DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, PALAKKAD

Dated this the 29^th  day of September 2011

Present   : Smt. Preetha G Nair, Member

    : Smt.Bhanumathi.A.K. Member                 Date of filing: 03/11/2009

(C.C.No.150/2009)

Divakaran.M

S/o.Late Kesavan Nair,

Sree Sai Sadan,

Krishna Gardens,

Chandranagar,

Palakkad – 678 007.                                        -       Complainant

(By Adv.M.R.Prasad)

V/s   

1.M/s.Religare Securities Ltd.

   25,Nehru Place,

   New Delhi – 110 019.

2. The Manager,

    M/s.Religare Securities Ltd.

   2^nd Floor, Opp.LIC Buildings,

   Mannil Arcade, Shoranur Road,

   Palakkad – 14.                                            -       Opposite parties

  (By Adv.A.K.Sundareswaran)

O R D E R

By Smt.PREETHA G NAIR, MEMBER

The complainant is a pensioner retired from the Central Government Service and he decided to invest money in stocks and  securities. The opposite party is doing business as stock  brokers all over India.  The 1^st opposite party is having branch office at Palakkad.  The complainant has an account with the opposite party for share trading and the code is MD1019 and DB 10636009. According to the agreement with the opposite parties the complainant had paid Rs.5,75,000/- to them during 10/11/2006 to 4/2/2008 for the purpose of trading in shares.  The complainant had deposited the amount with the opposite parties on the representation that they will be protecting the interest of the complainant in the trade.  The opposite parties are acting as the power of attorney of the complainant.  He had availed the services of the opposite parties and they are collecting service charges from the complainant.  The power of attorney was executed for the purpose  of share trading as per the trade practice prevailed in the stock trading area.  The opposite parties are bound to protect the interest  of the complainant and trade safely and profitably in the best interest of the complainant.  So that the money  deposited  by him is secured.  Nevertheless the opposite parties  are bound to furnish true and correct accounts of the trading carried out with his money on account.  But only on 29/9/2008 the opposite parties had given the details of cheque  pay in and pay out to the complainant  after repeated request.  As per the payment details given by the opposite parties they have shown the details  of only a sum of Rs.3,39,006/- for the period 2/12/07 to 15/7/08.  The opposite parties did not furnish any details regarding the balance amount and the details of trading carried out on behalf of the complainant.  Hence the complainant suspected some foul play on the part of the opposite parties in the transaction.  Then the complainant caused a lawyer notice dated 3/10/2008 calling upon the opposite parties to furnish the following details.

1.    Which are the shares opposite party had purchased as per the amounts deposited by the complainant ?

2.    Value of the shares purchased with date of purchase, quantity of shares, value of the shares on the date of purchase ?

3.    The sale of shares done on behalf of the complainant, quantity of shares sold, date of sale value for which shares were sold ?

4.    The entire details regarding trading conducted on behalf of the complainant from 10/11/2006 to till date ?

     But instead of giving the details required by the complainant the opposite parties caused a reply letter dated 17/10/08, stating incorrect and wrong statements.  The opposite parties not provided contract notes and account statements to the complainant as alleged in the reply letter.  As per the mode prescribed by the stock exchange the opposite party is bound to give the original contract notes and extract of accounts to the complainant and the opposite party shall keep the copy of the same counter signed by the complainant.  The allegation in the reply notice that the payments made by the complainant proves that he was aware of the status of his accounts is incorrect and wrong.  Because he had reposed utmost faith in the opposite parties and there is nothing against logic in  making payments  under the bonafide belief.  Then the complainant did not made any payment after 2/4/08.  The complainant again issued  a notice dated 19/11/08 to the opposite parties to furnish the details.  But the opposite parties neither furnished the details nor caused any reply.  The service of the opposite party is highly deficient and their inaction amounts to unfair trade practice.  The attitude of the opposite parties have caused much mental agony and suffering to the complainant, who is a senior citizen. Hence the complainant prays an order directing the opposite parties to

1.          pay Rs.5,75,000/- as the amount deposited with 18% interest per annum from 4/2/08 to 24/10/09 and

