six and half years from the time the Scheme has been totally worked upon and implemented and the complainant now more as an afterthought wishes to capitalise on various corporate benefits. OP-2 states that at this belated stage the Scheme should not be allowed to be interfered, moreover when it has been settled by the High Court of Bombay and the Supreme Court of India.
- It is further submitted that under the said scheme so approved and sanctioned by the Hon’ble High Court of Bombay, the registered shareholders of the OP-2 were under the obligation to return the duly signed and executed option form within the stipulated time of on or by 5 pm on 21.06.2002, failing which it was deemed that the registered shareholder was not interested to retain the shares. In the present instances, the complainant has failed and neglected to exercise the option to retain his shares on or before stipulated timeline. Accordingly, on non-receipt of the desire to retain the shares from the complainant herein, the OP-2 company re-purchased and cancelled subject 11 equity shares of the complainant.
- OP-2 further states that the present complaint is infructuous in view of the fact that the shares of the complainant have been validly re-purchased and cancelled in accordance with the duly sanctioned Scheme under Sec 391 of the Companies Act, 1956 by the Hon’ble Bombay High Court in as much as the Scheme has been completely worked upon in all respects, implemented and settled in the year 2002.
- It is further stated that the present complaint is not maintainable before this Hon’ble Forum in view of the law laid down by the Hon’ble NCDRC in the case of Sterlite Industries (India) Ltd. Vs. Ganapati Finsec Pvt. Ltd decided on 12.07.2013 in RP No.3345 of 2012 also in light of A. Asithambi Vs. Company Secretary, Satyam Computer Services Ltd. & Ors. which was upheld by the Hon’ble Apex Court in SLP (C) MP/36840 vide order dated 14.12.2012 and also in case of Dr. V.K. Aggarwal Vs. M/s Infosys Technologies Ltd. in OP No.287 of 2001 decided on 24.07.2012.
- On merits, it is stated that the contentions of the complainant are self-contradictory as had the complainant not received the cheque of Rs.1100/-, how the complainant claims to have resent the cheque of Rs.1100/- to the OP-2. It is also stated that the complainant has failed and neglected to intimate no-receipt of option form and repurchase consideration warrant under the above Scheme, which in the present case was dispatched to him, within stipulated time.
- In their reply, OP-3 has stated that OP 3 was not the Registrar and Transfer Agents of the OP-2 and the complainant has no privity of contract with OP 3 at any point of time. OP 3 became the Registrar and Transfer Agents (RTA) of OP-2 only in May 2007 and it is observed from the records received by the OP 3 that the complainant was not a shareholder at the time of its appointment as RTA.
- It is further stated that it appears from the complaint that the complainant’s shares were already bought back by OP-2 in the year 2002 and OP 3 has nothing to do with the action of OP-2 which was the sole and exclusive decision of the OP-2. It is stated that when the records pertaining to the shareholders of OP-2 was received by OP 3 when it became the RTA the complainant was not even a shareholder either in the electronic segment or in the physical segment. It is stated that the inclusion of OP 3 is a case of misjoinder and a malafide action on the part of the complainant.
- It is stated that as the complainant was not a shareholder it appears that OP 2 and its erstwhile registrars and transfer agents i.e. Share Pro Services have not received any intimation from complainant expressing his/her intention to retain the shares and as such the shares held by the complainant came within the purview of the scheme in the year 2002 itself and was purchased by the company. On such purchase, the shares stand cancelled and extinct and no benefits shall be accrue on the shares anymore. That for this reason apparently the name of the complainant was not reflected as the shareholder in the Registrar of Members or in the beneficiary position reports received from the depositors when OP 3 was appointed the Registrar and Transfer Agent of the OP-2.
- In his rejoinder, the complainant has stated that he is a senior citizen and was purchasing shares for the purpose of earning his livelihood. It is further stated by the complainant that office of OP-1 is within the territorial jurisdiction of this Commission, therefore this Commission has the territorial jurisdiction to entertain the present complaint.
