PER SHRI. S.B.DHUMAL - HON’BLE PRESIDENT :
1) Present dispute is as under -
It is averred in the complaint that the Complainant is a ‘Consumer’ as he has hired the services of Bombay Stock Exchange share brokers namely R.R. Nabar & Co. Shares Brokers Pvt. Ltd., for purchase & Sales of shares. Opposite Party No.1 are Share Brokers. Opposite Party No.2 is a regularity authority and empowered to make Rules and By-laws to regularize business of shares and securities. Opposite Party No.3 has been enacted SEBI (Ombudsman) Regulations 2003 for the resolution of the disputes between the investors & intermediaries such as members brokers & stock exchanges. However, the Opposite Party No.3 has not appointed any Ombudsman for Mumbai region.
2) It is the case of the Complainant that he purchased 400 shares for Himmatsingka Seide Ltd. from Opposite Party No.1. The Opposite Party No.1 purchased and delivered 400 shares to the Complainant on 28/08/1990 & 24/10/1990 respectively without specifying the particulars of the shares on the delivery book. Mr. Y.G. Jadhav another customer of Opposite Party No.1 filed a suit in the High Court, Mumbai, bearing Suit No.4066 of 1993 praying & claiming 200 shares of Himmatsingka Seide Ltd. bearing distinctive nos.2791101 to 2791200 and 1462801 to 1462900 out of the above 400 shares allegedly delivered by Opposite Party No.1 to the Complainant contending that Opposite Party No.1 has not delivered the said 200 shares purchased by him from the Opposite Party No.1. It is alleged by the Y.G. Jadhav in aforesaid suit that Opposite Party No.1 has delivered these 200 shares by mistake to the Complainant and on the said allegation the Complainant was made a party in the said suit by said Mr. Jadhav. The said suit is pending before the Hon’ble High Court. The Opposite Party No.1 requested Opposite Party No.2 to grant arbitration proceeding against the Complainant under Rules and By-laws of Opposite Party No.2, pending the said suit before the Hon’ble High Court on the same issue that Complainant has not paid price of 200 shares of above stated company. The Opposite Party No.2 granted arbitration pending the suit in the High Court. Regarding the same issue, appointed arbitrators Mr. Khandwala & Kishore Shah and the arbitrator granted award. The Hon’ble High Court has set aside aforesaid award. Opposite Party No.1 again requested Opposite Party No.2 to grant fresh arbitration under their Bylaws. Opposite Party No.2 though aware of the fact that suit is pending in the Hon’ble High Court regarding the same issue, appointed Mr. Pradip Kedia as Arbitrator. The Complainant’s contention is that suit is pending in respect of the said 200 shares before the High Court was not taken into consideration by arbitrator Mr. Pradip Kedia and passed the award against the Complainant, holding that the mater in the High Court cannot become subjudice. It is averred that Opposite Party No.1 has stated in the written statement filed in the High Court that by mistake he handed over 200 shares to the Complainant. Opposite Party No.1 did not write a single letter to Complainant asking to the Complainant to return the said 200 shares. On the contrary Opposite Party No.1 claimed the price of the 200 shares in the arbitration proceeding. The plaint filed by Mr. Jadhav, in High Court does not show any proof as to how & when payment for 200 shares was made. Opposite Party No.1 after award took out insolvency proceeding No.N/84 of 2003 against the Complainant for execution and payment of the said award. Therefore, the Complainant took out the notice of motion No.2815 of 2003 before the Hon’ble High Court and the Hon’ble High Court after hearing all the parties passed two interim orders for depositing suit shares and their value as per the award. Hon’ble High Court thereafter passed final order in the above notice of motion by observing that arbitration award be executed. Thereafter the Complainant agreed to make the payment in the insolvency Court in satisfaction of the award & the insolvency notice No.N/84 of 2003. By this payment, the Complainant became absolute and legitimate owner of 200 shares and accrued benefits by way of rights & bonus shares issued thereon. Therefore, it was duty of the Opposite Party No.1 to give clear and marketable title to these 200 shares to the Complainant. It is alleged by the Complainant that Opposite Party No.1 and Mr. Y.G. Jadhav - Plaintiff in High Court Suit No.4066/1993 filed against the Opposite Party No.1 are actually acting in collusion with sole objective of extracting more money from the Complainant under the blessing & support of the Opposite Party No.2. According to the Complainant inspite of payment of price of 200 shares Opposite Party No.1 has not given clear marketable price of the tile in respect of theses 200 shares and it amount to deficiency in service on the part of Opposite Party No.1. It is duty of the Opposite Party No.2 & 3 to see that whether their member shares broker complies with the Rules and Regulations by giving good marketable title when the payment of these 200 shares were made to the Opposite Party No.1. By not taking action as per Bylaws Rules by Opposite Party No.2 & 3 against Opposite Party No.1, Opposite Party No.2 & 3 have failed in their duties and committed breach of the statutory Rules and By-laws and it is deficiency in service on the part of Opposite Party No.2 & 3. Therefore, the Complainant has filed this complaint before this Forum.
