PER SHRI. S.B.DHUMAL - HON’BLE PRESIDENT :
1) In brief consumer dispute is as under -
That the Complainant has ‘FAST’ account bearing no.22505353993 with Opposite Party No.1-Standard Chartered Bank. “FAST” account is one in which shares and securities owned by the account holder are placed with the bank and overdraft facility is provided against those shares and securities, the extend of such overdraft facility and security being a percentage of the market value of the shares and securities which is calculated by the bank periodically. The overdraft limit thus fluctuates according to the stock market conditions. In the event of the withdrawals exceeding the limit computed by the bank, the account holder has to deposit money in his account to bring the balance within the revised overdraft limit, failing which the bank has a right to sell the shares and securities placed with it, and for this purpose the account holder has to execute a Power of Attorney in favour of the bank.
2) It is submitted by the Complainant that in the month of April, 2000, when he collected her bank statement she found a debit entry of Rs.1,35,525/-. Since no such payment was made by the Complainant. She made inquiry with the Opposite Party No.1 about the debit entry. Initially the staff of the Opposite Party No.1 was unable to account for the same and after considerable efforts, managed to find out that the entry was made for payment to a share broker under instructions of their Collection Manager. The Complainant found that the conduct of the first Opposite Party highly irregular and objectionable and against all principles of banking norms and practice which require every debit to be made under the authority of the account holder. In this case aforesaid debit entry was made without knowledge, consent or authority of the Complainant and even intimation of the same was not given to the Complainant and these amounts to deficiency in service on the part of Opposite Party and also constitutes a breach of trust. The Complainant in her letter dtd.07/04/2000 sent to the Opposite Party Opposite Party No.1, recorded aforesaid fact and called upon to reverse the said debit entry. Since no reply was received from the Opposite Party No.1, the Complainant’s husband personally approached various officers of the Opposite Party No.1 to make inquiries. During the course of discussion it was transpired that the said debit entry was made in respect of some objection regarding the sale of shares of Digital Equipments (India) Ltd. which had took place 2 years ago, somewhere in June, 1998.
3) In the month of June, 1998 the Opposite Party No.1 under the instructions from the Complainant, sold 100 shares of Digital Equipments (India) Ltd. The Complainant’s account was credited with the sale proceeds. The Complainant was not aware of what transpired thereafter till Rs.1,35,525/- was illegally debited from her account in April, 2000. After inquiry the Complainant found out that there was joint negligence on the part of both the Opposite Parties.
4) The procedure of selling shares is that the account holder executed a Power of Attorney in favour of the bank. The bank in turn gives a Power of Attorney to one of its officers to sign on its behalf. To empower the officer to sign the share transfer form on behalf of the bank, both the Powers of Attorney have to be lodged with the share transfer agents of the company when the shares have to be sold.
5) The Complainant had already collected and handed over a Power of Attorney on 01/12/1997 executed in favour of Opposite Party No.1, at the time of opening of “FAST” account. When the Complainant’s 100 shares of Digital Equipment (India) Ltd. were sold in June, 1998 by the Opposite Party No.1, the Opposite Party No.1 was required to lodge the said Power of Attorney executed by the Complainant in its favour empowering its officer to sell its shares on behalf of the Complainant. The Opposite Party No.1 was also required to lodge the Power of Attorney empowering a particular officer to sign on its behalf. However, Opposite Party No.1 had failed to comply with these formalities. Hence, the 100 shares of Digital Equipment (India) Ltd. which the complainant had sold through the Opposite Party No.1 could not be transferred to the name of the purchaser.
6) It is submitted by the Complainant the second Opposite Party without citing the correct objection as to why the said shares could not be transferred to the purchaser, sent a letter dtd.30/10/1998 to the purchaser informing him that the said shares could not be transferred as the transfer deed were signed the original share holders even though a Power of Attorney had been lodged. The reason given by the Opposite Party No.2 was incorrect, because transfer deeds were not signed by the Complainant as the original share holder but were singed by an official of the Opposite Party No.1. Moreover, the execution of a Power of Attorney confer on the constituted attorney to sign on the strength of such Power of Attorney, but in no way or manner does it affect, abridge, or restrict the right of the original holder to sign any document.
