BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II, U.T. CHANDIGARH

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Complt.  Case No :  963  of 2009

Date  of Institution:    09.07.2009

Date  of Decision  :    11.08.2010

Vineet Malik s/o Sh.Vinod Kumar Malik, R/o H.No.4963, Block D, Pancham Housing Complex, Sector 68, Mohali.

……Complainant

V E R S U S

1]       Kotak Securities Ltd., Regd. Office : Bakhtawar, Ist Floor, 229, Nariman Point, Mumbai through its Managing Director.

2]       Kotak Securities Ltd., Branch Office : SCO14-15, Sector 8, Chandigarh, through its Branch Head.

3]          Sh.anuj Shyam, Regional Manager, Kotak Securities Ltd., SCO 14-15, Sector 8, Chandigarh.

4]          Sh.Savinder, Office Co-ordinator, Kotak Securities Ltd., SCO 14-15, Sector 8, Chandigarh.

.…..Opposite Parties

CORAM:          SH.LAKSHMAN SHARMA                         PRESIDENT

                    SH.ASHOK RAJ BHANDARI            MEMBER

                    MRS.MADHU MUTNEJA                        MEMBER

PRESENT:     Sh.Vikas Awasthy, Adv. for the complainant.

Sh.Yogesh Saini, Adv. for the OPs

PER MADHU MUTNEJA, MEMBER

                                The present complaint has been filed by Sh.Vineet Malik under Section 12 of the Consumer Protection Act pleading deficiency in service by the OPs.  The complainant has prayed that the OPs be directed to compensate him on account of financial loss due to deficiency in service as well as mental agony and harassment. 

1]             The facts of the case are as under:-

                The complainant is a an Investment and Financial Consultant by profession.  He had opened a Demat Account with the Chandigarh Branch of OP No.1.  The complainant used to transact online as well as through phone.  On 8.6.2009, the complainant purchased 36000 shares of Suzlon @Rs.127/- (average rate) through his demat account. After the close of stock market on the same day, he called the office of OP No.2 telephonically and informed them that he has purchased the shares. He wanted to know the category of the shares as well as the payment required to be made by him.  He was told that he would be provided the information the next day.  On 9.6.2009, the complainant was asked by OP No.2 telephonically to sell stocks (shares) worth Rs.20.00 lacs as the shares purchased by him exceeded the arrangement between the parties.  The complainant immediately sold 8715 shares @Rs.122.45 per share through Internet and informed the OP No.4 that for the remaining amount, he would give a cheque the same day.  However, the OP No.4 kept insisting that the complainant needed to sell more shares to cover up the margin. The complainant reiterated that he would sent the margin amount later on the same day.  However, OP No.4 sold 20000 shares of the complainant @Rs.111.84 without his consent.  It is important to mention here that later on the same day, the rate of the shares increased to Rs.128/- thereby causing immense loss to the complainant.

                The complainant was shocked to know that his shares had been sold without his permission, even when he was willing to pay the margin money due to the OPs.  The complainant had even got a Demand Draft for Rs.6.00 lacs prepared from his bank to send to the OPs, but the OPs had already sold his shares without his consent.

                The complainant alleges that as per norms of OP No.1, every transaction regarding sale or purchase of shares through telephone has to be recorded on Voice Recording Machine by the Broker4/sub-broker.  This Voice Recording can be verified to validate the allegations of the complainant that his stocks were sold without his consent.

                The complainant made a written complaint to OP No.2 to restore 20000 shares back to his account within 48 hours as well as compensate him for the loss suffered.  Since, no action was taken by the OPs on the complaint, the complainant lodged a complaint with National Stock Exchange of India (NSE) on 12.6.2009.  Complaints were also sent to all other officials of the OP Company and SEBI highlighting the high headedness of the OPs.

                Since no action was taken by the OPs to restore the position, the complainant suffered a huge financial loss and has thus filed this complaint claiming deficiency in service on the part of OPs. He has claimed Rs.4.00 lacs on account of loss suffered due to unauthorized sale of the shares besides compensation and cost of litigation.

