CONSUMER DISPUTES REDRESSAL FORUM (CENTRAL)

ISBT KASHMERE GATE DELHI

CC/449/2016

No. DF/ Central/                                                                      Date

Rakesh Kumar Anand

S/o Lt. Sh. J.C. Anand

R/o C-1/13, Ground Floor, Rana Pratap Bagh,

Delhi-110007.                                                                           …..COMPLAINANT  

 VERSUS

M/S. SMC Global Insurance Ltd.

11/6B, Shanti Chambers, Pusa Road,

New Delhi-110005.                                                               …..OPPOSITE PARTY

Quorum  : Ms. Rekha Rani, President

                 Mr. R.S. Nagar, Member

                 Ms. Manju Bala Sharma, Member

ORDER

Ms. Rekha Rani, President

1.       Instant complaint has been filed by Sh. Rakesh Kumar Anand (in short the complainant) against M/S. SMC Global Insurance Ltd. (in short OP) under Section 12 of the Consumer Protection Act as amended pleading therein that he is a retail investor investing in equities for the last many years.  In June/July, 2014 he had put a question on Zee Business regarding his investment in Nestle where Gaurav Bajaj was one of the expert panelist.  Gaurav Bajaj persuaded the complainant to open a fresh Dmat and Trading account with SMC Global Securities Ltd. and start trading in Future and Options.  Gaurav Bajaj assured the complainant that he would not incur any loss or damage.  Complainant signed blank forms and transferred certain shares from his previous account to Dmat and Trading account with SMC Global Securities Ltd.  Trading stated on 11.08.2014 as per the advice of Asif Iqbal of Brainex.  Complainant was informed by Gaurav Bajaj that he had left Brainex and that Asif Iqbal had incurred losses in complainant’s account.  Gaurav Bajaj assured the complainant of recovering losses by transferring his account to another franchise controlled by him.  Complainant had no choice but to follow Gaurav Bajaj.  Trading continued in his account without taking any prior order or instructions from the complainant which caused heavy losses to him.  Complainant was defrauded by giving wrong assurances and guarantees.  Complainant was always informed about the trades telephonically when he used to be in hospital or in traffic and orders were never discussed properly with him.  Complainant does not have record as to which trades were confirmed by him.  When the complainant saw what transactions were taking place from his account he objected to the same.  Gaurav Bajaj told the complainant not to worry as he was a trading account expert.  On these allegations complainant has filed the instant complaint to give directions to OP to pay him a sum of Rs. 9,42,842/- being the amount of loss incurred by him due to authorized trading, Rs. 26,995/- towards interest on the above said amount, Rs. 6,00,000/- as compensation for having suffered mental agony and Rs. 15,000/- as litigation cost.

2.       OP appeared and contested the claim vide its reply.  We have heard complainant in person and Sh. Puneet Bhatia counsel for OP.

3.       Learned counsel for OP vehemently submitted that the complainant had invested money in shares and debentures i.e. trading which is a commercial transaction with a sole motive to earn profit thus the activity is purely commercial activity and is not covered under the provision of the Act. It was also submitted that complainant had already raised the same issue before NSE and for the disposal of the same, sole arbitrator was appointed by NSE, who after considering submissions and documents from both the parties, decided the matter in favour of OP vide arbitral award dated 06.07.2015.  The complainant filed appeal against the said award before the Appellate Arbitral Tribunal which dismissed the said appeal on merit in favour of OP vide Appellate Arbitral award dated 08.01.2016.  It is further submitted that the instant complaint is liable to be dismissed on the principle of Res-Judicata as the issues in the present complaint having been previously decided by the sole arbitrator and the Appellate Arbitral Tribunal.  It is also submitted that the complainant is not a consumer and that there was no deficiency in service as complainant had invested money in shares and debentures i.e. trading which is a commercial transaction with sole motive to earn profit thus the activity is purely commercial activity.

4.       In Neeraj Bhope & Anr., Bharatha Laxmi Vetsa & Anr. , Souvik Khamaru vs. Alpine Housing Development & Ors., III (2013) CPJ 58 (Kar.),

In Satish Kumar Pandey & Ors. vs. Unitech Ltd., III (2015) CPJ 440 (NC),

In Bharat Sanchar Nigam Ltd. vs. Ambika Singh, III (2010) CPJ 265 (U.P.) and in World Wide Immigration Consultancy Services vs. K.R. Shambhu, III (2010) CPJ 349 (Ker.) it was held that availability of arbitration as remedy does not bar complainant from approaching consumer Forum in case of deficiency in services.