7) After 15 months, the Opposite Party No.2 sent to the purchaser another letter dtd.13/12/99 wherein objection and/or reason for the failure the transfer the said shares was given as failure of the Opposite Party No.1 to lodge the Power of Attorney on the basis of which the transfer deed had been signed by the Opposite Party No.1. On the basis of second objection and/or the reason for failure to transfers, the original purchasers claimed that there was bad delivery and applied to the Stock Exchange for auction of the shares at the prevalent market rate. Accordingly, the price of the said 100 shares of Digital Equipments (India) Ltd. was determined at Rs.1,35,525/-. The purchaser, through his broker, asked the Opposite Party No.1 to pay this amount. Then the Opposite Party No.1 without consent or authority of the Complainant and even without giving any intimation to the Complainant debited Complainant’s amount by Rs.1,35,525/-. It is submitted by the Complainant that unexpected and unanticipated debit of such a huge amount from the Complainant’s account caused a sudden deficit resulting in the debit balance exceeding the overdraft limit, charges and debits to the Complainant’s account and a threat to sell off her other shares in case of failure to make the necessary payment.
8) The Opposite Party No.2 wrote a letter dtd.1/04/2000 to Opposite Party No.1 enclosing therewith both the objection memo dtd.30/10/98 and 13/12/99. The aforesaid letter bears a date which is after the date the debit entry was made in the Complainant’s account. Since there was a difference in the two objection memos issued by the Opposite Party No.2. The Complainant called upon Opposite Party No.1 to produce proof as to when Powers of Attorney had been lodged by it. Then Opposite Party No.1 disclosed/produced relevant documents - a) Power of Attorney executed by the bank in favour of its officers registered on 12/01/98. b) Power of attorney executed by the Complainant in favour of the bank registered on 07/04/2000. According to the Complainant, when her 100 shares of Digital Equipments were sold in June, 1998 the Opposite Party No.1 failed to lodge Power of Attorney executed by the Complainant in its favour and the same were lodged belatedly nearly two years later, on 07/04/2000.
9) It is alleged that in order to force the Complainant to accept whatever debits entries are made, and other charges and penal interest are levied, the Opposite Party No.1 forced Complainant to singe blank acknowledgments of security and debt and threatening that in the event to failure to execute the same, the overdraft limit would be cancelled and the advance given would be recalled or realized by the invoking the security and the guarantee held by the bank. The Opposite Party No.1 by its letter dtd.14/12/2000 called upon Complainant to sign the blank acknowledgments of debt and security. It is contended that it is unfair trade practice on the part of Opposite Party No.1. Further Opposite Party No.1 refused to give settlement showing penal interest and other charges being levied. As per Complainant, she was made a scapegoat for the joint negligence, deficiency in service and unfair trade practice of both the Opposite Parties. It is contended that cause of action to this complaint arose in April, 2010 here account was illegal and unauthorizedly debited.
10) The Complainant has prayed to direct both the Opposite Parties jointly and/or severally to credit Complainant’s account by Rs.1,35,525/-. The Complainant has further prayed to direct Opposite Party to reverse all the consequential entries of penal interest and other charges levied as a result of debiting the Complainant’s account by Rs.1,35,525/-. The Complainant has claimed compensation for harassment and cost of this complaint from the Opposite Parties. Alongwith complaint, the Complainant has produced documents as per list of document.
11) Opposite Party No.1 has filed written statement and thereby resisted claim of the Complainant contending interalia that allegations made in the complaint are false, hence, complaint deserves to be dismissed with cost. It is submitted that Opposite Party No.1 is a Commercial Bank carrying on business of banking and allied services of financial institution under the laws applicable in India. Amongst other banking business, Opposite Party No.1 also advances money to its customer under the scheme named as F.A.S.T. (Finance Against Shares in Time). This scheme enables customers to avail of the overdraft facility against the shares. Terms and conditions are stipulated in the Agreement-cum-Guarantee-Pledge.
12) It is submitted by the Opposite Party No.1 that this Consumer Forum does not have jurisdiction to entertain this complaint since there is no delay, defect, deficiency or negligence on the part of Opposite Party. The Complainant is not a ‘consumer’ within the meaning of Sec.2(1)(d) and Sec.2(1)(c) of the Consumer Protection Act, 1986. Therefore, the complaint deserves to be dismissed with cost on this ground alone.
