ER SHRI.S.S. PATIL – HON’BLE MEMBER
1) This is a complaint regarding discontinuing the service of online trading availed by the Complainant through Opposite Party.
The facts of the case, as alleged by the Complainant, are that, the Complainant has opened an online Trading Account (No.8500491343) with M/s. ICICI Web Trade Ltd.- the predecessor company of the Opposite Party in December, 2004. This company was to provide securities trading platform for putting through interalia, Complainants trades.
2) The Complainant also having the Bank Account and Demat Account with M/s. ICICI Bank Ltd. the group company of the Opposite Party. Opening of the Bank Account and Demat Account had the provision for second holder. Mr.Satyapal Motilal Sanghvi became the second holder of the said bank account and Demat Account.
3) The Complainant further stated that Opposite Party was to provide online trading facility but it deactivated the Complainant’s account NO.8500491343 on 02/09/09 and stopped that service (providing online trading facility). This was done on the ground that as per the Opposite Party, the Complainant did not re-execute the relevant forms. As per the Complainant, the Opposite Party sometimes claiming false ground that the forms were fully damaged by floods and sometimes claiming that the fully damaged forms were salvaged but were lost in transit and therefore, the Complainant should re-execute the documents required for account opening. The Complainant averred that this deactivation of the Complainant’s account and thereby stopping the online trading facility amounts to illegal, highhanded and malicious action which caused heavy losses to the Complainant. The Opposite Party vide its letter dtd.01/08/06 had requested the Complainant to fill in and submit completed account opening form with proof of identity and address alongwith photograph of all the holder (s), latest by 30/09/06 to avoid any inconvenience, including suspension of your account as the documentation has been fully damaged due to flooding on 26/07/05.
4) The Complainant has further apprehended that if the fully damaged documentations were not destroyed, there is possibility of it falling into the hands of unscrupulous people for fraudulent use. The Complainant tried to know the state of fully damaged documentation from the Opposite Party but invain. The Complainant wanted to know from the Opposite Party whether the documents were destroyed or still exist. If they are in existence they are likely to be misused. In this connection, the Complainant sent an E-mail dtd.02/09/06. In the E-mail the Complainant expected that the Opposite Party should take minimum care to see that the damaged forms do not go in the hands of unscrupulous people. The Opposite Party did not answer to this E-mail. Then the Complainant again wrote a letter dtd.30/12/06 but it was also not replied by the Opposite Party.
5) The Complainant also made a complaint to SEBI, NSE, BSE and Bank Ombudsman. The Opposite Party replied the NSE, “The Complainant has completed the re-execution formalities and necessary documents have been submitted. However, the Complainant had never re-executed the documents. Thus, the Opposite Party submitted its false reply to the NSE on 13/06/07. This has been done by the Opposite Party with a view to escape penal action by the NSE against Opposite Party. However, again in March, 2009 the Opposite Party started sending online messages to the Complainant as follows –
“we regret to inform that the account documents for this account were inadvertently lost while in transit. In view of the same I-Sec and ICICI Bank have requested the Complainant to resubmit / execute the documents. The Complainant further submitted that the above messages sent by the Opposite Party caused nuisance and made it impossible to transit with a peaceful mind and thereby caused losses in place of gains.”
6) The Complainant submitted that in the above situation under the constant apprehension of deactivation of the trading account, the Complainant opted to liquidate the stock to salvage the investment. This caused heavy losses as prices were much less (1/3 to ¼ of the purchase) of the purchase prices in most of the cases. On 24/03/09 almost the entire portfolio was liquidated which amounted to Rs.2,70,973.33. The Complainant then lodged the claim for above loss with the Opposite Party through E-mail dtd.24/03/09.
7) Lastly the Opposite Party deactivated the trading account on 02/09/09. The Complainant then issued notices to Opposite Party on 03/11/09 and 20/11/09. The Opposite Party replied to the notices but was staunch on its point of re-execution of documents.
8) The Complainant finally prayed that she is entitled for compensation of Rs.4,50,300/- as follows –
a) Rs.100 per day for deactivation of the online trading facility w.e.f.02/09/09 till activation of the said account. (Rs.15,300/- till 01/02/10).
b) Rs.2,70,000/- because of sale of the shares under compulsion of the price.
c) Rs.1,50,000/- for various expenses.
d) Rs.1,50,000/- for mental torture and agony.
e) Reactivation of the said account.
f) Letter of apology from Opposite Party.
