BEFORE THE CIRCUIT BENCH A.P.STATE CONSUMER DISPUTES REDRESSAL COMMISSION: AT VIJAYAWADA. OF 2008 AGAINST C.C.NO.7 OF 2007 DISTRICT CONSUMER FORUM-I, KRISHNA AT MACHILIPATNAM
Between
The Branch Head Karvy Stock Broking Ltd.,
Khojjilipet, Machilipatnam
Appellant/opposite party
A N D
Ch.N.V.Sriram S/o H.S.V.Prasad Rao
Hindu, Aged about 30 years, Occ: Business
D.No.15/317, resident of Machilipatnam
Respondent/complainant
Counsel for the Appellant Sri S.Prashanth Kumar
Counsel for the Respondent Sri M.Venkateshwarlu
QUORUM:
SRI SYED ABDULLAH, HON’BLE MEMBER
&
SRI R.LAKSHMINARSIMHA RAO, HON’BLE MEMBER
FRIDAY THE TWENTY NINETH DAY OF OCTOBER
TWO THOUSAND TEN
Oral Order ( As per R.Lakshminarsimha Rao, Member)
***
1. The opposite party in C.C.No. 7 of 2007 on the file of the District Forum, Krishna at Machilipatnam has filed the appeal challenging the order whereby it was directed to transfer the 40 MRF shares from the trading account of the complainant to his DEMAT account and it was directed to pay an amount of `5,000/- towards compensation and `1,000/- towards costs.
2. The respondent had been trading in shares through the appellant company for the last two years preceding the date of the complaint. By 8th November,2006 the respondent had 46 MRF shares in his account bearing number 311049 which the respondent instructed the appellant to transfer to his DEMAT account number 1419034. The appellant did not pay attention to the request of the respondent. The respondent had sent a telegram in this regard and personally visited the office of the appellant on 10th November, 2006 and submitted a written representation requesting for transfer of the 43 MRF shares to his DMAT account. The complainant had issued notice dated 16th November,2006 the receipt of which was acknowledged by the respondent. The non transfer of the MRF shares when the stock market was high said to have caused loss to the respondent which according to him constitutes deficiency in service on the part of the appellant company.
3. The appellant resisted the claim contending that the respondent is not consumer in view of his utilizing the service of the appellant stock exchange broking company for commercial purpose. 40 MRF shares were transferred on 2nd May, 2006, due to clerical mistake , from the common pool account of the appellant company to the respondent’s trading account bearing settlement number 2006079. During the periodical review of the respondent company’s account, its head office realized the discrepancy in the month of October,2006. The head office of the appellant company informed the respondent of the erroneous transfer of excess 40 shares in his account and then transferred back the 40 MRF shares from the account of the respondent to the common pool account of the appellant company. The respondent sold the shares in settlement numbers, 2006196, 2006198, 2006199 and 2006208 on 12-05-2006 and 15-05-2006 and received the payment of `2,50,000/- from the appellant company through cheque bearing number 501446 dated 2nd June,2006.The error reflected in the copies of the contract note and statement of account of the appellant company was communicated to the respondent. The appellant company claimed that there was no deficiency in service on its part in getting back the 40 MRF shares to its common pool account.
4. The respondent has filed his affidavit. Ex A1 to A5 were marked on his side.
5. K.Uma Maheshwer Reddy, the authorized signatory of the appellant company had filed his affidavit in support of the claim of the appellant company and got marked ExB1 to B13.
6. Feeling aggrieved by the order of the District Forum, the appellant company filed the appeal contending that the District Forum has no jurisdiction to entertain the complaint in view of the terms of the agreement providing for reference of the matter to arbitrator. The District Forum had dismissed the petition, I.A.No. 12 of 2007 seeking for referring the matter to the arbitrator. It is contended that the respondent failed to prove how and when he purchased the 43 MRF Company shares. The respondent had conducted business to the tune of `.8,75,03,413/- for the financial year 2005-2006 and `16,08,43,558/- for the financial year 2006-2007 which reflects the commercial nature of the transactions. The head office of the appellant company could not prevent the respondent from selling 3 MRF company shares as it was not brought to its notice else it could have prevent the sale of the 3 MRF company shares.
7. The points for considerations are:
1. Whether the District Forum has no jurisdiction to entertain the
complaint?
2. Whether the appellant was negligent in not transferring the 43 MRF
company shares from the trading account of the respondent to his
DMAT account?
3. Whether the respondent is entitled to the transfer of 43 MRF
company shares?