13) It is submitted that after filing of this complaint, Opposite Party No.1 has carried out complete investigation of the transaction in question. The Complainant on her own violation requested Opposite Party to sell 100 shares of M/s. Digital Equipment (India) from her said overdraft account. It was obligatory on her part to furnish forthwith, requisites documents such as duly executed share transfer form. This was not done by the Complainant in as much as share transfer form was not singed by the Complainant. This forced the Opposite Party No.1 to deliver the shares in the market through broker M/s. Dimensional Securities Pvt. Ltd., on 10/07/98 alongwith T.D. (Transfer Deed) singed by Collection Manager Mr.Anil Kaul of Opposite Party No.1 whose Power of Attorney was registered with Opposite Party No.2. In the meanwhile Opposite Party forwarded for registration to Opposite Party No.2 Power of Attorney executed by the Complainant in favour of Opposite Party No.1 on 20/07/98 under certificate of posting in compliance with the transaction. Opposite Party No.1 sold the shares in good faith by accepting request of the Complainant and credited Rs.13,270/- @ 133.70 (before brokerage and service charges) to her F.A.S.T. Account on 27/07/98. Thus, mandate under the contract was accomplished.
14) Subsequently Opposite Party No.1 came to know about bad delivery for the first time on 13/01/2000 when broker M/s. Dimensional Securities Pvt. Ltd. forwarded it letter dtd.10/01/2000 enclosing objection memo dtd.13/12/99 from Opposite Party No.1 to the buyer with a copy to a Complainant to the effect that the share transfer form was singed by the power of attorney holder but could not be acted upon since the same was not registered with Opposite Party No.2. The said letter also warned with rectification was to be by DEMAT FORM, last date being 22/01/2000 or else the shares to be auctioned. Despite Complainant being aware of said objection memo dtd.13/12/99, the Complainant never approached Opposite Party No.1. On the contrary upon receipt of aforesaid letter dtd.10/01/2000, Opposite Party No.1 informed the Complainant vides phonogram but the Complainant did not comply. Consequently, due to the non removal of objection under the memo, the shares in question were auctioned on 22/01/2000. Investigations carried out by Opposite Party No.1 further revealed that Opposite Party No.2 vide its letter dtd.30/10/98 had objection to the transfer of share for the reasons, that the signature of power of attorney holder are registered with them but transfer deed is signed by original holder. Opposite Party No.2 in its letter dtd.03/10/2000 and 03/11/2000 to the complaint stated that objection memo was incorrect. After 16 months of the sale, the transfer form had become invalid. But still Opposite Party No.2 chose to raise a different objection on 13/12/99. It is alleged that perhaps in collusion with and to accommodate the buyer Opposite Party No.2 issued memo at Exh.‘C’ to the complaint without a request from the buyer or even without a valid transfer deed. Had Opposite Party No.2 raised correct objection on 30/10/98 and communicated the same to Opposite Party No.1, the bad delivery could have been rectified easily by acquiring from the complainant fresh transfer form. At that point of time the shares were traded in physical form and the rectification could have also been done in physical form unlike the compulsion rectification in Demat Form at the time of second objection at Exh.‘C’. Lastly, in all fairness to the Complainant Opposite Party No.1 on behalf of Complainant appealed to B.S.E. but the same was rejected by B.S.E. for the reason that the matter is between client and company and not between the brokers. It is submitted that Opposite Party No.1 had no other option but to make payment to the exchange as per rules upon receipt of auction advice and debit the Complainant as the sale was effected upon the request made voluntarily by the Complainant herself and earlier credit of the said sale was made to her account. This was intimated to the Complainant and monthly statement was also sent to her in the routine course.
15) It is submitted that present case involves disputed questions of facts and law and therefore, this Forum has no jurisdiction to entertain and try this complaint therefore, the complaint be returned to the Complainant to file it before, competent Court. Opposite Party No.1 has denied allegations made in the complaint. It is denied that for the first time the Complainant came to know and the debit entry of Rs.1,35,525/- as alleged in the complaint. But according to the Opposite Party that Complainant had received the objection memo dtd.13/12/99 from Opposite Party No.2. It is expected on the part of Complainant to take action to avert bad delivery and the consequence auction. However, the Complainant never approached Opposite Party No.1 upon receipt of letter dtd.10/01/2000 about threatened auction. Opposite Party No.1 informed the Complainant with request to rectify bad delivery but the Complainant did not comply objection under the memo and so shares in question were auctioned on 22/01/2000. Opposite Party No.1 has denied allegations that Opposite Party No.1 acted without any authority or consent of the Complainant. It is contended that there is no deficiency in service on the part of Opposite Party No.1.