2]             After admission of the complaint, notices were sent to all the OPs. They have filed a joint reply. 

3]             As per the reply of OPs, the complainant is not a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act as the complainant trades in the market with a speculative motive.  The OPs further state that the complainant has filed a complaint on the same ground before the Investor Service Cell of the National Stock Exchange of India Ltd., Mumbai. 

                Further, the OPs state that as per the Member Client Agreement all differences, disputes between the parties  has to be adjudicated through Arbitrator and not before this Forum.  

                The OPs have also given complete details of all shares bought and sold in the complainant’s account on 8.6.2009.  They have also stated that the complainant was well aware of all the transaction and the OPs are not responsible for variation in price or market movement of securities due to which the complainant has suffered any loss. Loss, if any, was not due to the act of the OPs.  They have denied that the complainant was willing to pay the margin money to them.  The OPs also denied that the disputed 20000 shares of  Suzlon Energy Ltd. was sold without the consent of the complainant or that he suffered loss ofRs.4.00 lacs due to any fault of theirs.

                The complainant was required to square off the open position reflected in his account and all securities were sold as per his knowledge and information.  Further, the OPs have denied that there is any recording of telephonic conversation between the complainant and the official of OPs.

                The OPs state that the complainant has filed similar complaints before multiple authorities and has resorted to Forum shopping.  It is also stated that any dispute between the parties needs adjudication through Arbitration only.  Placing reliance on the above, the OPs have prayed for dismissal of the complaint.

4]             We have heard the ld.Counsel for the parties and have also gone through the voluminous record and evidence placed on file by the parties.

5]             Even though the complaint relates to only one transaction, it cannot be denied that the reliance by the complainant about this transaction is a “Telephonic Conversation”.  As per the provisions of Consumer Protection Act, the procedure for adjudication of a dispute is always summary in nature. We would not be able to delve into this issue of “Telephonic Conversation” and evidence needed thereon to adjudicate upon the case.

6]             Further, the OPs have alleged that the complainant is not a consumer as per Section 2(1)(d)(ii)  of the Consumer Protection Act.  As per the said section, the definition of a “consumer” is as under:-

(ii)      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 purposes;

 “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 complainant as per Income Tax Return submitted by him, is an Investment & Financial Consultant. He is earning his livelihood by means of self-employment by buying and selling shares and stocks to earn profits.  Therefore, as per the above explanation to Section 2(d)(ii), the complainant is definitely a consumer under the Consumer Protection Act.

7]             The OPs have also stated that any dispute between the parties should have been referred for arbitration.  The complainant in this regard has already filed a complaint before National Stock Exchange of India where his case would definitely be sent for arbitration and then be decided on merits. 

 8]            In case The Consumer & Citizens forum Vs. Karnataka Power Corporation, 1994(I) CPR 130 has held: “The remedy provided under the Act is in addition to the provisions of any other law for the time being in force.  The provisions of this Act give the consumer an additional remedy besides those that may be available under other existing laws.”

                In Ram Nath Vs. Improvement Trust, Bathinda, 1994(I) CPR 357 it has been held that : “It is authoritatively settled that the arbitration clause is not a bar to the entertainment of the complaint by the Redressal Agency constituted under the Act, even if the arbitration provision has been laid down in a statute.”

                In accordance with the above judgments, there is no bar as per statute to this Forum to hear the case.

9]             However, it is not possible for us to accept the telephonic instructions as the only evidence to decide this case.  The complainant has relied on his oral telephonic instructions to the OP to say that the OP have caused him immense loss due to not complying with his instructions.

10]            In view of the above, we deem it appropriate that the complaint be dismissed.  The oral directions communicated between the parties cannot be treated as ample proof to adjudicate upon this matter.  Therefore, this complaint is dismissed with no order as to costs. 

                Certified copy of this order be communicated to the parties, free of charge. After compliance file be consigned to record room.

Announced

11.08.2010                                                           

(LAKSHMAN SHARMA)

PRESIDENT

                                       (ASHOK RAJ BHANDARI)

MEMBER

                                                             (MADHU MUTNEJA)

MEMBER

‘Om’