In Ashminder Pal Singh vs The New India Assurance Co. Ltd Complaint No.C-47/2002 vide order dated 27.03.2009 State Commission Delhi observed that it has been stated in the order of the Hon’ble High Court dated 12.07.2005 that the award passed by the Insurance Ombudsman dated 03.12.2001 is not binding on the complainant. It was further observed as under :

“33. As regards the verdict of Ombudsman relied upon by the counsel for the OP it is neither binding though may be persuasive nor has any relevance as the remedy under section 3 of Consumer Protection Act 1986 is in addition to and not in derogation of any other law for the time being in force. While widening the scope of Section 3 of Consumer Protection Act, Supreme Court in large number of cases has taken a view that even if there is remedy available in any other legal forum or even if there is arbitration clause between the parties, still the aggrieved party can file complaint under Section 12 of the Consumer Protection Act 1986 seeking indemnification of the loss, compensation for mental agony, harassment, physical discomfort and other injustices suffered by him as no other statute provides such reliefs .”

          Accordingly, submission of learned counsel for OP that the complaint is barred by Res-Judicata is rejected.

5.       Learned counsel for OP has referred to the judgment of National Commission in City Bank N.A. vs. Universal Trading Corporation, First Appeal No. 188 of 1993 dated 18.05.1999 wherein it was observed:

“8. …..  In view of the questions of fact and law involved in this case, we are of the considered opinion that an elaborate enquiry into the market value of the shares at the relevant time and the settlement of accounts between the parties as a result of sale/market value of the shares and the outstanding or as to when the account of the Complainant should have been closed or whether there was any contract between the parties authorising the Citibank to sell excess shares or whether the Complainant has suffered any damages on account of the breach of contract can be satisfactorily adjudicated only in regular Civil Court and not before the Forums under the Consumer Protection Act.”

6.        Counsel for OP has further referred to Judgment of National Commission in Som Nath Jain vs. R.C. Goenka and Ors., Original Petition Nos. 18 to 27 of 1993 dated 21.10.1993 in which it was observed:

“In any case, it is evident from narration of facts stated above that elaborate evidence will have to be taken regarding purchase/sale of shares, their prevailing process in the market.  Again, the transactions of sale and purchase were made on telephonic instructions.  So elaborate evidence will have to be taken to establish what were the precise instructions given by the complainant to the respondent, broker etc.  Further allegations of fraud and manipulation of accounts cannot be decided on the basis of affidavits.  This is, therefore, not a fit case to be dealt with by the Consumer Forums.  These Original Petitions are, therefore, dismissed reserving liberty to the complainants to the complainants to seek redress for the alleged wrong done to him by the opposite party/respondent in a Civil Court, if so advised.”

7.        He has further referred to the judgment of National Commission in Vijay Kumar vs. Indusind Bank Revision Petition No. 3986 of 2011 in First Appeal No. 556 of 2010 in which it was observed:

“13. Petitioner has nowhere pleaded in its entire complaint that he is doing share trading business as self-employment for livelihood. Nor it has been alleged that the services provided by the respondent, were being availed of exclusively for the purpose of earning of his livelihood by means of self-employment by the petitioner. Dispute between the parties relating to commercial purposes are excluded under the Act.

14. Since, petitioner has been trading regularly in the shares which is a commercial transaction and for which he has also availed the over draft facility from the respondent, as such he would not be a consumer as per Section 2 (1)(d)(ii) of the Act. Moreover, regular trading in the purchase and sale of the shares is a commercial transaction and the only motive is to earn profit.”

8.       Complainant himself has submitted in Para 1 of his complaint that he is a retail investor investing in equities for the last many years. 

          In A. Asaithambi vs. M/S Satyam Computer Services Ltd. & Ors. Revision Petition No. 1179 of 2012, National Commission vide its order dated 01.08.0212 observed:

“9. The complainant has nowhere pleaded in the complaint that he is dealing with shares business as self-employment for livelihood. Nor it has been alleged that the services provided by respondents were being availed of exclusively for the purpose of his livelihood, by means of self-employment, by the complainant.

It must be borne in mind that disputes between the parties relating to commercial purposes are excluded under the Act. This view stands fortified by a recent authority of this Commission, reported in Vijay Kumar Vs. Indusind Bank, II 2012 CPJ 181 (NC).

10. Again, such like question arose for consideration before National Commission in case of Som Nath Jain Vs. R.C. Goenka & Anr, reported in 1 (1994) CPJ 27 (NC). In that case, dealing with sale purchase of shares, National Commission expressed serious doubt whether the complaint qua it would be maintainable under the Consumer Protection Act. Because, qua such transactions, elaborate evidence need to be taken regarding purchase and sale of shares, their prevalent price in the market and evidence regarding passing of instructions by client to the broker. Resultantly, the complainants were relegated to get the dispute decided through civil court.