16) It is submitted by the Opposite Party No.1 that it was the Complainant who sought to regularize her F.A.S.T. Account by selling 100 shares of M/s. Digital Equipment (India) Ltd. The Complainant has also received credit of Rs.13,700/- in her F.A.S.T. Account as result of the said transaction. According to Opposite Party No.1, first objection memo dtd.30/10/98 was never sent to Opposite Party No.1by anybody. It is admitted that Complainant and her guarantor has executed P.O.A. in favour of Opposite Party No.1 on 01/12/97. However, it is submitted that the allegations that the Opposite Party No.1 did not forward T.O.A. to Opposite Party No.2 and also did not forward to the officer executing transfer are false. Form was sent to Opposite Party No.2 on 20/07/98 and later one was registered with Opposite Party No.2 since 12/01/98. Opposite Party No.1 was not aware of the first objection and therefore, there is no negligence on the part of Opposite Party No.1. First objection This was not correct since Opposite Party No.1 executed share transfer form under T.O.A. from the Complainant. Therefore, there is no question singing the same as the same was executed by authorized officer of Opposite Party No.1 whose T.O.A. was registered with Opposite Party No.2.
17) It is contended by Opposite Party No.1 that original purchaser 3rd party buyer never informed Opposite Party No.1 till January upon second objection or bad delivery which is resulted in running transfer from involved was illegal on the part of Opposite Party No.2 who have initiated objection memo dtd.13//12/99. The Opposite Party No.1 has denied allegation that Opposite Party No.1 debited Complainant without any knowledge, consent or authority. The Complainant at the time of request voluntary sell of 100 shares, the Complainant has failed to sent duly executed transfer form, therefore, Opposite Party No.1 is not responsible for the loss, if any caused to the Complainant. Opposite Party No.1 has denied allegations of unfair trade practice and deficiency in service and submitted that complaint deserves to be dismissed with cost. Alongwith written statement, Opposite Party No.1 has produced guidelines for customer to fill in account opening form, photo copies of promissory note, letter of continuity, agreement-cum-guarantee- pledge, power of attorney, copies of the letter sent to the Complainant, statement of account, etc.
18) Opposite Party No.2 has filed written statement and resisted claim of the Complainant contending that complaint is misconceived and bad in law and therefore, complaint deserves to be dismissed with cost. Complaint is also bad for non-joinder of necessary party. The broker through whom the Opposite Party No.1 had sold 100 Equity Shares of M/s. Digital Equipment (India) Pvt. Ltd. is necessary party and therefore, complaint is bad in law for non-joinder of necessary party. Opposite Party No.2 has also raised contention that this Forum has no jurisdiction to entertain and try this complaint as power to decide the matter relating to the shares and issue any orders which are not covered under the Consumer Protection Act.
19) It is submitted that Opposite Party No.2 is of Division of Tata Sons Ltd., acting as a Registrar and Share Transfer Agent of DEIL, whose shares subject matter of complaint. The Complainant is a registered shareholder of DEIL holding 100 Equity Shares, under Folio No.DEH3010. The Complainant had given a Power of Attorney in favour of Opposite Party No.1 to execute, sign or to do any act in respect of 100 Equity Shares of DEIL against which it appears, the Complainant had taken a loan from Opposite Party No.1. It is submitted that, it is mandatory for Opposite Party No.1 to register Power of Attorney granted by the Complainant with Opposite Party No.2 before delivering any securities in the market.
20) The share certificate of 100 Equity Shares of DEIL registered in the name of Complainant jointly with Mr. Hoshang Tata was lodged with Opposite Party No.2 for registration in the name of Mr. Bharat J. Patel (Transferee) during October, 1998. On scrutiny of the transfer documents lodged by Mr. Bharat J. Patel, Opposite Party No.2 had observed that transfer deed was signed by Opposite Party No.1 as the constituted attorney for the transferors. The power of attorney granted by the Complainant to the Opposite Party No.1 Bank to execute transfer documents etc. on their behalf was not registered with Opposite Party No.2, therefore, the transfer documents were returned under objection to transferee by TCS vide their objection memo no.6356 dtd.30/10/98. However, while generating the objection memo in the computer system, the officials of Opposite Party No.2 had inadvertently punched the wrong objection code due to which reason for objection in the memo was shown as “the signature of the Power of Attorney holder is registered with us but the transfer deed is signed by original holder. Opposite Party No.2 does not have received any revocation order of the Power of Attorney “instead of” the transfer deed is singed by Power of Attorney holder but the Power of Attorney is not registered with Opposite Party No.2.