2.          Pay Rs.10,000/- as compensation for the sufferings.

Opposite parties filed version stating the following contentions.  Opposite party 1 stated that complaint is not a consumer dispute.  The opposite party 1 stated that complainant had opened an account with the opposite parties.  The complainant and the opposite parties have agreed to refer any disputes to arbitration as per the clauses of the member client agreement to which the complainant is a signatory. Hence the complaint is liable to be referred to arbitration.  The complainant was doing share trading business joining with the opposite parties.  He was purchasing shares for commercial purpose is an admitted fact. Under these circumstances the complaint will never come within the definition of a consumer as defined under the Act.  The complainant has made several payments at various points of time and whatever payments have been made by the complainant stand duly credited in his financial ledger and are also reflected in his financial ledger.  The  complainant has taken payouts as well on more than one occasion.  With respect to the legal notice and the information requested was duly replied through letter dated 17/10/08.  The opposite party is not responsible for the losses in the account of the complainant.  Further opposite party 1 stated that the complainant has taken a payout of Rs.3,59,499.66 and get his claims in addition to this an amount of Rs.5,75,000/- with hindsight of illegal gains.  Hence the 1^st opposite party prayed that complaint dismissed as devoid of merit with costs.

The 2^nd opposite party admitted that complainant has a demat account with them.  The trade is conducted only as per the instructions of the client.  The 2^nd opposite party stated that they had submitted  all the day trading notes to the complainant by post.  Further the quarterly trading statements are also sent to the complainant.  All the amounts and payments details are served on the complainant in time.  The opposite party had sent reply to the lawyer notice dated 3/10/08 stating the true facts of affairs. 

The allegations that the opposite parties had not provided contract notes and account statement as alleged in the reply notice, and the opposite party is bound to give the original contract notes and extract of account to the complainant and the opposite party shall keep the copy of the same counter signed by the complainant, are not at all correct and there is no truth in it.  Since the complainant is supplied with his contract notes, account statements, he will be very much enlightened  about his account and hence he cannot claim any amount from this opposite party because any amount credited or debited will be seen in his account details.  Trading in the account of complainant is done only  as per the instructions of the complainant and hence any profit or loss occurred in the transaction is to be borne by the complainant himself and the opposite parties are not at all liable to pay any amount or interest as claimed in the complaint.

      The complainant is not eligible to get any amount from the opposite parties as alleged in the complaint.  The 2^nd opposite party stated that during the fall of the market the complainant had sustained some loss. For that the 2^nd opposite party is not at all responsible.  Hence the 2^nd opposite party prayed that dismiss the complaint with cost.

Complainant and opposite parties filed affidavit and produced documents.  Ext.A1 to A4 series marked on the side of the complainant.  Ext.B1 & B2 series marked on the side of the opposite parties.  2^nd opposite party was cross examined as DW1. 

Matter was heard.

1.    Whether complainant is a consumer as defined in the Consumer Protection Act ?

2.    Whether there is any deficiency in service on the part of opposite parties ?

3.    If so, what is the reliefs and cost complainant is entitled to ?

Issue No.1

One of the main contention of opposite parties that the complainant is not a consumer as defined in the Consumer Protection Act.

Section 2(1)(O) of Consumer Protection Act define Service.  “Service” means  service of any description which is made available to potential (users and includes, but not limited to, the provision of) facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board  or lodging or both, (housing construction), entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract or personal service.

From the definition it is clear that service provided with respect to financial  transaction comes within the purview of the Consumer Protection Act.  Further opposite parties stated that complainant was doing share trading business joining with the opposite parties and he was purchasing shares for commercial purpose.  Under these circumstances the complainant will never come with in the definition of consumer.  No evidence was produced by the opposite parties to prove that complainant was purchasing shares for commercial purpose.  Opposite parties argued that the share trading is a speculative transaction and the present complaint deserves to be summarily dismissed on this ground alone.  Sharekhan Ltd. And another V. Rajeshwar Sharma 2011 CTJ 212 (CP) (SCDRC) wherein the State Commission has held that the shares are already in the name of the complainant, there is no speculative intention.  The question of speculation therefore does not arise.  The learned counsel for the opposite parties also argued that there was an arbitration Clause in the agreement between the parties and therefore the Consumer Forum would have no jurisdiction to try the same.  In this respect we may refer to Section 3 of the Act in view of which the remedy under the Act has been provided in addition to any other remedy available to the consumer.  Otherwise also the existence of an arbitration clause in an agreement does not exclude the  jurisdiction of Consumer Forum.   The complainant is a pensioner retired from the Central Govt. Service and he decided to invest money in stocks and securities.  Hence the complainant is a consumer under the Consumer Protection Act.