3) The Complainant has prayed to direct Opposite Party No.1 to remove the defects in 200 shares and benefits accrued thereon and to give it clean and marketable title as to the value of the shares of Himmatsingka Seide Ltd. has been paid by the Complainant. The Complainant has requested to direct Opposite Parties No.1 to 3 to pay to the Complainant Rs.5 Lacs being compensation alongwith interest @ 18% p.a. for loss and damage caused to the Complainant for defending the Suit No.4066 of 1993 and other various proceedings.
4) The Complainant has prayed to direct Opposite Party No.1 to 2 to replace suit shares with the fresh and marketable shares in compliance of the Bylaws of Opposite Party No.2 and to direct Opposite Party No.2 to initiate penal action against the Opposite Party No.1 under Bylaw No.357(viii) for failure to carry on transaction as per Rules. The Complainant has prayed to direct Opposite Party No.3 to conduct statutory investigations into the matter under Section 11C of SEBI Act and implement the various provisions of the SEBI Act and to take disciplinary & penal action under Section 15F(b) & 15HA of SEBI Act against owners & officials of Opposite Party No.1 & 2 for indulging into unfair trade practices to cheat the Complainant. He has prayed for any other relief as may deem fit.
5) Alongwith complaint, the Complainant has filed documents as per the list of document and affidavit in support of the complaint.
6) Opposite Party No.1 has filed affidavit in reply and thereby resisted claim of the Complainant contending interalia that complaint is not maintainable and this Forum has no jurisdiction to try and decide the present complaint. It is alleged that gross delay is caused in filing of this complaint.
7) According to Opposite Party No.1, Opposite Party No.1 is a share & stock brokers and member of Bombay Stock Exchange Ltd. Rules, Bylaws and Regulations of Bombay Stock Exchange are binding on Complainant as well as on Opposite Party No.1. Under the Bylaws any dispute between a broker and client in respect of transactions undertaken on the stock exchange in accordance with the Rules, Regulations and Bylaws of Bombay Stock Exchange and anything has to be referred to the arbitration under Bylaws of 248 of BSE Ltd.
8) It is alleged by Opposite Party that the Complainant is forum shopping. The Complainant firstly approached Bombay Stock Exchange for the same relief and when he did not succeed, the Complainant approached to Opposite Party No.3. When the Complainant did not succeed even there, the Complainant took out Notice of Motion No.2214 of 2006 for the same reliefs and the said Notice of Motion is pending before the Hon’ble High Court. In the said notice of motion, the Complainant has failed to get favorable orders. Now the Complainant has approached belatedly to this Consumer Forum and therefore, Complainant is not entitle to any relief from this Forum.
9) It is submitted by Opposite Party No.1 that Suit No.4066 of 1996 filed by Y.G. Jadhav claiming the same very shares from the Complainant and his wife is pending before the Hon’ble High Court of Bombay. It is submitted that in the said Suit the Complainant, on his own, voluntary deposited 200 shares of Himmatsingka Seide Ltd. with the Prothonotary and Sr. Master of the High Court. Therefore, present complaint is not maintainable before this Forum as it is subject matter of suit pending before the Hon’ble High Court. According to Opposite Party No.1 that the 200 shares of Himmatsingka Seide Ltd. for which the Complainant has approached this Forum were duly transferred by the company in the name of Complainant and his wife Ms. Gargi Abrol. Not only thus title of the said shares passed to the Complainant and his wife, but they have received right and bonus shares on the said shares issued by the company. The Complainant has deliberately suppressed these facts from this Forum. Therefore, there is no cause of action to this complaint. There is no deficiency in service on the part of Opposite Party No.1 and complaint deserves to be dismissed. According to Opposite Party No.1, the Complainant had purchased only 200 shares of Himmatsingka Seide Ltd. but collected 400 shares from Opposite Party No.1 dishonestly. It was duty of the Complainant to return 200 shares out of 400 shares as he had no right, title or interest over the said 200 extra shares. Inspite of pending litigation in the Hon’ble High Court, the Complainant continued to hold the said shares and received all the benefits to which he was not entitle. Opposite Party No.1 had filed Arbitration Reference against the Complainant for return of extra 200 shares of Himmatsingka Seide Ltd. Award passed by the Arbitrator directed the Complainant to return shares to the Opposite Party No.1. Inspite of returning the shares, the Complainant chose to pay value of the shares, that only after insolvency proceeding were taken against the Complainant. It is alleged that Complainant abused the process of law therefore, complaint be dismissed with cost.
