M/s Bhajanlal Kamakhaya Lal B.P.(HUF)
Represented by its Manager, Shri Shibu Sharma,
Mani Bhawan, Lower Police Bazar,
Shillong- 793 001
…Appellant /Complainant
-Vs-
1.The Chairman,
Motilal Oswal Securites Ltd.
81/82 Bajaj Bhawan, 8th Floor,
Nariman Point, Mumbai-400021
2.M/s Bidya Fiscal Services Pvt. Ltd.
C/o Mani Bhawan, Lower Police Bazar,
Shillong- 793 001
…Respondents/Opposite parties
Date of hearing : 19.10.2013
Date of judgment : 26.10.2013
JUDGMENT & ORDER (CAV)
Per Mr. Justice P K Musahary, President.
This appeal, filed by the complainant under section 17 of the Consumer Protection Act, 1986 (C.P.Act in short) is directed against the order dated 28.11.2006 passed in Complaint Case No.22/08 by the learned District Consumer Disputes Redresal Forum, East Khasi Hills, Shillong (District Forum in short) dismissing the complaint petition without cost.2. The appellant complainant, as stated in the complainant petition is an investor and has been maintaining a Margin Funding Account (MFA in short) with the respondent/ O.P.No.1, through its franchisee respondent/ O.P.No.2. A healthy business relationship developed between the complainant and the opposite parties ever since the complainant entered into an agreement with the O.P.s and dealt in quite a number of shares. The O.P.No.2 on 18.1.08 intimated the complainant that there was a shortage of Rs.2,02,000/- in his MFA. On being so intimated, the complainant deposited the said amount on the same day i.e. 18.1.08 through a cheque drawn in the Union Bank of India (UBI),Shillong Branch in favour of the O P NO.1 which was cleared on 21.1.08. The complainant sent the computerized copy of the pass-book showing the credit of the said amount in the A/c of O.P.No.1 on 23.1.08. There was a debit balance of Rs.1,18,393.04 in the A/c of the complainant on 19.1.08. The complainant on being intimated, deposited the said amount also through a cheque drawn on CBI Shillong Branch in favour of the O.P. no.1 which was cleared on 22.1.08. The complainant duly informed the O.P.No.1 by sending a scanned copy of the pass book on 23.1.08. It is alleged that inspite of immediate deposit of margin in the MFA, the O.P.No.1 most arbitrarily and illegally sold the equity shares of the complainant without intimating him or taking his consent leading to a loss of Rs.6,00,737/-. The complainant demanded justice from the O.Ps by making several correspondences and serving pleader’s notice, but to no effect. Ultimately he filed the complaint petition which has been dismissed vide impugned order dated 28.11.08.
3. Heard Mr. S P Sharma, learned counsel for the appellant and Mr. B. Baruah, learned counsel for the respondents.
4. The O.Ps (present respondents) contested the complaint case by filing written statement contending that the transaction between the complainant and the O.P.s comes under the purview of the commercial transaction as trading of securities is outright a commercial trade carried out for commercial gains and as such the complainant is not a consumer as defined and contemplated under the CP Act. So also the transaction carried out under the MFA A/c are outright commercial transaction as it pertains to funding against the shares and securities, for which the complainant would not come under the purview of Section 12 of the C.P.Act which defines the term “consumer” and the complianant being not a consumer, his complaint petition is liable to be dismissed.
5. The learned District Forum having considered the facts and circumstances of the case, came to a finding that the complainant has “failed to proof beyond a reasonable doubt that he is an investor to earn his livelihood and he is a consumer as defined in Section 2(d)(ii) of the Consumer Protection Act, 1986.” The learned District Forum also came to a finding that the “Complainant has executed agreement for opening Margin Funding Account (MFA) with Motilal Oswal Financial Services Ltd. (MOFSL) and the present transaction pertains to MFA account are outright commercial transactions as the same relates to funding against the shares and securities and the present complaint prima facie does not come under the purview of section 12 of the Consumer Protection Act, 1986.” Having held so, the learned District Forum concluded that the complainant is not entitled to any compensation.
6. In his written submission Mr. Sharma, learned counsel tried to impress upon us that the appellant complainant is a consumer within the meaning of section 12 of the C.P. Act inasmuch as the respondents- O.Ps are buying and selling shares and stocks on behalf of appellant on payment of brokerage and thus they are rendering services to the appellant /complainant in consideration of the brokerage received by them. According to Mr. Sharma, the appellant/complainant “is only an investor involved in investing in shares for his personal gain through the opposite parties who have volunteered to render services to him for consideration of brokerage , it is only the opposite parties who are doing the buying and selling of shares of the complainant for which they are charging brokerage.” Further in the written submissions it is stated that the appellant has only made the investment in shares for his own personal gain and not for re-sale of the same for commercial purpose. In support of this submission reference has been made to Article 4 of the tripartite agreement executed between stock brokers/sub-brokerage and client wherein it is stated that “ the client agrees to pay to the stock broker brokerage and statutory levies as are prevailing from time to time and they apply to the client’s account, transaction and to the services that stock broker/sub-broker renders to the client. The stock broker agrees that it shall not charge brokerage more than the maximum brokerage permissible as per the rules, regulations and bye laws of the relevant Stock Exchange/SEBI”
7. In order to make his above submissions more convincing the learned counsel for the appellant has referred us to the decision of the Hon’ble National Commission in Punjab University –vs- Unit Trust of India and ors. reported in SC & National Consumer Law Cases (2005-2008) 245 and also in Raja Gopal –vs- Ravi Shankar reported in the same journal at page 39.