Issue II & III

We have heard the learned counsel for the parties and have perused the record.

According to the opposite parties they are the power of attorney holder  of the complainant.  Hence they are bound to furnish accounts to the complainant.  In Ext.A1 the complainant demanded accounts as per notice dated 3/10/10.  As per Ext.A2 the opposite parties sent a reply letter dated 17/10/10 and not answer the questions or gave the statement of accounts.  At the time of cross examination DW1 had admitted that the opposite party is bound to give the original contract notes and extract of accounts to the complainant.  No evidence was produced by the opposite parties to prove that they had issued contract notes and statement of accounts given to the complainant.  The complainant stated that as per the contract notes produced by  the opposite parties the account is available only for Rs.3,39,006/- No contradictory evidence was produced by the opposite parties.   In Ext.A4 series the complainant  had paid Rs.5,75,000/- to the opposite party.  The opposite parties have not produced the statement of accounts of Rs.5,75,000/-.  The complainant stated that trading is to be carried out only for written instructions in the format prescribed by the company  and the procedure was not followed by the opposite parties.  No contradictory evidence  was produced by the opposite parties.  DW1 deposed that trading instructions was given through phone.  No documentary evidence was produced by the opposite parties to prove that trading instructions was given through phone. Opposite parties stated that for collecting the service charges they had given their service honestly and sincerely.  It was therefore necessary for the opposite parties to issue the original contract notes and extract of accounts to the complainant.  No evidence was produced by the opposite parties to prove that trading is to be carried out only for the complainant’s written instructions in the format prescribed by the company.  Opposite parties not produced any concrete evidence to show the loss.   The 1^st opposite party stated that  the complainant had taken a payout of Rs.3,59,499.66 from his account.  At the time of hearing the complainant also admitted that he had received the amount  and stated that the opposite parties will have to give the profits made out of the amount to the complainant.  The opposite parties stated that due to shattering and depression in the share market in the year 2008 the value of all  shares and futures were diminished and most of the traders including the complainant sustained loss.  No evidence was produced by the opposite parties to show that they are doing the share business as per the directions of complainant.  In Ext.B1 the complainant entered into an agreement with the opposite parties on 22/9/2006. The complainant stated that he  had paid Rs.5,75,000/- to the opposite parties during 10/11/2006 to 4/2/2008 for the purpose of trading in shares. The opposite parties furnished the statement of account is only for Rs.3,39,006/-. The statement of balance amount of Rs.2,35,994/- (i.e.Rs.5,75,000 – Rs.3,39,006 = 2,35,994) not produced by the opposite parties.

In the above discussions we are of the view that there is deficiency in service on the part of opposite parties.  In the result the complaint allowed.

We direct the opposite parties jointly and severally to pay Rs.2,35,994/- (Rupees Two lakhs thirty five thousand nine hundred and ninety four only) as the balance amount with 12%  interest from the date filing of complaint to date of order and pay Rs.1,000/- (Rupees One thousand ) as cost of the proceedings to the complainant.

Order shall be complied within one month from the date of order, failing which the complainant is entitled for 9% interest per annum for the whole amount from the date of order till realization.

Pronounced in the open court on this the 29^th day of September 2011.

 Sd/-    

Smt.Preetha G Nair

Member

 Sd/-

Smt. Bhanumathi.A.K.

Member

APPENDIX

Exhibits marked on the side of the complainant

Ext.A1 – Copy of lawyer notice with postal receipt dated 3/10/08

Ext.A2 – Reply to lawyer notice dated 17/10/08

Ext.A3 series – Copy of  to lawyer notice dated 19/11/08 with postal receipts

Ext.A4 series – Photocopy of receipts issued by opposite parties (14 nos)

Exhibits marked on the side of the Opposite party

Ext.B1 – Copy of Agreement dated 22/9/06

Ext.B2 – Copy of Contract notes 313 pages

Cost Allowed

 Rs.1,000/- allowed as cost of the proceedings