21) Mr. Bharat J. Patel, prospective investor had realized after a gap of one year that the reason mentioned in the objection memo issued by Opposite Party No.2 is not appropriate and therefore, he had requested Opposite Party No.2 to issue objection memo with correct wording. Then Opposite Party No.2 issued fresh objection memo dtd.13/12/99, giving the correct reasons as “the transfer deed is signed by Power of Attorney holder but the Power of Attorney is not registered with us.” Memo was issued to Mr. Bharat J. Patel so as to enable him to deliver the same to the bad delivery cell of Stock of Exchange, Mumbai for replacement of the shares by the introducing broker. Mr. Bharat J. Patel delivered aforesaid letter dtd.13/12/99 to M/s. Dimensional Securities (P) Ltd. through broker. DSPL did not rectify the objection and therefore, Mr. Bharat J. Patel approached Stock Exchange, Mumbai, for assistance. The Stock Exchange, Mumbai, had subsequently auctioned these shares and debited the account of DSPL by sum of Rs.1,37, 925/-. DSPL therefore, had approached the Stock Exchange, Mumbai, Arbitration Department, to review the decision stating that Mr. Bharat J. Patel has misguided the bad delivery cell of the exchange as the 2nd objection memo was not a bad delivery and was only a request matter as per Stock Exchange, Mumbai, bylaws. The DSPLs request was rejected by the Stock Exchange, Mumbai, on technical ground and accordingly DSPL has debited this amount to the account of Opposite Party No.1 who in turn had debited the said amount to the account of Complainant on March, 2000 as claimed by her.
22) After receiving letter from Complainant, Opposite Party No.2 had investigated the matter and verified the records available with them. Opposite Party No.2 was also discussed the matter with officials of the Stock Exchange, Mumbai, and came to the conclusion that the whole issue was created due to the bad delivery of 100 equity shares by Opposite Party No.1 on behalf of Complainant by executing the transfer deed as Power of Attorney holder without registering the same with Opposite Party No.2. The Opposite Party No.1 had erred in introducing these shares in the market through DSPL before registering the Power of Attorney of the Complainant. DSPL had accepted the 2nd objection letter dtd.13/12/1999 issued by Opposite Party No.2 which they must not have accepted. It is contended that the transaction in question should have been treated as request and not as bad delivery. The Complainant and Opposite Party No.1 were fully aware that they were required to rectify the objection and submit fresh transfer deed duly executed by the Complainant so as to enable Mr. Bharat J. Patel to get the shares registered in his name. However, Complainant and Opposite Party No.1 have deliberately avoided the execution of fresh document which have resulted in the auction of these shares by the Stock Exchange, for which Opposite Party No.2 is not responsible.
23) According to the Opposite Party No.2, Opposite Party No.1 forwarded the Power of Attorney granted by the Complainant authorizing Opposite Party No.1 to execute transfer documents on behalf of Complainant to the Opposite Party No.2 only on 07/04/2000. Whereas, Opposite Party No.1 had sold and delivered 100 Equity Shares of the Complainant in the market during October, 1998 and did not rectify the position or register the Power of Attorney inspite of shares were returned unregistered by Opposite Party No.2. There is no deficiency on the part of Opposite Party No.2 and therefore, complaint against Opposite Party No.2 deserves to be dismissed.
24) The Complainant and Opposite Parties have filed numbers of documents. The Complainant has filed written argument. The Opposite Party No.1 & 2 have also filed their respective written arguments. The Complainant had filed an application to amend the complaint to join TSR Dara Shwa Ltd. as a Opposite Party No.3. However, the Complainant has not pressed this application. Heard oral submissions of Mr.Jahangir Ghai, Authorised Representative for the Complainant and Ld.Advocate – Mr. M.G. Barve for Opposite Party No.1. Opposite Party No.2 was absent. However, Opposite Party No.2 have filed written argument therefore, complaint was closed for order.
25) Following points arises for our consideration and our findings thereon are as under -
Point No.1 : Whether the Complainant has proved deficiency in service on the part of Opposite Party Nos.1 & 2 ?
Findings : Yes.
