Before the District Consumer Disputes Redressal Commission, Rohtak.
Complaint No. : 168
Instituted on : 15.03.2022
Decided on : 18.11.2024.
Pradeep Gur aged-65 years son of Sh. Harbhaj Singh resident of 20, Defence Colony, Hisar.
………..Complainant.
Vs.
- Karvy Stock Broking Ltd. Corporate Office “Karvy Millennium “Plot No.31, Nanakramguda Financial District, Gachibowli, Hyderabad(Telangana) through its CEO.
- Karvy Stock Broking Ltd., 1st Floor, Ashoka Plaza, Delhi Road, D.L.F. Colony, Rohtak, Haryana-124001 through its Incharge.
- ICICI Bank Ltd. ICICI Bank Towers, BandraKulra Complex, Bandra(East) Mumbai-400051 through its M.D.
- ICICI Bank Ltd. Ashoka Plaza, Delhi Rohtak Road, Rohtak Haryana through its Branch Head.
- National Stock Exchange of India Ltd. Exchange Plaza, Plot No. C/1, G-Block, Bandra-Kurla Complex Bandra (E), Mumbai-400051.
……….Opposite parties.
COMPLAINT U/S 35 OF CONSUMER PROTECTION ACT,2019.
BEFORE: SH.NAGENDER SINGH KADIAN, PRESIDENT.
DR. TRIPTI PANNU, MEMBER.
DR.VIJENDER SINGH, MEMBER
Present: Sh. LalitNayyar, Advocate for complainant.
Sh. Naveen Chaudhary, Advocate for opposite party No. 3 &4.
Opposite party no. 2 given up.
Opposite party no. 1 and 5 already exparte.
ORDER
NAGENDER SINGH KADIAN, PRESIDENT:
1. Brief facts of the case as per complainant are thatopposite party no. 1 is a stock broking company and a trading member of National Stock Exchange Mumbai and depository participant registered with NSDL CDSL. The opposite party no. 2 is the branch office of opposite party no. 1. Opposite party no. 3 is a Bank and opposite party no. 4 is the branch office of opposite party no.3. The opposite party no. 5 is a platform to provide trading facility for debt, equity and other asset classes accessible to investors across the nation. In the year 2018, the complainant was approached by the Branch Manager of Hisar Branch of opposite party no. 1 to earn livelihood by investing in share and stocks through their company. On his assurance, the complainant signed a few documents and opened DEMAT and trading accounts at his office Hisar and made some investments. After some time, the Hisar branch office was closed and his account was transferred to Branch Office at Rohtak i.e. opposite party no. 2. Then complainant started investing in securities/shares through opposite party no.1 and 2 to earn his livelihood. However in the year 2020, the complainant came to know that opposite parties indulgedin malpractices and fraudulently pledging shares/securities of their clients with banks to obtain loans. On 18.03.2020, the complainant approached to opposite party no. 1 and 2 for transfer of his shares to his DEMAT account in HDFC Bank and submitted instructions slips for transfer of his shares in the office of opposite party no. 2. On that opposite parties no. 1 and 2 transferred some of the shares/securities to the DEMAT account with HDFC Bank but 982 shares of Granules India Ltd. and 1 unit of ICICI Prudential mutual funds total valued at Rs.365936/- are still with the opposite parties. Complainant regularly requested the opposite parties No. 1 and 2 for transfer the share/securities. Opposite party no. 1 vide its undated letter, received by the complainant in January 2021 informed that these shares/securities are held with their clearing member i.e. ICICI Bank and will be released and transferred to his account within 15 to 20 days time. Despite this assurance, shares/securities have not been transferred to his account nor the money, in lieu of these shares/securities has been refunded to the complainant so far. The complainant also registered a complaint with SEBI and also with the National Stock Exchange but to no effect. However SEBI cancelled broking license of opposite party no. 1 and NSE cancelled its trading membership. On 23.08.2021, opposite party no. 3 lodged a criminal complaint against opposite party no.1. This shows that the opposite party no. 1 has pledged securities/shares of its client with the opposite party no. 3 in a fraudulent manner in violation of rules and regulations. The complainant regularly visited the office of opposite party no. 1 for transfer of his securities/refund of money. Lastly a mail dated 31.01.2022 was sent to opposite party no. 1 and in reply vide mail dated 07.02.2022 has again stated that they are in final stage of raising necessary resources and shall be responsible for fulfillment of its obligations by it effecting payment of amount/transfer of securities standing to the credit of its customers. But they did not transfer his securities or refunded his money. As such, the act and conduct of the opposite parties is illegal and amounts to deficiency in service. Hence this complaint and it has been prayed that opposite parties may kindly be directed to refund Rs.385937/-(whereas in para no.6 of this complaint, it is written as Rs.365937/-) being value of securities/shares as per statement dated 30.12.2020alongwith 18% interest per annum from 30.12.2020 till its actual realization and Rs.25,000/- as litigation and Rs.1,00,000/-as compensationon account of mental agony & harassment to the complainant.
