1.       The present Revision Petition (RP) has been filed by the Petitioner against Respondents as detailed above, under section 58 (1) (b) of Consumer Protection Act 2019, against the order dated 25.10.2021 of the State Consumer Disputes Redressal Commission, Delhi (hereinafter referred to as the ‘State Commission’), in First Appeal (FA) No. 533 of 2010 in which order dated 20.05.2010, District Consumer Disputes Redressal Forum, New Delhi (hereinafter referred to as District Forum) in Consumer Complaint (CC) No.CC/1081/06  was challenged, inter alia praying for setting aside the impugned order dated 25.10.2021 in FA/533/2010.

2.       While the Revision Petitioner was Appellant and the Respondents were Respondents in the said FA/533/2010 before the State Commission the Revision Petitioner was OP-1 and Respondents No.1 & 2 were Complainants No.1 & 2 and Respondent No. 3 was OP-2 before the District Forum in the CC/1081/06. For the sake of convenience, parties will also be referred to as they were arrayed before the District Forum.  Notice was issued to the Respondents on 15.12.2022. Petitioner filed the written arguments on 07.07.2023. The Respondents No.1 & 2 filed their written arguments/synopsis on 19.12.2022 and again submitted their written arguments on 04.07.2023.

3.       Brief facts of the case, as emerged from the RP, Order of the State Commission, Order of the District Commission and other case records are that:-

(i)      In December 2005, public issue of ICICI Bank opened.  As per the terms of the public issue, i.e. Clause 40 of Form 2A it was informed that each investor was required to submit one Cheque of full amount alongwith the Application Forum. The complainants jointly applied for 100 equity shares in the public issue of the ICICI Bank opened in December 2005. The application No. 43716506 was submitted through their stock broker M/s D.B. International, for the purchase of 100 shares of ICICI Bank in the said initial Public Offering. The complainants submitted two cheques dated 05.12.2005 for Rs.11,000/- (drawn on UCO Bank) and Rs.4,000/- (drawn on Bank of Baroda).   On 23.12.2005, Complainant No.1 issued letter to the Bank’s Registrar i.e. Karvy Computershare Pvt. Ltd. claiming that they have not received any acknowledgement or intimation in respect of the application made for allotment of shares.  In response to Complainants’ letter, M/s Karvy Computershare sent an email on 29.12.2005 informing that the Application made by the Complainants was not received for processing.  The complainants were advised to approach the Bidding Centre with whom they had lodged the Application Form.  On 03.01.2006, the complainants were informed by M/s Karvy Computershare that they are unable to locate their application and requested the Complainants to share details such as Application Number, Cheque No., Issue Date, Amount and the Name of the Bank and Branch. Later, details regarding the bank clearance serial number were also sought.  The Complainant submitted the concerned details on 09.01.2006.  M/s Karvy issued another letter on 13.01.2006 calling upon the complainant to submit the correct details of the application number and the details of the cheques as the query of the complainant was not processed due to mismatch in application details. On 24.01.2006 complainants submitted its application details to M/s Karvy Computershare.  In the month of January 2006, the complainant visited the branch where in it was intimated to the Complainant that as per terms of the issue i.e. Clause 40 of Form 2A, only one cheque was required to be submitted alongwith the application form. However, the complainants had filed more than one cheque, hence the application of the complainants was rejected and they may collect the cheque and application form, the complainants failed to collect his cheque and application form. 

(ii)     The complainants issued letters dated 18.02.2006 and 27.03.2006 to Dy. Manager Bombay Stock Exchange submitting the details of the alleged incident and demanding that the complainants be allotted the 100 shares as applied by them. The complainants filed a complaint vide letter dated 24.04.2006 before the Dy. Manager Securities & Exchange Board of India, Bombay Stock Exchange requesting the authorities to intervene and to allot the Complainants 100 shares as applied by the complainants.  ICICI Bank Ltd. vide letter dated 12.05.2006 intimated that the application for allotment of shares of the complainants was rejected being in violation of Clause 40 of Form 2A.   M/s 3i Infotech issued letter dated 15.05.2006 to the complainant/Respondent No.1 informing that since the complainant issued two cheques drawn on two different banks, the application for allotment of shares was rejected being in violation of Clause 40 of Form 2A.  It was also informed that the public issue has already been closed in December 2005.  The complainant again sent a letter to the Bank on 22.05.2006 reiterating that the shares as applied by the complainant be allotted to him.  The complainant also quoted the clause 40 of Form 2A in the letter. Hence, the complainants filed complaint before the District Forum. 

