BEFORE THE DISTRICT FORUM:KURNOOL

Present: P.V.Nageswara Rao , M.A., LL.M., President(FAC)

And

Smt. C.Preethi,  M.A.LL.B., Lady Member

And

Sri. M.Krishna Reddy, M.Sc.,M.Phil., Male Member

Thursday  the 10^th day of September, 2009

C.C. 18/09

Between:

V.V. Narasa Reddy, S/o. Venkata Swamy Reddy ,

R/o.H.No. 50/760A/7/2, Gayathri Estate , GE1-12, Kurnool - 518003.                               

 …  Complainant

                                 Versus

1. M/s. ICICI direct, ICICI Securities Limited , Represented by its Managing Director ,

ICICI Centre , H.T.Parekh Marg, Church gate, MUMBAI - 400200.

2. M/s. ICICI direct, Represented by its Centre Manager,

ICICI Securiteis Limited ,

D.No. 40/353/C-1, Park Road, Kurnool - 518 002.

3. M/s. ICICI direct,Represented by its Centre Manager,

ICICI Securities Limited ,1^st Floor , 6-3-111, Amrutha Mal, Somagiguda , Hyderabad - 500 082.                        

….Opposite parties   

                        This complaint is coming on this day for orders in the presence of Sri. M.Sivaji Rao ,  Advocate, for the complainant , and Sri. E.Sreenivasulu ,  Advocate for opposite party No. 1 and opposite parties 2 and 3 is called absent set – exparte and upon perusing the material papers on record, the Forum made the following.

ORDER

(As per Sri. M.Krishna Reddy , Male Member)

C. C.No.18/09

1.     The case of the complainant is filed U/S 12 of C.P.Act , 1986 seeking a direction on the opposite party to pay Rs.64,125/- towards the  compensation of additional  loss, Rs.5,000/- for mental agony  and the cost of this case.

2.     The brief of the case is that the complainant has a D.MAT A/c bearing No. IN30328-55028878 with ICICI direct and has to pay Rs.100/- per lot towards brokerage for trading. The complainant  sold 1250 (1lot) of CAIRN INDIA LIMITED  (CAIIND) on 26-09-2008  in PUT option  OPT-CAIIND-Oct -2008 -185 –PA-S with a premium of Rs2.25 and allotted  more than a lakh for the above position . The trigger price for the above position for the  stock is Rs.177.94 as per opposite parties E-mail dated 19-11-2008 . The complainant adds  that as per the  norms, when ever the stock  price trades below trigger price, the opposite party has  to square off the open  position  to save the client from facing further loss, but the above PUT  option was not squared  off even when the stock was trading  below Rs.100/- . On the other hand on 29-10-2008 i.e, the day of closing of contract at 11-29 hours ,  the open position  of complainant was squared off by opposite party No. 1 at a premium  of Rs.119.75 when the spot price was trading  in the range of  Rs116 to Rs.122. Further  it is  stated that  the contract closes automatically  at the end of last  day and it closed at the stock  price of Rs.116.55 with a premium  of Rs.68.45. It is alleged  that the

opposite party unnecessarily entered  on the last day , squared off   the open position  negligently  and became  responsible  for the increase  of premium of Rs.51.30 additionally.  This negligent  act of opposite party attracted  the complainant  an additional  loss of Rs.64,125/-= (Rs.51.30 x 1250) . The complainant pleads that  he has sent two E-mails  to the opposite party , on 12-11-2008 , and 19-11-2008 for rectification . Since the complainant  received no proper  reply , he was constrained  to file   this complaint  seeking appropriate reliefs.

3.     In proof of his case , the complainant filed sworn affidavit  and got marked Ex.A1 to A12. The complainant relied on these documents to substantiate his claim.

4.     In pursuance of the receipt of the notice of this forum as to this case of the complainant while the opposite party No.2 and 3 was set ex-parte ,  the opposite party No. 1 made its appearance through his counsel  and contested the case filling written version denying his liability  for complainants  claim and seeking  dismissal  of complaint  with cost ( and direction to the complainant to pay an amount of Rs.20,942.93)

5.     The written version of  the opposite party No.1 states that  opposite party No. 1 is a securities broker  registered  with Securities  Exchange Board of India  (SEBI) with membership  of NSE of India  & BSE LTD. He offers on line  broking service  to its clients through on line  portal WWW. ICICI direct.com (website) . The complainant registered as a client for execution of transaction on stock exchanges  and entered into an agreement  with opposite party No.1 as  per the norms  prescribed by SEBI on 26-08-2004. He opened  a 3–in-1 account which consists of Bank  and D-Mat-A/c with ICICI Bank Limited  and trading account with ICICI securities  Limited . For executing the option  trading through opposite  party No.1,the complainant pays a flat brokerage of Rs.95/- per lot excluding taxes and other statutory levies. The terms and conditions and  concept  was properly explained  to the complainant  and were accepted  by him before commencing the trade. The complainant was provided with necessary tools on opposite parties  website  to continuously  monitor his position and initiate necessary action to safe-guard the same. It is also stated that the primary responsibility to monitor positions , add additional  margin to keep the  position open or to place square off orders to close open positions lies on the complainant . As per the agreement  in the event of dispute between opposite party No.1  and complainant  shall be resolved through arbitration.