2. After registration of complaint, noticeswere issued to the opposite parties. Opposite party No. 3 and 4 in their reply has submitted thatgrievances of the complainant are against opposite party no. 1 and 2 and its functionaries directly and in this regard, the complainant may take recourse to the protections available to him under the applicable exchange and/or other regulatory guidelines, without involving opposite party no. 3 and 4 in any manner. The allegations of criminal activity made against the opposite party in the complaint are totally false. The details of the shares/securities of the complainant have not been disclosed/mentioned in the complaint and the opposite party denies withholding of any such share/security of the complainant. It is further submitted that the complainant has not made any correspondence in respect of the alleged shares/securities with the opposite party OP Bank. Further no notice or demand has ever been raised on the opposite party bank. It is further submitted that in respect of the shares pledged by opposite party No.1 & 2 with the opposite party-Bank, the opposite party has not invoked the pledge or sold the shares or benefited from such pledged shares in any way. Furthermore, in pursuance of order dated 22.11.2019 passed by SEBI and under supervision of NSE, NSDL removed the pledges in the depository system unilaterally and transferred shares pledged with ICICI Bank purportedly to the respective end-clients of OP no.1 & 2. The opposite party-Bank does not have any details of the ultimate beneficiaries to whom such shares were transferred to by NSE/NSDL, and details can be obtained by the complainant from NSE/NSDL. The details of the shares/securities of the complainant have not been disclosed/mentioned in the complaint and the opposite party bank denied withholding of any such share/security of the complainant. Even if the version of the complainant is taken to be true on the face of it, the same is part of investigation of case FIR No.891 dated 23.08.2021 registered at P.S.Gachibowli District Cyberabad and thus, the same cannot be released. All the other contents of the complaint were stated to be wrong and denied and opposite party prayed for dismissal of complaint with costs.
3. Notices issued to opposite party no. 1 and 5 on 24.03.2022 through registered post. Tracking report also placed on record which revealed that Item delivery was confirmed. Case called several times since morning but none has appeared on behalf of opposite party no. 1 and 5. As such, opposite party no. 1 and 5 were proceeded against exparte vide order dated 21.04.2022 of this Commission. Learned counsel for the complainant given up opposite party no. 2 being unnecessary at this stage vide his statement dated 11.07.2022.
4. Learned counsel for the complainantin his evidencehas tendered affidavit Ex.C15, documents Ex.C1 to Ex.C14 and closed his evidence on dated 03.10.2022. Ld. counsel for the opposite party No. 3 and 4 has tendered affidavit Ex.RW1/A, document Ex.R1 and closed his evidence on 02.01.2023.