4.       Vide Order dated 20.05.2010, in the CC no. 1081 of 2006the District Forum allowed the complaint by passing the following order:-

      “OP should allot shares to complainant as on same basis as shares have been allotted to other applicants and of the same price has been allotted to others.  If they have no shares they should buy from the market and get those transferred to the complainant.  OP should pay dividends distributed by the company to share holders from the date of the allotment to till date.  OP should pay Rs.60,000/- as compensation for harassment and mental tension as they are senior citizens and OP should also pay Rs.40,000/- as litigation.” 

5.       Aggrieved by the said Order dated 20.05.2010 of District Forum, Petitioner/Bank appealed in State Commission and the State Commission vide order dated 25.10.2021 in FA No.533 of 2010 has dismissed the Appeal and upheld the order dated 20.05.2010 passed by the District Forum in CC-1081/2006.  The State Commission directed that the order of District Forum shall be complied with on or before 26.11.2011, failing which, the Appellant/Petitioner herein shall be liable to pay an amount of Rs.80,000/- as compensation instead of the amount of Rs.60,000/- as allowed by the District Forum.  FDR along with interest accrued till date, shall be released in favour of the Respondents No. 1 & 2, to be adjusted as the amount of compensation, litigation cost and if the same exceeds the aforesaid two heads, the amount of dividend payable, in terms of the District Forum.

6.       Petitioner/Bank has challenged the said Order dated 25.10.2021 of the State Commission mainly on following grounds:-

(i)      the State Commission failed to appreciate that the Hon’ble Supreme Court in the case of Morgan Stanley Mutual Fund Vs. Kartick Das reported as 1994 SCC (4) 225 has held that a prospective investor is not a consumer to prefer a complaint under the Consumer Protection Act, 1986.  Prospective investor does not become a consumer as defined under the Act.   Hon’ble Supreme Court in the said case also noted that Consumer Disputes Redressal Forum has no jurisdiction whatsoever in such cases of prospective investors.

(ii)     The State Commission erred in not appreciating that the Hon’ble Supreme Court in Special Leave to Appeal (Civil) No. 5401 of 2013 titled Ganapathi Parmeshwar Kashi and another Vs. Bank of India & Anr., held as “………The DMAT account was opened by the petitioners purely for commercial transactions.  Therefore, they were rightly not treated as consumer so as to entitle them to claim compensation by filing complaint under the 1986 Act.”

(iii)    The State Commission ought to have appreciated that the complainants were only prospective investors and not consumers of ICICI Bank Ltd. There is no purchase of goods for a consideration nor again could he be called the hirer of the services of the company for a consideration.  The shares are not ‘goods’ as defined under Section 2(1)(1) of the Act. An application for allotment of shares cannot constitute goods.  No service was offered by ICICI Bank to complainants since ICICI Bank is not trading in shares.  The object of issuing shares is for building up capital.  It is not a practice relating to the carrying of any trade.  No member of the public has a right or entitlement to a share of the company making an issue of capital for the first time.

(iv)    The State Commission ought to have appreciated that the complainants cannot be given the benefit of their own wrongdoings.  It is an admitted position that the complainants filed two cheques with their application.  As per Clause 40 Form 2A each application should be accompanied by a cheque or draft. As such the rejection of application was in accordance with the terms and conditions of the issue.

(v)     The State Commission failed to appreciate that purchase and trading is inherently speculative and the same is governed by SEBI Act, 1992.  The State Commission ought to have dismissed the complaint of the complainants and directed them to approach appropriate authorities.

(vi)    The State Commission erred to appreciate that the clauses 46 & 47 which provided for ‘the right to reject bids’  and ‘grounds for technical rejection’ respectively were only indicative and not exhaustive.  The said Red Herring Prospectus also uses word ‘interalia’ in Clause 47 thus signifying that there could be other grounds not mentioned specifically in the said clauses basis which a bid could be rejected.   The State commission erroneously accepted the contentions and averments of the Respondent and failed to appreciate the facts before it and established principle of law, and thus, committed grave error in law in allowing the complaint.