- It is also stated by the complainant that he is, in no way challenging the order of the Hon’ble High Court of Bombay or the company policy but is merely stating that the shares should have been bought back after informing and getting consent of the complainant.
- On the objection of limitation it is stated by the complainant that since he had earlier filed his complaint with SEBI, Consumer Society and then Consumer Court, J.P. Nagar from where the complaint was returned to be filed in appropriate forum there is no delay on the part of the complainant and the complaint is not barred by time.
- It is reiterated by the complainant that he never received the letter of availing the buy back , however, he did receive the cheque of Rs.1100/- but had sent it back to OP-1 as the complainant was not willing to sell his shares to OP-2.
- The complainant has placed reliance on the judgment of the Hon’ble NCDRC in the matter of Unit Trust of India Vs. Kelki Devi & Ors vide order dated 09.12.2002 wherein it was held that the complainant cannot be made to suffer on the lapse of erring opposite parties. Placing reliance on this judgment the complainant states that he never received the buy back Option Form and had he received, he would not have accepted the buy back offer.
- It is stated that after the merger of the OP-2 with Vedanta Group, Vedanta Group has offered bonus shares to its shareholders and on that account the complainant has lost approximately Rs.1,50,000/-. The complainant has also placed reliance of the Hon’ble Supreme Court passed in Unit Trust of India Vs. Shri Shanker Das in CA No.7604/2002 wherein it was held that the shareholder is a consumer within the purview of the Consumer Protection Act, 1986.
- This Commission has gone through the entire material on record and is of the view that the complainant is a consumer as he was holding shares in a Demat account and not in a trading account. In this regard, the judgments relied on by the OP cannot be relied on for the reason that in this case the complainant has clarified that he was engaging in buying and selling of shares to earn his livelihood as he is a retired person.
- This Commission has the territorial jurisdiction to entertain the present complaint as the office of OP No.1 is situated within the jurisdiction of this Commission.
It is also seen from the record that the complainant has averred in his complaint that he did not receive the buyback option form while he did receive a cheque of Rs.1100/- from OP 2. OP 2 in their reply, have categorically stated that the cheque of Rs.1100/- was sent along with the buyback option form however, have not placed on record any document to show that the buyback option form was sent along with the cheque that was received by the complainant. It is also seen that the complainant has been constantly filing complaints i.e Sebi, Consumer Court, JP Nagar however, the Hon’ble Supreme Court in Secunderabad Cantonment Board Vs. M/s. B. Ramachandraiah & Sons Civil Appeal Nos. 900-902 of 2021
“It is undisputed that final payments were received latest by the end of March 2003 by the Respondent. That apart, even assuming that a demand could have been made on account of price variation, such demand was made on 08.09.2003. Repeated letters were written thereafter by the Respondent, culminating in a legal notice dated 30.01.2010. Vide the reply notice dated 16.02.2010, it was made clear that such demands had been rejected. Even taking 16.02.2010 as the starting point for limitation on merits, a period of three years having elapsed by February 2013, the claim made on merits is also hopelessly time barred.” Also, in Geo Miller & Co. (P) Ltd. v. Rajasthan Vidyut Utpadan Nigam Ltd [(2020) 14 SCC 643] it was observed that mere correspondence of the appellant by way of writing letters/reminders to the respondent subsequent to this date would not extend the time of limitation.
It is seen that the complaint filed by the complainant at J P Nagar, U.P was also beyond time as the cause of action arose in 2002 and the complaint was first filed in 2008 therefore, the complainant cannot take the benefit of Section 14 of the Limitation Act which deals with Exclusion of time of proceeding bona fide in court without jurisdiction. Placing reliance on the judgments of the Hon’ble Supreme Court, the present complaint is dismissed as being time barred.
Parties to be provided with the copy of the order as per rules. File be consigned to record room. Order be uploaded on the website.
File be consigned to the record room after giving copy of the order to the parties. Order be uploaded on the website.