Point No.2 : Whether the Complainant is entitled to credit Rs.1,35,525/- in her FAST Account No.22505353993
which was with Opposite Party No.1 and offer direction to reverse all clients’ entries of penal interest and
other charges levied as result of debiting Complainant’s account by Rs.1,35,525/- and for compensation and
cost of this proceedings ?
Findings : As per final order.
Reasons :-
Point No.1 :- Factual matrix of this case are as under – that the Complainant has ‘FAST’ account bearing no.22505353993 with Opposite Party No.1-Standard Chartered Bank. “FAST” account is one in which shares and securities owned by the account holder are placed with the bank and overdraft facility is provided against those shares and securities, the extend of such overdraft facility and security being a percentage of the market value of the shares and securities which is calculated by the bank periodically. In the event of the withdrawals exceeding the limit computed by the bank, the account holder has to deposit money in his account to bring the balance within the revised overdraft limit, failing which the bank has a right to sell the shares and securities placed with it, and for this purpose the account holder has to execute a Power of Attorney in favour of the bank. The Complainant has executed Power of Attorney in favour of the bank. In the month of June, 1998, the Opposite Party No.1 under the instructions from the Complainant sold 100 shares of Digital Equipments (India) Ltd. and the Complainant’s account was credited with the sale proceeds.
The Opposite Party No.1 is a commercial bank carrying on business of banking and allied services of financial institution under the law applicable in India. Among other banking business Opposite Party No.1 also advances money to its customer under the scheme named as ‘Finance Against Sale in Time’. The Opposite Party No.2 is a division of Tata Services Sons Ltd. acting as Register and Share Transfer Agent of DEIL, whose shares are subject matter of complaint. The Complainant had given a Power of Attorney in favour of Opposite Party No.1 to sell the said shares. According to the Opposite Party No.2, it is mandatory for Opposite Party No.1 to register Power of Attorney granted by the Complainant with Opposite Party No.2 before delivering any securities in the market.
It appears from the evidence that the Share Certificate of 100 Equity Shares of DEIL registered in the name of Complainant jointly with Mr. Hoshang Tata was lodged with Opposite Party No.2 by transferee Mr. Bharat J. Patel during October, 1998. On scrutiny of transfer documents launched by Bharat J. Patel, Opposite Party No.2 noticed that Transfer Deed was assigned by Opposite Party No.2 as a Constituted Attorney for the transferees. However, the Power of Attorney granted by the Complainant to the Opposite Party No.1 bank to execute transfer documents, etc. on their behalf was not registered with Opposite Party No.2. Therefore, Opposite Party No.2 returned the said transfer documents under objection to transferee vide their objection memo no.6356 dtd.30/10/98. Opposite Party No.2 has admitted that while generating the objection memo in the computer system, the officials of Opposite Party No.2 had inadvertently punched the wrong code due to the reason for objection in the memo was shown as “the signature of Power of Attorney Holder is registered with us but the Transfer Deed is singed by original holder. We do not appear to have received any revocation order of Power of Attorney” instead of the Transfer Deed is singed by Power of Attorney Holder, but the Power of Attorney is not registered with Opposite Party No.2.