7.       Heard counsels of both sides.  Contentions/pleas of the parties, on various issues raised in the RP, Written Arguments, and Oral Arguments advanced during the hearing, are summed up below.

7.1     During the arguments, the Petitioner in addition to repeating what has been stated under the grounds, under para (6) above, contended that in response to the queries of Respondents/complainants the Petitioner duly informed the complainants in writing vide letter dated 12.05.2006 of the status of their Application for allotment of shares.  The Complainants had only filed an application for allotment of shares.  Complainants cannot claim to be consumer until shares are actually allotted to them.  As such complainants were only prospective investors and not consumers of ICICI Bank Ltd.  The law has been settled by the Hon’ble Supreme Court in the matter of Morgan Stanley Mutual Fund vs. Kartick Das (supra).  It was later held by the Hon’ble Apex Court that it is only after allotment that the shares come into existence thereby making them ‘Goods’.  It will then follow that only after the allotment the shares will be considered as “Goods” to fall in the mischief of the Consumer Protection Act, and till the allotment in the words of the Hon’ble court in the matter of R.D. Goyal V. Reliance Industries Ltd., (2003)  1 SCC 81:2002 SCC. “In Sri Gopal Jalan case after examining the various decisions, Sarkar, J., observed:  

“It is beyond doubt from the authorities to which we have earlier referred, and there are many more which could be cited to show the same position, that in Company law 'allotment' means the appropriation out of the previously unappropriated capital of a company, of a certain number of shares to a person. Till such allotment the shares do not exist as such. It is on allotment in this sense that the shares come into existence.

“39. In view of the aforementioned authoritative pronouncement of this Court it must be held that shares pending allotment in view of the provisions of law as thence existed could not be said to be goods."

No member of public can claim as a matter of right when shares are offered for first time in an IPO.  Allotment is on pro rata basis subject to the approval of the application filed by such investors.

No money was paid by the Complainants to ICICI Bank Ltd.  Buying and selling of shares is a commercial activity and cannot come within the scope of Consumer Protection Act.

7.2.    It is contended by the Petitioner that the impugned order of the State Commission is against precedents laid by this Commission and Hon’ble Supreme Court of India. This Commission in a catena of judgments has held that sale purchase of shares is a commercial purpose and trading in shares is purely commercial activity and only motive is to earn profit and the complainant is not a consumer.

7.3.    On the other hand Respondents contended that complaint is categorically covered under section 2(1)(c)(iii) as their Bid-Cum-Application was duly accepted with 2 cheques but was not processed due to deficiency in service and the complaint is also definitely a ‘Consumer Dispute’ as defined under section 2(e) because the ICICI Bank does not deny/dispute the allegations, and the ‘deficiency’ complained is also a fault, imperfection, shortcoming or inadequacy on the part of ICICI Bank as defined under Section 2(g). Hence, complaint is definitely covered under sections 2(1)(c)(iii), 2 (1) (E ) & 2 (1)(G) of Consumer Protection Act, 1986 and therefore is maintainable & deserves to be decided by this Commission.   The judgment referred to by the Petitioner Bank in Morgan Stanley Mutual Fund case does not apply to the present case as the present case falls under Section 2(1)(C)(iii) of the Consumer Protection Act, 1986 whereas the aforesaid judgment dealt only with Section 2(1)(C) (i) & (ii) of the Act as mentioned in the judgment.  In the present case there was definitely deficiency in Service and the Case is squarely covered by the judgment of this Commission in The New India Assurance Co. Ltd. Vs. Kishore P. Mastakar (FA No. 541 of 1994).  It was only after long lapse of 6 months period and only after the directions of BSE, the Bank rejected the application giving specious reasons.  Thus, there is gross deficiency of service on the part of ICICI Bank in barring the application of the complainants from consideration and not even communicating their decision to the complainants and finally after 6 months rejecting on the wrong grounds.  The State Commission has  already held in SBI Life Insurance Co. Ltd. Vs. Ashok Sardana FA-08/1087 in Para 16 that “In view of having come across thousands of such cases where the rightful claims of the consumers were rejected due to the act of omission and commission of the insurance companies in not presenting the cheque of premium on the same day or the next day and not intimating the insured about the dishonouring of the cheque in writing so as to facilitate the insured consumer to make payment in cash or through any other mode……”