9) The Complainant has attached the xerox copies of the following documents in support of her compliant –
a) Letter dtd.01/08/06 from Opposite Party to the Complainant.
b) Transcript of E-mail dtd.02/09/06 from Satyapal Sanghvi to Opposite Party.
c) Letter dtd.30/12/06 from the Satyapal Sanghvi to Opposite Party.
d) Letter dtd.02/11/06 from the Opposite Party to Motilal Sanghvi.
e) Transcript of E-mail dtd.24/06/06 to the SEBI.
f) Letter dtd.28/06/07 from SEBI (acknowledgement).
g) Letter dtd.11/06/07 from Opposite Party to NSE.
h) Letter dtd.03/07/07 from NSE to Satyapal Sanghvi.
i) Print out of pop-up dtd.23/03/09 from Opposite Party.
j) Transcript of E-mail dtd.24/03/09 from Satyapal Sanghvi.
k) Notice dtd.03/11/09 by Satyapal Sanghvi to Opposite Party.
l) Final Notice dtd.20/11/09 by Satyapal Sanghvi to Opposite Party.
m) Reply dtd.12/11/09 from Opposite Party to the Complainant.
n) Reply dtd.29/11/09 from Opposite Party to the Complainant.
10) The complaint was admitted and notice was served on the Opposite Party. Opposite Party appeared through its Ld.Advocate and filed its written statement wherein it denied almost all the allegations mentioned in the complaint and specifically stated that the services availed by the Complainant were for commercial purpose i.e. to earn profit and not earn livelihood. The trading undertaken by the Complainant is speculative and speculative transactions and services availed for commercial purpose are not covered by the definition of the term consumer U/s.2(1)(d) of the C.P.A., 1986.
11) The Opposite Party has admitted that it provides safe and convenient process for online broking services to buy and sell the shares and other financial services. The Opposite Party has explained that trading account is always held in single name while clients are given facility to open or link existing ICICI Bank Demat or Saving Account either in single name or in joint names.
12) The Opposite Party has further stated that, there were heavy rains on 26/07/05 and the place where the Complainant’s forms were kept was flooded and some of the client’s documents were damnum fatale (loss due to unusual accident). Therefore, the Opposite Party initiated the re-execution of the account opening forms for complying the guidelines of SEBI, NSE, BSE, etc. The Opposite Party admitted that it repeatedly sent letters, reminders and even flashed online notices/messages prior to temporary discontinuation of services availed by the Complainant. It was informed that the account opening documents were damaged and the clients were requested to re-execute the form. Re-execution form was issued to the Complainant. In view of the stringent K.Y.C. guidelines issued by the SEBI, NSE, BSE, NSDL, etc. the Complainant was intimated that in absence of non receipt of the completed documentation within a prescribed date, his account would become non operational.
13) The Opposite Party further submitted that, the Complainant’s form was salvaged in fully damaged condition due to which re-execution form has to be obtained and therefore, letters were sent to the Complainant. In May, 2007 one Mr.Satyapal complained to the regulatory authorities but he did not mention his unique client code (UCC). It is alleged by the Opposite Party that Mr.Satyapal is in practice of carrying out correspondences without giving due references of earlier letters, UCC etc. The document dtd.16/04/07 by Mr.Satyapal to SEBI is the example of this. This Opposite Party further explained that it is not possible to identify the client by names. Still they submitted their reply on the basis of date available with them as “the execution exercise is being carried out and the form is duly submitted.” This erroneous reply was sent to SEBI because of lack of UCC No.
14) It is the contention of the Opposite Party that Complainant’s forms were salvaged in fully damaged condition and was found missing during the exercise of shifting office. An FIR of which was duly made to police authorities. The Complainant was also informed the incident & she was requested to fill in the account opening form. The Opposite Party has averred that SEBI vide its order dtd.18/06/09 has levied penalty on Rishabh Stock Broking Services Pvt. Ltd. for non compliance found in account opening documents in inspection held in 2005-2006 & 2006-2007 as Rishabh Stock Broking Service Pvt. Ltd. has maintained incomplete registration forms. Hence, after waiting for 3 long years, Opposite Partytemporarily deactivated the Complainant’s trading account for want of documents in order to adhere with KYC norms of the regulatary authorities. Therefore the Complaiant is not liable for any relief and the Complainant be dismissed with cost.
15) The Opposite Partyhasattached the xerox copies of the following documents –
a) Contract Note addressed to the Complainant.
b) Letter dtd.14/09/05 of Opposite Party to NSE, SEBI.
c) Letter dtd.23/05/07 to Opposite Party from NSE.
d) SEBI’s order dtd.18/06/09.
e) Letter dtd.11/06/07 of Opposite Party to NSE.
f) Copy of the order book and contract note dtd.19/03/10.
g) Contract note 5/09/N08980739 issued to the Complainant trade date 24/03/09, settlement dtd.26/03/09.