5. We have heard learned counsel for the parties and have gone through material aspects of the case very carefully.
6. The main contention of ld. Counsel for the complainant is that the complainant had invested in shares with opposite party No.1 & 2, broker of opposite party No.5. In the year 2020 complainant came to know that opposite party No.1 & 2 have pledged shares and securities of their clients with bank i.e. opposite party No.3 and obtained loan against these securities. Complainant requested the opposite party No.1 & 2 to close his trading account and transfer his share holdings to DMAT account with HDFC Bank Hisar. Delivery instructions slips were submitted to the office of opposite party No.2 on 18.03.2020. Opposite party no.1 & 2 had transferred some of the shares of the complainant to HDFC bank DMAT account but 982 shares of Granules India Ltd. and 1 unit of ICICI Prudential mutual fund were not transferred and as per holding statement dated 30.12.2020 total value of these shares was Rs.365937/-. Complainant repeatedly requested the opposite parties to transfer these his shares but in vain. Complainant registered a complaint against the opposite party No.1 & 2 with the SEBI and with the NSE i.e. respondent No.5 but complaint was not resolved. However, opposite party no.5 vide its letter dated 15.10.2020 informed the complainant that the SEBI has cancelled the broking license of opposite party no.1 and NSE cancelled its trading membership. It is also submitted that opposite party no.1 has obtained loan from the opposite party no.3 by pledging shares of its clients with opposite party No.3 and even the opposite party no.3 is negligent in accepting the pledge of shares without the consent of its owners.
7. We have perused the documents placed on record by both the parties. Perusal of documents shows that FIR has been lodged against the opposite party No.1 & 2 under different sections. No doubt, the perusal of the documents again itself shows that Karvy Stock Broking Ltd.(KSBL) has violated the rules and regulations of the SEBI as well as of NSE and there is unfair trade practice on their part by pledging the shares and securities of their clients with the opposite party no.3 for the purpose of obtaining the loan without obtaining the consent of their clients. It has been directed by the SEBI to the trading members that they will not pledge the securities lying with the trading members to any bank for raising funds but in this case the respondent no.1 & 2 have violated the instruction of SEBI and NSE and have pledged the securities of their customers with ICICI Bank. Hence there is deficiency in service as well as unfair trade practice on the part of opposite party No.1 & 2. However, opposite party No.3 & 4 in their written statement has submitted in para no.5 that: “Opposite party has not invoked the pledge or sold the shares or benefited from such pledged shares in any way. Furthermore, in pursuance of order dated 22.11.2019 passed by SEBI and under supervision of NSE, NSDL removed the pledged in the depository system unilaterally and transferred shares pledged with ICICI Bank purportedly to the respective end-clients of OP No.1 & 2. The opposite party-bank does not have any details of the ultimate beneficiaries to whom such shares were transferred to by NSE/NSDL and the said details can be obtained by the complainant from NSE/NSDL”. It is further contended that : “As per regulatory guidelines SEBI/RBI, Stock Broker can pledge shares for availing loans from Banks/financial Institutions to meet their Working Capital requirements. In this respect, reference is made to Loans and Advances Master Circular 2015 issued by RBI”. As per the complainant he sent an email dated 31.01.2022 to opposite party no.1 and in reply to the same, hereceived a mail dated 07.02.2022, through which they have stated that they are in the final stage of raising necessary resources and shall be responsible for fulfillment of its obligations by it effecting payment of amount/transfer of securities, standing to the credit of its customers. However, no time limit is given. Meaning thereby no amount has been paid to the complainant till date. As per Holding Statement Ex.C4 dated 30.12.2020 issued by opposite party No 1 &the value of shares/securities of the complainant is Rs.365937/- on dated 30.12.2020. Hence opposite party No.1 & 2 are liable to pay the alleged amount to the complainant. As the complainant has given up opposite party No.2, hence only opposite party No.1 is liable to pay the alleged amount to the complainant.
8. In view of the facts and circumstances of the case, we hereby allow the complaint and direct the opposite party No.1 to refund the amount of Rs.365937/-(Rupees three lac sixty five thousand nine hundred and thirty seven only) alongwith interest @ 9% p.a. from the dated 30.12.2020 till its realisation to the complainant. Opposite party No.1 is also directed to pay a sum of Rs.20000/-(Rupees twenty thousand only) as compensation on account of mental agony and harassment and Rs.5000/-(Rupees five thousand only) as litigation expenses to the complainant. Order shall be complied within one month from the date of decision.
9. Application(s) pending, if any, stands disposed of in terms of the aforesaid judgment.
10. Copy of this order be supplied to both the parties free of costs. File be consigned to the record room after due compliance.
Announced in open court:
18.11.2024.
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Nagender Singh Kadian, President
………………………………..
TriptiPannu, Member.
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Vijender Singh, Member.