11. West Bengal State Consumer Disputes Redressal Commission, Kolkata, in case Ramendra Nath Basu Vs. Sanjeev Kapoor & Anr., reported in 1 (2009) CPJ 316 qua share trading has held that transactions between parties do not come under purview of Consumer Protection Act, 1986.

12. Similar view was taken by the Delhi State Consumer Disputes Redressal Commission, New Delhi in case Anand Prakash Vs. A.M. Johri & Ors., reported in III (2000) CPJ 291, by holding that sale purchase of shares are commercial transactions, so, complainant is not a consumer in such cases.”

          National Commission referred to judgment of Supreme Court in Morgan Stanley Mutual Fund vs. Kartick Das (1994) 4 SCC 225 wherein it was observed that a prospective investor is not a consumer under the Act. 

9.       In Sanjay Chandra Agarwal vs. India Bulls Securities Ltd., I (2015) CPJ 450 (NC), National Commission held that share transactions are not carried out by way of self-employment for earning livelihood and therefore the complainant is not a consumer.

10.     In Steel City Securities Ltd. vs. G.P. Ramesh, I (2014) CPJ 576 (NC), National Commission held that trading in shares is purely commercial activity and only motive is to earn profits.  Therefore the complainant is not a consumer.

11.     In Balvantkumar Gyanchand Mittal vs. Networth Stock Broking Ltd., II (2015) CPJ 535 (NC), National Commission held that trading in shares and speculative business are outside purview of consumer.  Therefore the complainant is not a consumer.

12.     In Gautam Das (Dr.) vs. Sun Pharmaceuticals Industries Ltd., II (2010) CPJ 276 (NC), Equity shares were allotted.  Duplicate shares were transferred to third person.  Shares were subsequently dematerialized.  Shares were never sold by share holder.  Alleging deficiency in service complaint was filed.  National Commission observed that shareholders are not consumers under Section 2(1)(d)(ii) of the Act.  Complaint is not legally maintainable.

13.     In Nagraj Narayan Katti vs. ITC Ltd., 1 (2014) CPJ 485 (NC) it was held by National Commission that Consumer Fora is not armed with power to decide question of shares as it entails huge evidence which cannot be decided in summary procedure. 

14.     In Ashok Dogra vs. India Bulls Securities Limited, II (2010) CPJ 61 (Chd.) Complainant alleged that shares were traded by OP officials without authority.  He alleged deficiency in service and unfair trade practice.  Complaint was dismissed holding dispute did not fall under Consumer Protection Act.  Contention of the complainant that he invested in shares for earning livelihood was rejected.  It was held that purchase of shares is done for earning huge profits which is commercial in nature and therefore complainant was not a consumer.  It was also held that allegations of fraud cannot be gone into by the Consumer Fora.

15.     In Anit Properties Pvt. Ltd. vs. HDFC Bank Ltd., I (2014) CPJ 168(NC), National Commission held that Consumer Fora has no jurisdiction to decide case of shares.

16.     In Vimal Raosaheb Chougule, Raosaheb Sidhapa Chougule (Dr.) vs. Stock Holding Corporation of India Ltd. & Ors., IV (2013) CPJ 34 (NC), National Commission observed that allegations of the complainant regarding fraudulent transfer of shares is not a consumer dispute and therefore Consumer Fora has no jurisdiction.

17.     In Ashutosh Pankajbhai Desai vs. Bharatkumar Ranchhoddas Rana, I (2014) CPJ 324 (NC), R.R. Equity Brokers Pvt. Ltd. vs. Dinesh Kumar Jaiswal, III (2014) CPJ 396 (NC), Krishan Lal Lalra vs. Religare Securities Ltd., II (2015) CPJ 338 (NC) and V.K. Agarwal (Dr.) vs. Infosys Technologies Ltd. & Ors., I (2013) CPJ 373 (NC), National Commission held that regular trading in sale and purchase of shares is purely commercial activity and only motive is to earn profits.

18.     The complainant has himself pleaded that he is a retail investor investing in equities for the last many years.  He has nowhere pleaded that he is thereby earning livelihood by way of self-employment.  He has further made allegations of fraud and cheating in making transactions of crores of rupees through his account.  In view of the aforesaid judgments the transaction carried on by the complainant is purely commercial and the allegations regarding fraud and cheating qua said transactions are beyond the jurisdiction of the Consumer Fora.  The complaint is therefore dismissed.  Copy of this order be sent to the parties as statutorily required.  File be consigned to record room.

Announced on           Day of                       2019.