10) Opposite Party No.2 has filed affidavit in reply and thereby resisted claim of the Complainant. It is submitted that Opposite Party No.2 Bombay Stock Exchange is limited company registered under Companies Act, 1956. Before 2005, BSE was known as Stock Exchange, Mumbai. BSE is governed by the Rules, Bye-Laws and Regulations of BSE Ltd. which are made pursuant to and/or duly approved by the Central Government / Securities & Exchange Board of India (SEBI) – Opposite Party No.3. Main purpose of BSE is inter-ally to assist, regulate and control dealings in securities and to take appropriate measures, restrain and prevent any market manipulation, price rigging and other malpractices. Rules, Bye-Laws and Regulations of BSE are binding on its members. It is contented that present complaint is not maintainable and it is misconceived and full of falsehoods and misleading.
11) It is submitted that there is no privity of contract between Complainant and BSE. At any time BSE has not provided any service to the Complainant as contemplated under Consumer Protection Act and as such the Complainant is not a Consumer.
12) According to Opposite Party No.2 there was contract between Opposite Party No.1 and Complainant for purchase of shares. The dispute between the Complainant and Opposite Party No.1 has been adjudicated and the Arbitration Forum has hold that Opposite Party No.1 had erroneously and due to oversight delivered to the Complainant extra 200 equity shares of Himmatsingka Seide Ltd. and Complainant has no right, title and interest on the said extra 200 equity shares. Opposite Party No.2 has stated about litigation between the parties pending before the Hon’ble High Court and deposit of 200 shares certificates of Himmatsingka Seide Ltd. by the Complainant with the Hon’ble High Court. It is submitted that suit is pending before the Hon’ble Bombay High Court.
13) It is submitted that there is delay in filing of this complaint. There is no deficiency in service on the part of Opposite Party No.2 and complaint against Opposite Party No.2 deserves to be dismissed with heavy cost.
14) Opposite Party No.3 has filed written statement and Opposite Party No.3 has also resisted claim of the Complainant on various grounds contending that complaint deserves to be dismissed. According to Opposite Party No.3, there is no cause of action to the complaint. The Complainant has filed this complaint against Opposite Party No.1 for allegedly not giving marketable title of 200 shares to the Complainant and in this complaint the Complainant has unnecessarily joined Opposite Party No.3 as a party. There is no relationship as consumer and service provider between Complainant and Opposite Party. Therefore, this Forum has no jurisdiction to entertain and try this complaint.
15) It is contended that Opposite Party No.3 is statutory body constituted under the Security and Exchange Board of India Act, 1992. Opposite Party No.3 is regulator of Securities Market and perform statutory duties as prescribed under SEBI Act, 1992 and Regulations made thereunder. Opposite Party No.3 does not provide any ‘service’ for any consideration or fee to the Investors as alleged by the Complainant. As per Opposite Party No.3, complaint is not only frivolous but it is abuse of the process of law. Opposite Party No.3 has denied each and every allegation made in the complaint and submitted that present complaint deserves to be dismissed with heavy cost.
16) The Complainant has filed reply to the written statement filed by the Opposite Parties. He had filed application for interim relief. Opposite Parties have filed say to the interim relief application. The Complainant has filed affidavit of evidence, Opposite Parties have also filed affidavit in support of their written statements. We heard oral submissions of Complainant in person and Ld.Advocate Mr. Ajay Khandar for Opposite Party No.1, Smt. Adity Mukharjee- Dy. Legal Manager of Opposite Party No.2. Nobody was present for Opposite Party No.3 at the time of hearing of oral argument. Perused documents produced by both the parties.
17) Following points arises for our consideration and our findings thereon are as under -
Point No.1 : Whether the Complainant is a ‘consumer’ as defined under Sec.2(1)(d)(ii) of the Consumer Protection Act,
1986 ?
Findings : No
Point No.4 : Whether the Complainant is entitled for relief from Opposite Parties as prayed for ?