8. We would now consider as to whether the decision of the Hon’ble National Commission in the aforecited cases are applicable to the case at hand. In the first case, the Punjab University invested a huge amount of provident fund and other benefits of its employees in the UTI under the Institutional Investors special fund unit scheme 1993. The issue involved in the said case was whether investment in an UTI Scheme would come under commercial activities. After a detailed discussion the Hon’ble Commission held that investing of amount with UTI by the complainant Punjab University comes under commercial activities. It was also held that the complainant university is a ‘consumer’ under Section 2(1)(d) of the CP Act and a complaint is maintainable. The reasoning for taking such decision could be found in paragraph 14 of the said judgment. It would be apt and beneficial to quote hereunder-
” 14. Further, the investment with the UTI is something akin to depositing/investing the funds with a bank or a financial institute. The bank or the financial institute in turn uses it for commercial activity by disbursing loans, etc. But, a person who invests or deposits with the bank has no other role to play except to deposit the amount. And, that is the reason why, by inclusive definition Section 2(1)(o) specifically provides that service of any description rendered by a bank or a financial institution would be covered by the provisions of the Consumer Protection Act, 1986. If such an investment or deposit is excluded by holding that bank or financial institute is carrying on commercial activity then, the inclusive definition of Section 2(1)(o) would be nugatory. The person who invests the amount with the UTI or a bank for earning interest or dividend is not carrying out any commercial activity. He only invests the amount. The bank or the UTI may be carrying on commercial activity with the funds invested by a consumer. But in such case, his only participation is investment. The bank or financial institutions accepts the deposits for carrying out commercial activities. Otherwise, for them, there is no basis of giving inters tot the depositors. The UTI is one of such financial institutions, which, in our view, is covered under Section 2(1)(o) of the Consumer Protection Act, 1986.”
It is to be noted that the UTI is a financial institution created under a statute known as Unit Trust of India Act, 1963. The preamble of the said Act speaks about “establishment of corporation with a view to encouraging saving and investment and participation in the income, profits and gains accruing to the corporation from the acquisition, holding, management and disposal of securities.” The UTI like the bank carries on commercial activities, yet the accepted legal position is that the services rendered by the UTI, banks or financial institutions are covered by the inclusive definition of Section 2(1)(o) of the C.P.Act and the investors are to be regarded as consumers within the meaning of Section 2(1)(d) of the said Act. The factual and legal position in the present case is just the contrary. Factually the OP No.1 with which the appellant invested his fund, is a Pvt. Company which is exclusively carrying on commercial activities. Legally speaking the services rendered by a Pvt. Company like the O.Ps are not accepted as ‘service’ under Section 2(1)(o) of the C.P. Act.
9. There is also a marked difference in the status of the investors of Punjab University case and the instant case. The complainant/investor in Punjab University (supra) is an educational institution and naturally it is not engaged in commercial activities. It simply invested its employees’ Provident Fund and other benefits as required under some relevant rules for the welfare, advantage and benefit of the employees concerned. As an University it is not doing any trading nor has it been indulging in speculation in the sale or purchase of shares for commercial purpose to make profit. As against this, the appellant in the present case is a HUF and an investor maintaining MFA with the OP No.1 through O.P.No.2. The appellant invested a huge amount to the tune of Rs.6,00,736/- in purchasing a number of shares. The purpose behind such investment, unless shown or proved otherwise, is nothing but for commercial purpose with profit motive and that would take out the appellant from the ambit of definition of ‘consumer’ and ‘service’ under the CP Act. To solve this position the appellant must be able to show or prove that the shares were purchased or fund was invested for the purpose of earning his livelihood. We have carefully gone through the averments made in the complaint petition as well as the rejoinder to show cause to the O.Ps but failed to find any averment to the effect that investment was made just to earn the livelihood of the members of the HUF. There is no pleading to that effect and in absence of such pleading no inference or conclusion could be drawn in favour of the appellant /complainant that the investment was made not for commercial purpose but for earning the livelihood of the family members so as to accept the appellant as a consumer under the CP Act. In our considered view the ratio of judgment which is sought to be relied upon by the learned counsel for the appellant, is not applicable to the present case.
10. In other case, Rajagopal (supra) the question as to whether complainant is a consumer or not or as to whether the complainant carried on commercial transaction with the O.P are not involved. The brief facts in the said case are that the complainant purchased 400 shares from the O.Ps. The said shares were not handed over to him when the price of shares was Rs.1,300/-. The O P handed over only 100 shares when the price had fallen to Rs.23/- and subsequently fallen further to Rs.7/- per share. In that case, the Hon’ble National Commission held that the complainant is entitled to the amount of Rs.67,950/- minus Rs.2300 the value of 100 shares with 9% interest p.a. from the respective dates of the deposits. We fail to understand how the judgment of the above case has a bearing with and applicability to the present case. We are of the view that the learned District Forum, although apparently missed to discuss the above aspect of the matter, came to a correct finding in holding the appellant/complainant as not a consumer and not entitled to any compensation under C.P.Act. We, therefore, uphold the order of the learned District Forum which is under challenge in this appeal.
11. In view of above settled position of law, this appeal stands dismissed. No order as to costs. However, Liberty is granted to the Appellant to seek legal redress in civil court or as deemed fit, in which case they may seek condonation of delay in filing in accordance with the judgement of the Hon’ble Supreme Court in the Laxmi Engineering works case.
Send down the records forthwith to the Forum below with a copy of this judgment and order.