7.4     It is further contended by the Complainants that in the present case, though there is no condition in Clause 46  & 47 stating the grounds for rejection of Bid-cum-Application- that Bid must be accompanied with only one cheque, yet  even if the ICICI Bank thought it so, it could have informed the complainant on his phone number duly mentioned in the Application Forum to enable him to make payment by single cheque, which it never did and that is definitely the deficiency in the conduct of the Bank. Complainants have relied upon the judgement of Hon’ble Supreme Court in Ghaziabad Development Authority Vs. Balbir Singh (2004) 5 SCC65.  Stock Brokerage Services, ICICI Bank, 9- A, Connaught Place, N.D. -1 as Respondent No. 3, which has long back merged with ICICI Bank’s new Company –“ICICI Securities”.  When both the Companies have now merged, then the Bank cannot make its non-existent company.  Hence, the best solution is that the Bank should transfer 100 shares to the Accounts of complainants and the complainants will make immediate payment, without interest to ICICI Bank as per order passed by the Fora below.

8.       In this case, the only reason for rejection of application of the complainants for allocation of 100 equity shares of OP ICICI Bank in the IPO was that two cheques were submitted along with application instead of one cheque.  Letter dated 12.05.2006 of OP/ICICI Bank stated that according to terms and conditions of the issue, the investor was required to submit only one cheque along with the application, as per clause 40 of Form 2A made available with the application form, as the application was accompanied by two cheques drawn on two different banks, it was rejected.  We have carefully gone through the relevant documents in this regard and find that there is no such condition that categorically states that application should be accompanied by only one cheque.  As long as application is otherwise in order and is accompanied by the requisite amount, it ought not to have been rejected on the sole ground of being accompanied by more than one cheques.  At the most, if the ICICI Bank found it to be a defect, should have informed the applicant, within the time-lines of last date of submission of application, giving an opportunity to the applicant to rectify the defect and resubmit the application before the last date, which the ICICI Bank has not done.  Hence, the applicant was justified in presuming that his application, which is otherwise in order, would be a valid one as it was accompanied by requisite amount, though in the form of two cheques, instead of one.  As was held by Hon’ble Supreme Court in Ireo Grace Realtech Pvt Ltd Vs Abhisekh Khanna and  Ors (2021)3 SCC 241 Hon’ble Supreme Court held “the provisions of Consumer Protection Act have to be construed in favour of the consumer to achieve the purpose of enactment as it is a social benefit oriented legislation.” Consumer Protection Act is a beneficial legislation, in case of any ambiguity, the clauses must be read in favour of consumer.  Hence, we are of the view that there was no bar in submitting the application with requisite amount in two cheques, instead of one. 

9.       We have carefully gone through the order of State Commission as well as District Forum.  They have duly considered various contentions raised by the OP/ICICI Bank and given a speaking and well-reasoned order.  We do not find any reasons to interfere with the same.  As was held by the Hon’ble Supreme Court in Rubi Chandra Dutta Vs. United India Insurance Co. Ltd. [(2011) 11 SCC 269], the scope in a Revision Petition is limited. Such powers can be exercised only if there is some prima facie jurisdictional error appearing in the impugned order. In Sunil Kumar Maity Vs. State Bank of India & Ors. [AIR (2022) SC 577] held that “the revisional jurisdiction of the National Commission under Section 21(b) of the said Act is extremely limited. It should be exercised only in case as contemplated within the parameters specified in the said provision, namely when it appears to the National Commission that the State Commission had exercised a jurisdiction not vested in it by law, or had failed to exercise jurisdiction so vested, or had acted in the exercise of its jurisdiction illegally or with material irregularity.”  

10.     We do not find any irregularity or material irregularity or jurisdictional error in the orders the State Commission or District Forum.  Hence, the order of State Commission dismissing the Appeal for Petitioner herein (ICICI Bank) is upheld.  Revision Petition is dismissed.  Parties to bear their respective costs.

11.     The pending IAs in the case, if any, also stand disposed off.