KUNDAN KUMAR KUMAI

These are the appeals u/s 15 of the Consumer Protection Act, 1986, preferred by the OP no.1 and OP no.2 of CC/106/2019 respectively, against the order passed by the Ld. DCDRF, Cooch Behar on 30/01/2023.

The Appellants’ case in brief is that, the Respondent/Complainant being a senior citizen had purchased a Certificate from the Appellant/ OP no.1 through Appellant/OP no.2, the Agent of the Appellant/OP no.1., on 15/09/2017 amounting to Rs.5,00,000/- (Rupees five lakhs) only, vide Reference no.11BR89 for the maturity period of five years, on the ground that the above Certificate could be encashed, if required within a short period. Subsequently, when the Respondent/Complainant needed money and had been to the office of the Appellant/OP no.2, for obtaining the pre-maturity amount in the month of December, 2018, but the Appellant/OP no.2, failed to refund the Respondent/Complainant, in spite of repeated requests, causing hardship to the Respondent/Complainant. This non-cooperation by both the Appellants, in refunding of her initial amount resulted in deficiency of service, following which the Respondent/Complainant filed a claim case before the Ld. DCDRF, Cooch Behar, with necessary prayers.

The Appellant/OP no.1, contested the claim by filing a written version, wherein the claim that they were share and stock brokers having SEBI Registration No. INZ000165135 and also the Trading Member of Bombay Stock Exchange Ltd. & National Stock Exchange of India Ltd. It was also depository participant, duly registered with CDSL. It was also mentioned that the Appellant/OP no.2, was registered as authorized person of the Appellant OP no.1 and the role of the Appellant/OP no.2, was to provide  services to the clients of the Appellant/OP no.1, only in respect of business activities, carried on by the Appellant/OP no.1 and could not act beyond the Broker-Authorized Person Relation, as laid down in the Broker-Authorized Person Regulation. It was further stated that if the Appellant/OP no.2 acted beyond the Broker-Authorized Person Relation or carried out any business activity, which is not the business of the Appellant/OP no.1, the Appellant/ OP no.1 was not at all responsible for any such act of the Appellant/OP no.2. The Appellant/OP no.1 had also terminated the registration of the Appellant/OP no.2, as authorized person vide its letter dated 13/12/2018. It was further mentioned that the Respondent/Complainant had not opened any A/c with the Appellant/OP no.1 and the Respondent/Complainant was not registered with it. As such, the Respondent/Complainant was not a client of the Appellant/OP no.1 and there was no privity of contract between them. It was apparently a private/independent transaction between the Respondent/Complainant and the Appellant/OP no.2, for which the Appellant/OP no.1 should not be held responsible. It was further stated that the complaint of the Respondent/Complainant is based on a Certificate, issued by the Appellant/OP no.2 and the Appellant/OP no.1 was not aware of such Certificate/Policy. The Respondent/Complainant failed to establish any proof of payment to the Appellant/OP no.1, nor the acceptance of the same by the Appellant/OP no.1. It was also stated that the Appellant/OP no.1 was not authorized by the SEBI to offer and provide any such services and as such denied receiving any such payment, from the Respondent/Complainant through the Appellant/OP no.2. That apart it was mentioned that the Respondent/Complainant had invested to make profits and the same was made for commercial purpose and outside the purview of definition of consumer as laid down in Consumer Protection Act. It was further prayed that the case be dismissed.

From the written arguments put forward, the case made out on behalf of the Appellant/OP no.2, is simply that the investment made by the Respondent/Complainant, was with a view to making profits and therefore the Respondent/Complainant could not be bracketed within the definition of consumer, as defined in Consumer Protection Act, as the investment made, was for purely commercial purpose.

After going through the evidence and materials on record, the Ld. DCDRF, Cooch Behar passed the impugned order directing the Appellants to refund Rs.5,00,000/- (Rupees five lakhs) only, jointly and severally with interest @ 6% p.a. along with Rs.50,000/- (Rupees fifty thousand) only for as compensation, mental pain, agony and harassment and Rs.50,000/- (Rupees fifty thousand) only, for deficiency in service and Rs.15,000/- (Rupees fifteen thousand) only, as litigation cost, within 45 (forty-five) days, from the date of the impugned order.

Being aggrieved by the impugned order, the Appellants preferred this instant appeal on the ground that the Ld. DCDRF, Cooch Behar, had erred in law and facts, while passing the impugned order.