Findings : No
Reasons :-
Point No.1 :- In the complaint para no.1 the Complainant has averred that he is a ‘Consumer’ as he has hired services of the one Bombay Stock Exchange share broker namely R.R. Nabar & Co. Share Brokers Pvt. Ltd., for purchase & sales of shares. The Complainant has filed this complaint mainly on the ground that Opposite Party No.1 has not given marketable title to the Complainant in respect of 200 shares of Himmatsingka Seide Ltd. Opposite Party No.2 is Bombay Stock Exchange which is established to regularize the business of shares and security and for that purpose authorize to make Rules and Bye-Laws for the regulation and control of contract between its members. Opposite Party No.3 is statutory body constituted under Security Exchange Board of India Act, 1992 and discharging its statutory duties. The Complainant has averred that he has filed this complaint before this Forum because of deficiency in services rendered by the Opposite Party No.1 to 3.
Opposite Party No.2 & 3 in their written statement have contended that there is no relationship as a consumer and service provider between the Complainant & Opposite Party No.2 & 3. Therefore, this Forum has no jurisdiction to entertain and try this complaint.
Ld.Advocate for Opposite Party No.1 has vehemently submitted that present complaint is abuse of process of law. The Complainant is not a ‘consumer’ as defined under Sec.2(1)(d)(ii) of the Consumer Protection Act, 1986. Even according to the Complainant, he had hired services of the Opposite Party No.1 shares brokers for purchase and sales of shares. It is submitted that transactions of purchase & sales of shares is a commercial activity. According to Opposite Party No.1 the Complainant is dealing in shares, which is a commercial activity and therefore, the Complainant is not a consumer under Sec.2(1)(d)(ii) of the Consumer Protection Act. Ld.Advocate has further submitted that in this case in respect of the 200 shares out of 400 shares of Himmatsingka Seide Ltd. allegedly purchased by the Complainant from Opposite Party No.1. Mr. Y.G. Jadhav has filed Suit No.4066 of 1993 before the Hon’ble High Court. The Complainant had appeared before the Hon’ble High Court and taken on Notice of Motion. The Complainant in the complaint itself has clearly admitted that he has taken on Notice of Motion. The Complainant has not disputed the fact that said suit is in respect of 200 shares out of 400 shares purchased by him from Opposite Party No.1 of Himmatsingka Seide Ltd. Ld.Advocate for the Opposite Party has submitted that the said suit is still pending in the High Court and during pendency of said suit in respect of the same subject matter the Complainant has filed this complaint before this Forum. Therefore, complaint is not maintainable. Further it is submitted that the Complainant has already appeared before the Administrator appointed in accordance with the provision of SEBI in respect of 200 shares which are subject matter of this complaint. In the complaint the Complainant has stated about arbitration proceeding award passed in that proceedings and deposit of 200 shares by him before the Hon’ble High Court. It is submitted on behalf of Opposite Party No.1 that simultaneously the Complainant is not entitle to file various proceedings before various authorities in respect of same subject matter and therefore, complaint is not maintainable. It is contended that as Complainant is not a consumer and on this ground alone present complaint deserves to be dismissed.
At the time of oral argument the Complainant has submitted that during relevant period of transaction he was serving as Sr. Branch Manager of a Bank and as an investment he purchased 400 shares of Himmatsingka Seide Ltd. Admittedly the Complainant has availed services of Opposite Party No.1- Share Broker for purchase and sales of shares. This complaint is filed by the Complainant in respect of the transaction of purchase of shares from Opposite Party No.1. The Hon’ble State Commission in number of cases has held that dealing in shares is commercial activity and a person who avails services for sales and purchase of shares is not a consumer. Considering facts of this case and evidence adduced by the parties, we hold that the Complainant has availed services of the Opposite Party No.1 for commercial purpose. Opposite Party No.2 is established to regularize the business of shares and security. Opposite Party No.3 is a statutory body constituted under Security and Exchange Board of India, 1992, to regularize Securities Market and perform statutory duties. The Complainant has not availed services of Opposite Party No.2 & 3 for any consideration. As discussed above the Complainant has availed services of Opposite Party for commercial purpose therefore, Complainant is not a consumer under Sec.2(1)(d)(ii) of the Consumer Protection Act, 1986. Hence, we answer point no.1 in the negative.
Point No.2 :- As discussed above, the Complainant is not a ‘Consumer’ under Sec.2(1)(d)(ii) of the Consumer Protection Act, therefore, present complaint is not a consumer complaint and this Forum has no jurisdiction to entertain and try this complaint. As such, the Complainant is not entitled to any relief from this Forum against Opposite Party. In the result we answer point no.2 in the negative.
For the reasons discussed above, complaint deserves to be dismissed. Hence, we pass following order -
O R D E R
i.Complaint No.43/2008 is hereby dismissed.
ii.No order as to cost.
iii.Certified copies of this order be furnished to the parties.