16) The Complainant filed rejoinder and written argument. The Opposite Party also filed its rejoinder reply and written argument and submitted the copies of the judgements Of Hon’ble Maharashtra State Commission. ii) SC Case No.CC-08/089 in Nirupama Das V/s. Shares & Stock Broking Services Pvt. Ltd. iii) SC Case No.CC-8/32 in Raghunath Biswas V/s. VCK Share & Stock Broking Services Ltd. iv) First Appeal No.1126/07 in case Abhay Ramchandra Lodha V/s. LKP Shares and Securities Ltd. and other. v) SC Case No.F.A. 359/09 in Vishwanath Poddar and others V/s. ISE Securities & Services Ltd. vi) II (2003) CPJ 100 NC in Omprakash Sahni and Anr. V/s. State Bank of India and Anr. vii) First Appeal No.195/07 in Prithviraj Jayachand Oswal V/s. Hem Securities Ltd.
17) We heard the Ld.Constituted Attorney Mr.Satyapal Sanghvi and the Ld.Advocate Shri.V. Kulkarni for the Opposite Party. We also perused all the above stated documents filed by both the parties and our findings are as follows -
As stated by the Complainant herself, she had an online Trading Account No.8500491343 with Opposite Party and the dispute is regarding this trading account as the Opposite Party deactivated this account on account of non re-executing the documents required for registering with the Opposite Party.
18) From the complaint itself it is clear that the Complainant had an online Trading Account which contemplates that Complainant was doing the business of purchase and sale of the shares and securities. The word trade included in the trading account denotes the meaning of commerce, buying and selling activity. Therefore, the Complainant has availed the services of the Opposite Party to facilitate these activities of buying & selling share/securities with intent to get profit from those buying and selling activities of shares/securities. We examined the whole complaint to see whether there is any pleading that the Complainant did these transactions, trading for earning her livelihood by her self employment. Unfortunately the answer is negative. Nowhere in the complaint it has been mentioned that the Complainant earned her livelihood on this business of shares and securities. Even all the documents and pleadings, correspondence with the Opposite Party, NSE, BSE, SEBI have been prepared and signed by the husband of the Complainant. The Opposite Party has cited the judgement of Hon’ble State Consumer Disputes Redressal Commission, West Bengal in S.C. Case No.CC/08/32 in Raghunath Biswas V/s. VCK Shares & Stock Broking Services Ltd., Kolkata. The facts of this case are identical to the facts of the complaint in hand. In the above said case No.CC 08/32 Complainant had a trading account with Opposite Party VCK Shares Stock Broking Services Ltd. From the statement issued by the Opposite Party, the Complainant found that he traded NIFTI Shares between 13/12/07 to 08/01/08 and as a result of trading in shares the Complainant incurred loss and Rs.2,70,000/- were debited from his account. The Complainant did not sign a single contract note said to have been executed allegedly relating to transfer of said shares. As no relief was available, Complainant filed the complaint. The Hon’ble Commission observed “The first contention which falls for our consideration is as to whether the Complainant is a Consumer entitled to approach a Forum under C.P.A. in view of the nature of the transactions undertaken by him amounting commercial transaction and whether even if it was a commercial transactions, it was for earning livelihood of the Complainant by his self employment. From the facts available it is found that in course of the said transaction between the Complainant & Opposite Party, the Complainant used to purchase shares which were again to be sold and both these buying & selling were through the Opposite Party under instructions of the Complainant. Therefore, it is not fact that the Complainant obtained the service which was not directly related to the trading done by the Complainant. So it is apparently a commercial transaction. It was argued on behalf of the Complainant that the said transaction was for earning livelihood of the Complainant by his self employment. In this respect while going through the pleading and evidence, we do not find any such statement by the Complainant. The only statement made by the Complainant is that he is an ordinary retired person and never had any education or prior experience of trading in shares. It is neither pleaded nor stated on evidence that the said transaction was for earning livelihood by the Complainant or it amounted to his self employment. In such circumstances, we are of the opinion that it is conclusively shown that the transaction was for commercial purpose and it was not for earning livelihood and therefore, the Complainant is not entitled to be treated as a consumer.”
19) In the instant complaint also the online trading of shares / securities was carried out for commercial purpose with intent to make profit. The Complainant has not mentioned in the complaint that she was doing this business for earning her livelihood by her self employment. There is no evidence in this respect to establish these facts. Therefore, we do not have any doubt in concluding that the activities undertaken by the Complainant were for commercial purpose and as such, the Complainant is not a consumer within the meaning of Sec.2(1)(d)(ii) of the Consumer Protection Act, 1986. Therefore, this Forum does not have the jurisdiction to entertain this complaint and examine the further merits of this case. Therefore, in view of the above finding, we pass the following order -
O R D E R
i)Complaint No.31/2010 is hereby dismissed with no order as to cost.
ii)Copy of this order be furnished to both the parties.
