Shri Umed Kumar Bhansali
S/o (L) Bhikam Chand Bhansali
R/O, C/O M/s Shree Hanuman Store,
Bara Bazar, Shillong-793 002
District: East Khasi Hills,
Meghalaya:
…..Appellant/Complainant
-Vs-
1. M/s Consortium Securities (P) Ltd.
Represented by its Managing Director,
36, Sant Nagar, East of Kailash,
New Delhi-110065.
2. M/s G G Consultants
A partnership Firm
Represented by its Partner
(1) Sri Girish Jasrasaria,
DAC No.1051, Janapat Lane,
Guwahati,Assam.
(2) Sri Gagan Deorah,
Ulubari, Guwahati-781 007,
…Respondent s/Opposite parties
Date of hearing : 31.08.2013
Date of judgment : 14.09.2013
JUDGMENT & ORDER (CAV)
Per Mr. Justice P K Musahary, President.
The appellant herein is the complainant before the District Consumer Dispute Redressal Forum, East Khasi Hills District, Shillong (for short, ‘ District Forum’) who filed a complaint case No.7/08 which was dismissed with cost vide order dated 1.9.2008 passed in the said case. The present appeal is directed against the said order of the learned District Forum.
2. The facts of the case, in brief, are that the appellant/complainant deposited an amount of Rs.7,50,000.00 with the opposite parties by a cheque dated 14.11.07 in the Axiz Bank, Shillong Branch. The said amount has not been reflected as credit in the statement of transaction furnished by the opposite parties to the complainant. The amount of debit shown in the said statement is Rs.17,54,375.51 paise only as on 8.1.08 and after taking into consideration the statement bearing NN 8006 and 8007 and the credit of the aforesaid cheque dated 14.11.07, the amount due to the complainant came to Rs.8,79,478.53 paise only. The complainant claimed that he is entitled to and otherwise eligible for receiving the interest @ 18% from 14.11.07 till the date of payment. The pleader’s notice dated 11.2.08 to opposite parties making the said claim was not responded and so the complaint case was filed demanding compensation under the following counts:
(i) Total cost including pleader’s notice fee etc,
clerkage and miscellaneous expenditure : = Rs.6,500.00
(ii) Claim already preferred vide pleader’s notice = Rs.7,53,542.99
Dated 12.2.08
(iii) Interest on Rs.7,50,000.00 from 14.11.07
to 7.3.08 and further interest subsequent
from the said date the said date =42,000.00
(iv) Interest on Rs.8,02,042.99 only from the date
of receipt of the pleader’s notice till final disposal
of the complaint petition.
3. The opposite parties/respondents filed a joint written statement raising preliminary objection to the effect that the complainant is not a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986 (C.P.Act, in short) and the Consumer Forum has no jurisdiction to try the case inasmuch as the complainant is an investor in the share market and he is solely responsible for his trading in the share. Moreover, a bar has been imposed under Sections 15Y and 20A of the Securities and Exchange Board of India Act, 1992 (SEBI Act in short) to entertain and try the complaint. The complainant filed a rejoinder to the written statement of the opposite parties stating inter alia that the nature and cause of action existing in the case is amenable to the jurisdiction of the Consumer Forum which is not barred by any other consideration under the SEBI Act. So also the arbitration clause does not take away the right of the complainant to take shelter under any other provision including that of the C.P.Act.
4. We have heard Mr. B K Deb Roy, learned counsel for the appellant and also Mr. R C Bhalla, learned counsel for the respondents. We have also perused the records of the learned District Forum as made available today.
5. Mr. B K Deb Roy, learned counsel for the appellant pointed out and submitted that the complaint petition was fixed for hearing on 18.8.08 but no hearing took place as the learned counsel for the respondent/opposite parties sought for some time to file his objection. The prayer for short adjournment was not objected to by him on condition that the opposite parties would file the written argument on 22.8.08. But to his surprise the same was not recorded in the order-sheet and instead , it was recorded that hearing has been fixed on 1.9.08. Mr. Deb Roy asserted that he was present for the complainant in the District Forum on 1.9.09 but no hearing took place on that day also, yet it is recorded in the order sheet that “ order ready and delivered in the open court”. Further it was submitted that the written submission filed for the complainant were not taken into consideration and the impugned order was pronounced solely taking into consideration the written submissions of the opposite parties.
6. We have verified from the records and found that a combined written argument was filed by the opposite party No.2 on 22.8.08. On the same day a written reply upon submission of the opposite party was also filed by the complaint citing as many as 15 cases (authorities) in support of his case. The impugned order has no reference to the said written submissions filed by the learned counsel for the parties. So, an impression has been created that learned District Forum has not taken into consideration the cases cited and relied upon by the parties. Apparently, this case is required to be remanded for fresh consideration and disposal on the basis of written submissions of the parties. But we refrain ourselves from doing so considering the fact that this appeal has been pending for last five years, due mainly to technical reasons and no useful purpose, far less the interest of justice, would be served, if the case is remanded to learned Forum below. The other reason for us is that the Forum has been called upon by the appellant to decide as to whether the complainant is a prospective buyer or prospective investor, or in other words, a consumer simpliciter, within the meaning of Section 2(1)(d) of the CP Act. The Forum is to proceed further if it is decided in the affirmative. The decision in the negative would naturally stop the forum to adjudicate upon other issues.