Decisions with Reasons

Ld. Advocate for the Appellants, at the time of final hearing, had submitted that the Respondent/Complainant, could not produce any document to show that she had paid Rs.500000/- (Rupees five lakhs) only, to the Appellant/OP no1. For which reason, the Respondent/Complainant was never a customer of the Appellant/OP no.1. It was further argued that the Appellant/OP no.1 were share and stock brokers having SEBI Registration No. INZ000165135 and also the Trading Member of Bombay Stock Exchange Ltd. & National Stock Exchange of India Ltd. It was also depository participant, duly registered with CDSL. They could only provide services with appropriate Client Code and a Trading and Demat Account, maintained with them. But, the Respondent/OP no.1 was never a customer of the Appellant. It was also submitted that the Appellant/OP no.2, was registered as the authorized person of the Appellant/OP no.1, to provide services to the clients of the Appellant/OP no.1 only in respect of business activities carried out by the Appellant/OP no.1 and could not act beyond the Broker-Authorized Person Relation and as such any business activities, if any, performed by the Appellant/OP no.2, which was beyond the  Broker-Authorized Person Relation, was not at all the responsibility of the Appellant/OP no.1. That apart, the registration of the Appellant/OP no.2 had been terminated by the Appellant/OP no.1 vide its letter dated 13/12/2018. Moreover, the selling and buying of shares for earning future interest does not lie within the purview of definition of consumer u/s 2(d) of the Consumer Protection Act. The impugned order had been further assailed on the ground that reliance had been made on the judgement passed in M/s. Kirti Consultants Vs. Sukhdev Savitra Salve by the Hon’ble NCDRC in Revision Petition No.1692/2001, on the ground that against the money paid by the Complainant, shares had never been allotted, whereas in the instant case the Respondent/Complainant failed to show that the money had been paid to the Appellant/OP no.1. Furthermore, the Respondent/Complainant had failed to satisfy the exemption as laid down in section 2(d) of the Consumer Protection Act, 1986. Ld. Advocate for the Appellants had relied in the judgement passed in Morgan Stanley Mutual Fund Vs. Kartik Das with Dr. Arvind Gupta Vs. SEBI & Ors. by the Hon’ble Supreme Court reported in (1994) Supreme Court Cases 225 and Baidyanath Mondal Vs. Kanahaya Lal Rathi & Ors. by the Hon’ble NCDRC reported in 2022 SCC on-line NCDRC 62.

Ld. Advocate for the Respondent/Complainant, on the other hand submitted that the instant appeal had been filed without any specific ground and also had not enclosed vital documents intentionally and the Ld. DCDRF, Cooch Behar, had rightly relied in the judgement passed in M/s. Kirti Consultants Vs. Sukhdev Savitra Salve by the Hon’ble NCDRC in Revision Petition No.1692/2001. Thus, the impugned order be upheld and the instant appeals be dismissed. He had also filed a copy of the Annexure A which is a receipt showing deposit of Rs.500000/- (Rupees five lakhs) only in the name of the Appellant/OP no.1.

The Appellant/OP no.1 had maintained throughout that, the Appellant/OP no.1 were share and stock brokers having SEBI Registration No. INZ000165135 and also the Trading Member of Bombay Stock Exchange Ltd. & National Stock Exchange of India Ltd. It was also depository participant, duly registered with CDSL. They could only provide services with appropriate Client Code and a Trading and Demat Account, maintained with them. Against this assertion, there is nothing in the cross-examination nor any evidence forthcoming from the Respondent/Complainant to contradict and dispute the above assertion of the Appellant/OP no.1. Hence, the assertion of the Appellant/OP no.1 being uncontroverted has to be accepted. That apart with the Appellant/OP no.1 asserting that a customer with the Appellant/OP no.1, needed to be registered with appropriate Client Code and with Trading and Demat Account, the Respondent/Complainant was duty bound to prove the same. But the failure on the part of the Respondent/Complainant to do so results in the assertion of the Appellant/OP no.1 being true. The only document in the possession of the Respondent/Complainant is a computer-generated receipt, allegedly handed over by the Appellant/OP no.2, but having no details with regard to Client Code nor the name of the Franchisee, the Appellant/OP no.2, nor bearing the LOGO of the Appellant/OP no.1. Under the circumstance, the above-mentioned receipt not only fails to inspire confidence, but rather enhances the assertion made by the Appellant/OP no.1.

However, having observed the above, the Appellant/OP no.1 cannot absolve itself from liability simply by maintaining that it had terminated the registration of the Appellant/OP no.2 vide its letter dated 13/12/2018, as on the date of alleged occurrence the relation between the Appellant/OP no.1 and the Appellant/OP no.2 was still persisting and which may have led to the Respondent/Complainant to invest in the Policy. It is a different matter that the Appellant/OP no.2 may have misled the Respondent/Complainant, but the Appellant/OP no.1 also cannot escape its vicarious liability by hiding behind the Broker-Authorized Person Regulation and the termination of the registration of the Appellant/OP no.2.

Since it is well established that the Appellant/OP no.1 was dealing in shares and capital market, it is established law, as on date that the Respondent/Complainant is not a consumer under the Consumer Protection Act in view of the judgement passed in Morgan Stanley Mutual Fund Vs. Kartik Das with Dr. Arvind Gupta Vs. SEBI & Ors. by the Hon’ble Supreme Court reported in (1994) Supreme Court Cases 225, still holding good.

However, in view of the observations and findings made above, the Respondent/Complainant is at liberty to proceed with civil and criminal actions in order to recover her investments against both the Appellant/OP no.1 and the Appellant/OP no.2.

In view of the above the instant appeals succeed.

It is therefore

                                                ORDERED

That the instant appeals A/33/2023 & A/43/2023 be and the same are allowed on contest, but without costs.

The impugned order is hereby set aside.

Copy of the order be sent to the parties, free of cost.

Copy of the order be sent to the Ld. DCDRF, Cooch Behar, for necessary information.

Statutory deposits, if any, in both the appeals mentioned above, be returned from whom received.

Jt. Registrar, Siliguri Circuit Bench of WBSCDRC, to do the needful.