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/105/2019 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 13/06/2017 amounting to Rs.5,00,000/- (Rupees five lakhs) only, vide Reference no.11BR41 and Client Code DA01230,  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 January, 2019, 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 they claimed 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 opened a Trading and Demat Account with the Appellant/OP no.1, in the month of January, 2011 and the Respondent/Complainant had been allotted Client Code DA01230. But the Appellant/OP no.1 further stated that it had never received any sum of moneys, as claimed by the Respondent/Complainant. The A/c of the Respondent/Complainant was in “Dormant” stage since February, 2017 and no transaction of any sort had taken place in her A/c. It was further stated that the Respondent/Complainant had previously made several payments in her Trading A/c by cheques, in the name of the Appellant/OP no.1 and therefore the Respondent/Complainant, was well aware that any payment in her Trading A/c had to be made in the name of the Appellant/OP no.1. It was further mentioned that from the financial statement of the Respondent/Complainant that the Appellant/OP no.1 had not received any such payment from the Respondent/Complainant and the Appellant/OP no.1, was never a party to such dealing between the Respondent/Complainant and the Appellant/OP no.2, as it was a private dealing between them. Since the complaint referred to some Certificate/Policy, issued by the Appellant/OP no.2 to the Respondent/Complainant. It was further mentioned that from verification it could ascertained that the Certificate/Policy was forged/fabricated and not issued by the Appellant/OP no.1. 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, 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 though the Respondent/Complainant had been a client of the Appellant/OP no.1, but from her financial statements there is nothing to show that the Respondent/Complainant had deposited the amount of Rs.500000/- (Rupees five lakhs) only, to her A/c maintained by the Appellant/OP no.1. That apart she had been fully aware that the amount had to be deposited in the name of the Appellant/OP no.1 and thus her dealings with Appellant/OP no.2 was not binding upon 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.  It is not disputed that the Respondent/Complainant had an A/c with the Appellant/OP no.1. The only point of dispute is that the Appellant/OP no.1 had not received any Rs.500000/- (Rupees five lakhs) only, paid on 13/6/2017 and had corroborated the same by filing the Statement of the Respondent/Complainant, starting from 13/04/2011 till 31/03/2018 wherein the deposit of Rs.500000/- (Rupees five lakhs) only, deposited on 13/06/2017 is not reflected. Under the circumstance, this assertion of the Appellant/OP no.1, appears to hold true.

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 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/34/2023 & A/42/2023 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.