7. In support of the contention that the prospective investor in future goods is not a consumer under the CP Act, the respondent /opposite parties largely relied upon a decision of the Apex Court in Mogan Stanley Mutual Fund –vs- Kartick Das; (1994) 4 SCC 225. In the said case one of the issues framed was “whether the prospective investor would be ‘consumer’ within the meaning of the CP Act,1986?” That was a case where the settled position of law that a prospective investor or association is not a consumer under the CP Act, has been reaffirmed. We are only to discuss whether the said law, in the attending facts and circumstances of the present case, would be applicable.
8. As stated , the appellant in the above cited case, is a domestic mutual fund registered under the Securities and Exchange Board of India (SEBI in short) and managed by the Board of Trustees. Its Memorandum of Article and Association was approved by the SEBI. Its draft scheme was also approved by the Board of Trustees as well as by SEBI. The management of the company took necessary steps to begin marketing the scheme by issue of advertisement duly approved by SEBI in writing on 25.11.93. Pursuant to such approval the advertisement and hoarding were released on 13.12.93. A suit was thereupon filed by a party in the court of Sub-Judge for injunction restraining the public issue from being floated. The Sub-Judge passed interim order but the High Court , on being moved by the appellant , stayed the same on 4.1.94. On the same day a writ petition was also filed before the High Court against SEBI, by another person seeking stay of the public issue from being floated. The writ petition was dismissed in limine which gave rise to CA No. 4587 of 1994. The Respondent Kartik Das moved Calcutta District Consumer Dispute Redressal Forum, for the same relief as were sought for in the writ petition , alleging that the appellant offering circular was not approved by the SEBI that there were several irregularities in the same, that the basis of allotment was arbitrary, unfair and unjust and that the appellant was seeking to collect money by misleading the public. The said Forum passed interim order dated 4.1.94 purportedly “considering the utmost urgency of the case as cited by the learned counsel of the petitioner, otherwise the application would be frustrated”. SLP (C)No.272/94 was then preferred before the Hon’ble Supreme Court out of which CA No. 4584/94 arose. The questions that arose for determination of the Hon’ble Supreme Court were –
(i) Whether the prospective investor could be a consumer within the meaning of CP Act, 1986?
(ii) Whether the appellant company ‘Trades’ in shares?
(iii)Does CP Forum have jurisdiction in matters of this kind?
(iv)What are the guiding principle in relation to the grant of an add interim injunction in such areas of the functioning of the capital market and public issues of the corporate sector and whether certain ‘’verval restriction clause’ would require to be evolved judicially as has been done in cases such as State of West Bengal –Vs- Swapan Kuamar Guha and Sanchaita Investment;(1982) 1 SCC 561?
9. The facts of the instant appeal have already been narrated earlier. The question of approval by SEBI for starting share marketing/trading or non compliance of the procedure in the matter are not raised in the present case. In fact what is found on record is that an agreement between the respondent as a ‘stock broker’ and the appellant as a client’ was signed on 14.11.07. A copy of the said agreement is available on record along with the written statement filed by the opposite party No.1. As per the said agreement, the appellant entered into the trading in response to and on being satisfied with the scheme/offer floated by the appellant-company. No where in the written statement the opposite party No.1 has stated that the appellant is a prospective investor and for that reason he is not a consumer. It is rather pleaded in paragraph 3 of the written statement that the complainant is not consumer within the meaning of Section 2(1)(d) of the CP Act inasmuch as there is no deficiency of service. This statement implies that the opposite party accepted the client as an investor in their trading business. Mr. Bhalla , learned counsel for the opposite parties during his oral submissions did not rely upon the case law – Mogan Stanley (supra) to persuade us and accept the appellant as a prospective investor. Following the above discussions there should not be any doubt that the complainant / respondent is not a prospective investor; rather an investor simpliciter , he having invested money by buying shares through opposite party No.2.
10. The next question that naturally arises is whether the complainant as investor/purchaser of shares is a consumer as defined under Section 2(1)(d) of the CP Act. For deciding this question the Forum has to examine and find out as to whether the compliant invested the money or purchased the shares with heavy speculation in the sale and purchase of shares for commercial purposes in order to make profit or for just earning his livelihood and/or supplementing the personal income. Reply may be available from the averments made in the complaint itself. In paragraph 4, the complainant has introduced himself as reputed businessman of Shillong, who “ has been doing transaction shares under account bearing No. WG517 with the opposite party NO.1 through Opposite party No.2, who is franchise of the opposite party No.2 at Guwahati, Assam. In paragraph 5 he further stated that “ in the course of transaction of share by complainant since 29.11.07, he had deposited an initial margin of Rs.7,50,000.00 ( Rupees seven lakhs fifty thousand) only by cheque No. 35976 dated 14.11.07 on Axis Bank, Shillong Branch through franchise of the opposite party No.1…”. The position, as pleaded in the complaint , is quite clear that the compliant being a reputed businessman was in a position to invest a huge amount of money running into several lacs in the share trading. An investment of such huge amount by a reputed or established businessman like complainant implies nothing but commercial purpose aimed at derivation of more profit. There is not even a whisper in the complaint that the complainant purchased shares or indulged in share market not for commercial purpose but for his livelihood and for supplementing his personal income. Even in the written argument as well as oral argument no such statement has been made by the complainant . It has, therefore, become an admitted position that the complainant is not a prospective investor but an investor simplicitor in the share market for commercial purpose.