6.     The opposite party No.1 submits that the complainant  took 1 lot (1250)  of CAIIND in PUT option under (F  &O)   segment OPT-CAIIND – 29 –Oct_2008 -185-PA-S on 26-09-2008  at a premium of Rs.2.25 and allocated required margin accordingly.  The complainant had  an amount of Rs.106693.75 as margin on open position at the beginning  of 29-10-2008 . Due to sudden fall in price  the margin short fell to Rs.43,930/- on the position  . On the previous days the complainant satisfied the margin requirements , hence the position was untouched by opposite party  No. 1 giving  his discretions  to exercise  when ever  he wants . The complainant was continuously  monitoring  his position  and even after  knowing  this  ,his position  dropped below trigger price , did not either  provide adequate margin or square of his position. Finally  when the available  amount fell short of required  margin the said position  was squared off at opposite parties  discretion on best effort basis . So the opposite party No.1 is  not responsible  for the loss emanating such position and thus the entire  claim and allegation  of  complainant are false. Hence it is  prayed by opposite party  No. 1 to pass an order in his favour  with cost.

7.     In support of his case the opposite party has filed documents which are marked as Ex.B1 to Ex.B7 and sworn affidavit . Opposite party relied  on these documents to substantiate his claim.

8.     Hence , the point for consideration is whether the  complainant has made out any deficiency on the part of the opposite party sustaining its liability  to complainants claim.

9.     Having perused  the contentions of both the counsel and the documents  placed on record it is found that there is no dispute  on the points  that the complainant  has 3-in-one account with opposite party NO.1  bearing No. IN30-3028-550-28878 (Ex.B1 &B2)   and sold 1250 (1lot) shares  of CAIIND on 26-09-2008  in PUT Option   OPT.CAIIND-29Oct2008 -185 –PA-S with a premium of Rs.2.25 and allotted more than 1 lakh for the above position (Ex.A1). The complainant is also aware of the terms  and conditions  of contract (Ex.B4 & B5).  There is no dispute  on the point that the trigger price was Rs.177.94 for the above stock, and the stock price  dropped below the  trigger price on some days before 29-10-2008  which is the  closing day of the open position in that month . It is also agreed  by both parties  that if the stock price trades below trigger price , the client faces loss and to minimize  the loss any one of the  two parties shall place square off orders to the open position but the responsibilities  lies more on the client. Even otherwise the settlement is exercised  by its own  at closing of expiry date.

10.    The contention of complainant is that on 27-10-2008 (Ex.A12) , the stock price was  listed much below Rs.100/- and the available  money was Rs.106693.75. The opposite party No.1 was negligent  and not placed the square off order to protect the complainant  from facing loss. But on expiry date i.e, 29-10-2008  when the stock price was  trading in the range of Rs.116 to 122 (Ex.A11) ,the opposite party  No. 1 unnecessarily interfered and closed  the position with a premium of Rs.119.75 resettling  in short fell  of margin by an amount of Rs.43,390/- (Ex.A2). If the opposite party No.1 had stayed un-touching the position leaving the sole responsibility  to the complainant  , since it was expiry day , the position would have been settled at the stock price of Rs.116 with premium of (185-116.55) Rs.68.45 automatically, and the loss might have been lessoned by an amount of Rs.64,125/- ,. More over it is not the profit or loss that is questioned here by the  complainant , but it is the service  that was rendered by the opposite party No.1 for consideration , paid to him through brokerage.

11.    The contentions  opposite party  No. 1is that he had squared off the position when required margin fell short to his discretion on the best effort basis is not acceptable. It would have been appreciated if he had squared off  the position  as soon as the available  money short fell of margin  but it was  not done so. The opposite party No.1 relied on the citations  2007 (2) CPJ 161 National Commission , 2007 (4) CPJ 199 NC  and 2006 (3) CPJ Pg.No.350 Chandigarh,  which have no relevance in this case.

12.    In view of what is stated above the forum holds that the complainant has established clearly the deficiency of service due to negligence on part of opposite party No. 1. Since opposite party No. 2 is a branch office doing same  business transaction at Kurnool , this forum has jurisdiction U/S 11 (2) a.

13.    Now the question is what in the quantum of compensation  that can be awarded  to him ? The loss of Rs.64,125/- claimed with interest  is on higher side  .Looking the entire  facts and circumstances  of the case, ends of justice would be met if the amount of Rs.43,390/- which is in excess of available  money that had fallen short as margin in the transaction is paid to the complainant.

14.    From the reasons stated above the complaint is allowed directing the opposite party to pay Rs.43,390/- towards compensation  of loss , Rs.1,000/- towards  mental agony and Rs.500/- towards costs of the case within 45 days from the date of receipt of this order. The rest of the claim is dismissed.

Dictated to the stenographer, transcribed by her, corrected and pronounced by us in the open bench on this the 10^th day of September, 2009.

        Sd/-                                  Sd/-                  Sd/-

LADY MEMBER              PRESIDENT FAC)     MALE MEMBER

APPENDIX OF EVIDENCE

Witnesses Examined

For the complainant :Nil             For the opposite parties :Nil

List of exhibits marked for the complainant:-

List  of exhibits marked for the opposite parties: 

             Sd/-                                Sd/-                          Sd/-

LADY MEMBER               PRESIDENT (FAC)      MALE MEMBER           

// Certified free copy communicated under Rule 4 (10) of the

A.P.S.C.D.R.C. Rules, 1987//

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Complainant and Opposite parties

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