4. To what relief?
8. POINT NO1: The appellant company had filed an application before the District Forum seeking for referring the matter to an arbitrator. The reliance was placed on the terms of the agreement that provides for reference of the dispute to an arbitrator. The District Forum had answered the question referring to the application filed by the appellant company which was dismissed by a detailed order and the appellant company had not filed any revision against the dismissal of its application. The remedy provided under Section 3 of the Consumer Protection Act is additional remedy to the remedies provided under the common law. The reference to the arbitration of any suit in the light of Section 8 of the Arbitration and Conciliation Act and the clause in any agreement in regard to the arbitration proceedings is not applicable to the proceedings initiated invoking the provisions of the Consumers Protection Act. Therefore, the contention of the appellant company that the District Forum has not jurisdiction is not sustainable.
9. POINT NO2: The respondent buying and selling the shares through the appellant company is not disputed. It is contended on behalf of the appellant company that due to clerical error, 40 MRF shares were transferred in excess from the appellant company’s pool account into the respondent’s trading account on 22-05-2006 through settlement number 2006079. It was submitted that the head office of the appellant company realized the mistake in the month of October,2006 and after intimating the respondent in writing about the transfer of excess 40 shares ,the head office of the appellant company transferred the 40 MRF shares back to the common pool account of the appellant company in four transactions,11 shares on 16th October,2006 through settlement number 2006196, 15 shares on 18th October,2006 through settlement number 2006198, 8 shares on 19th October,2006 through settlement number 2006199,and 06 shares on 2nd Novemberr,2006 through settlement number 2006208. The learned counsel for the respondent submitted that appellant company failed to prove the short fall of 40 shares. It was contended that by 8th November, 2006 the respondent in his account had 43 MRF shares which were sought to be transferred from his trading account to his DEMAT account and failure of the appellant company to transfer the shares invited a telegram notice dated 9th November,2006 followed by the personal visit and letter dated 10th November,2006 and finally notice dated 16th Novemeber,2006 got issued through advocate of the respondent. Subsequently, the respondent sold 3 MRF shares and by the date of filing the complaint, the respondent had 40 MRF shares in his account in respect of which shares the damages have been claimed by filing the complaint on the premise that as the trading was not done when the MRF shares had high stock market value, the respondent sustained loss due to inaction of the appellant company.
10. The appellant company had not given any response to the request of the respondent for transfer of the 40MRF shares from his trading account to his DEMAT account. The letter dated 5th October,2006 issued by the appellant company informing the respondent that the 40MRF shares were traced out at the time of trading account of the complainant and requested the respondent to transfer those shares to their account. The respondent had denied receipt of the letter. The appellant company had not filed acknowledgement of the letter. The district Forum has opined that the dispatch of the letter 5months after the head office of the appellant company found the discrepancy in the number of the shares would throw shadow on the contention of the appellant company buying and selling statement of complainant’s trading account of the respondent issued by the Notational Stock Exchange would show that the respondent had not purchased any MRF shares. The appellant company had transferred back 43 MRF shares from the respondent’s account to its common pool account in four transactions,11 shares on 16th October,2006 through settlement number 2006196, 15 shares on 18th October,2006 through settlement number 2006198, 8 shares on 19th October,2006 through settlement number 2006199,and 06 shares on 2nd Novemberr,2006 through settlement number 2006208.The failure on the part of the appellant company to give reply ipso facto does not entitle the respondent to the 40 MRF shares. The respondent had failed to show that he had purchased the 40MRF shares from a certain company or issued instructions to the appellant company to purchase the shares. Any transaction in this regard must be in consonance with the statement of account of the respondent issued by the National Stock Exchange. The respondent is not entitled to the 40 MRF shares in question.
11. The appellant company by mistake credited 43 MRF shares to the trading account of the respondent. In the normal course, as it was under bonafide mistake the appellant company is held entitled to get back the 43 MRF shares. The appellant company had got back only 40 shares and permitted the respondent to sell the remaining 3 MRF shares. The appellant was not conscious of the 3 shares till the respondent has come up with the plea that by virtue of his selling the 3 MRF shares right under the nose of the appellant company and the reticence maintained by the appellant company would prove his entitlement to the MRF shares. The appellant company thus is estopped from claiming the 3 MRF shares or the value thereof. The appellant company by its attitude had certainly caused mental tension to the respondent though he had not suffered any material loss. The impugned order to the extent of transfer of 40 MRF shares from the trading account of the respondent to his Demat account is liable to be set aside and the rest of the order does not warrant any interference.
12. In the result, the appeal is allowed. The order dated 5th December,2007 passed by the District Forum is modified to the extent of extent of direction to the appellant company to transfer of 40 MRF shares from the trading account of the respondent to his Demat account is set aside. The rest of the order is upheld. In the circumstances of the case, there shall not be any costs. Time for compliance four weeks.
MEMBER
MEMBER
Dt.29.10.2010
KMK*