11. The appellant never took a stand that he was carrying on trade business for self employment or for supporting his livelihood or for supplementing his personal income. In this regard we refer to a case, Consortium Securities Pvt. Ltd and ors –vs- M/s Parveen Kumari, reported in 2011 CTJ 582 (CP) SCDRC) wherein it has been held by the State Consumer Dispute Redressal Commission, Union Territory Chandigarh, that complainant engaged in buying and selling shares of different companies , on payment of their charges in the form of brokerage, who did so to earn her livelihood by means of self employment, is not a consumer. It has also been observed therein that law has already been settled on this point that a person getting/buying shares through some share brokers for his livelihood is a consumer and the share broker is liable to pay the value of the share with interest, if any, amount has not paid by the broker to the concerned person. This aspect of the matter has not been discussed by the learned District Forum in the impugned judgment and order but we have seen that learned District Forum framed as many as four issues. The main issue framed is “whether complainant is a consumer within the meaning of Section 2(1)(d) of the Consumer Protections Act 1986” The preliminary issue raised by the opposite parties is included in this issue. The said issue has been discussed and decided by the learned District Forum as under:
“(i) Whether the Complainant is a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act, 1986?- The Complainant in his petition stated hat he has been doing transaction shares with the OP NO.1 through the OP No.2 and he is a consumer as laid down u/s 2(d)of the Consumer Protection Act, 1986. The OP in the show cause stated that the Complainant was purchasing and selling shares worth lakhs of rupees and not a Consumer as defined u/s 2(d)and 2(e) of the said Act . Section 2(d) of the Consumer Protection Act?, 1986 reads as follows:-
(i) Buy any goods 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 user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose; or
(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 persons who hires ‘[or avails of] the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payments, 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 purpose];
[Explanation: For the purposes of this clause’ commercial purpose” does not include use by person of goods bough and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment;]
The complainant was purchasing and selling shares and was a shareholder of the OP No.1 as per the petition. There is no doubt that purchasing /selling of shares can be done mostly by the rich people for increasing their wealth and not to earn their livelihood. Further there was no such agreement between the Complainant and the OP No.1 for providing service. The Forum agreed with the submission made by the OP that the Complainant was purchasing/selling shares for making profit and on commercial purposes. The Complainant therefore has failed to proof that he was a consumer as defined in Section 2(d) of the Consumer Protection Act, 1986. The issue is decided in the negative and against the Complainant.”
12. In the above cited case, the present counsel Mr. Bhalla appeared for the appellant consortium Securities Pvt. Ltd and advanced his argument that the complainant who is doing trading and indulging in heavy speculation in the sale and purchase of shares for commercial purposes for profit is not a consumer as defined under the Companies Act. Because of the settled position of law, we do not want to discuss this issue further. .
13. Additionally Mr. Bhalla has submitted that the Consumer Forum can refer the parties to arbitration provided the conditions laid down under Section 8 of the Arbitration and Conciliation Act, 1996 are fulfilled. In this regard he has referred to Branch Manager, Magma Leasing and Finance Ltd. and another –vs- Potluri Madhavilata and another, reported in (2009) 10 SCC 103 and Shripal Jain –vs- Torrent Pharmaceuticals Ltd. & ors; 1995 Supp (4) SCC 590. We do not want to comment upon the applicability or non-applicability of the rulings of the aforesaid cases to the present case because we feel that once it is held that compliant is not a consumer, this Commission ceases to be a Forum to pass any order directing the parties to go for arbitration. So, we leave the option with the parties.
14. So far as this case is concerned, we are in agreement with the learned District Forum that the appellant/complainant is not a consumer within the meaning of Section 2(1)(d) of the CP Act and the Consumer Forum has no jurisdiction to adjudicate the complaint. This appeal is therefore liable to be dismissed and it is accordingly dismissed. No costs. However the Appellant may approach any other appropriate Forum if so advised, in which case he may claim the benefits of Section 14 of the Limitation Act to exclude the period spent in prosecuting the proceedings under the Consumer Protection Act while computing the period of limitation in accordance with the judgement of the Hon’ble Supreme Court in Laxmi Engineering works vrs P.S.G Industrial Instituite reported in AIR 1995 SC 1428.
Send down the records along with a copy of this judgment & order.