It appears that Mr. Bharat J. Patel, prospective investor, after gap of 1 year realised that reason mentioned in the objection memo issued by Opposite Party No.2 is not correct and therefore, he had requested Opposite Party No.2 to issue objection memo with correct wordings. Thereafter, Opposite Party No.2 has issued fresh objection memo dtd.13/12/99 giving correct reasons as “the Transfer Deed is singed by Power of Attorney Holder but the Power of Attorney is not registered with us.” Memo was issued to Mr. Bharat J. Patel, so as to enable him to deliver the same to the bad delivery sale of Stock Exchange Mumbai for replacement of the shares by introducing broker. Copy of first memo dtd.30/10/98 issued by Opposite Party No.2 was not sent to Opposite Party No.1. Copy of corrected memo dtd.13/12/99 was addressed to the Complainant. Mr. Bharat J. Patel delivered aforesaid memo dtd.13/12/99 to M/s. Dimensional Securities through broker. However, M/s.DSPL did not rectify the objection and therefore Mr. Bharat J. Patel approached Stock Exchange Mumbai for assistance. Stock Exchange Mumbai subsequently auctioned these shares and debited the account of DSPL by sum of Rs.1,37,925/-. DSPL therefore, had approached Stock Exchange Mumbai, Arbitration Department to review the decision stating that Mr. Bharat J. Patel had misguided the bad delivery of cell of exchange as the second objection memo was not a bad delivery and it was only a request matter as per Stock Exchange Mumbai bylaws. DSPL’s request was rejected by Stock Exchange Mumbai on technical ground and therefore, DSPL has debited this amount to the account of Opposite Party No.1 bank who in turn has debited the said amount to the account of Complainant on March, 2000. According to the Complainant in the month of April, 2000 when she collected her bank statement she found debit entry of Rs.1,35,525/- . Since no such payment was made to the Complainant. Somebody informed the Opposite Party No.1 about the debit entry. Initially staff of the Opposite Party No.1 was unable to account for the same. After considerable efforts the Complainant came to know about deficiency in service on the part of Opposite Party No.1 & 2 and that debit entry of Rs.1,35,525/- was made without her consent or authority by Opposite Party No.1. The Complainant wrote letter to Opposite Party to reverse the said debit entry but there was no reply from the Opposite Party therefore, the Complainant has filed this complain
Mr. Jahangir Ghai has submitted on behalf of the Complainant that it is admitted fact that the Complainant has FAST Account with the Opposite Party No.1. The Complainant had deposited her shares with Opposite Party No.1. One of the share scripts so deposited was 100 shares of Digital Equipment (I) Ltd. The Complainant has given instruction to Opposite Party No.1 for sale 100 shares of D.E.I.L. In the month of April, the Complainant noticed debit entry of Rs.1,35,525/- in her account. After enquiry she came to know the aforesaid entry pertained to the transaction of sale of 100 DEIL Shares.
It is submitted on behalf of Complainant, as per procedure of FAST Account, the Complainant had executed Power of Attorney in favour of Opposite Party No.1 – Standard Chartered Bank to enable the bank to signed Documents, Transfer Deed of Shares, etc. in her behalf. As per the procedure, the banks also executed a Power of Attorney in favour of its particular officer to authorize and enable him to sign on behalf of the bank. As per procedure Opposite Party No.1 bank was required to lodge Power of Attorney given by the Account Holder of FAST Account i.e. of Complainant and Power of Attorney given by the bank to its particular officer for a valid transfer of shares with Opposite Party No.2. However, in this case after receipt of instructions from the Complainant to sale 100 shares of DEIL, Transfer Deed was singed by the authorized officer of the bank. However, the Opposite Party No.1 failed to lodge Power of Attorney executed by the Complainant in favour of bank with Opposite Party No.2 who is acting as a Registrar and Share Transfer Agent of DEIL. Despite ample authority, Opposite Party No.1 failed and neglected to clear the objection by submitting relevant Power of Attorney. The Opposite Party No.1 warned that shares would be auctioned by Stock Exchange Mumbai for bad delivery and Opposite Party No.1 failed to do the needful and did not bother to inform the Complainant about the same. Subsequently shares were auctioned by Stock Exchange Mumbai in April, 2000. Subsequently Opposite Party NO.1 debited said amount in the Complainant’s account without any information to the Complainant. It is submitted that though 100 shares of DEPL were sold as per instructions of the Complainant in the month of June, 1998, the Power of Attorney executed the Complainant in favour of the bank was lodged only on 07/04/2000 i.e. after auction of the said shares by Stock Exchange. According to Mr. Ghai, aforesaid facts clearly established negligence and deficiency in service on the part of Opposite Party.
Ld.Advocate Mr. Barve on behalf of Opposite Party No.1 has submitted that there is no negligence or deficiency in service on the part Opposite Party No.1. Complaint is not valid as per Sec.2(1)(d) and 2(i)(c) of the Consumer Protection Act. Opposite Party No.1 acted as a prudent banker and therefore, complaint against Opposite Party No.1 be dismissed with cost.
It is submitted that after receipt of complaint of the Complainant, Opposite Party No.1 investigated the transaction and it was noticed that transfer form was not signed by the Complainant and therefore, Opposite Party No.1 was forced to deliver the shares in the market through broker M/s. Dimensional Securities Pvt. Ltd. on 10/07/98 alongwith Transfer Deed singed by the Collection Manager Mr. Anil Kadu of Opposite Party whose Power of Attorney was registered with Opposite Party No.2. In the meanwhile, Opposite Party forwarded for registration of Power of Attorney in favour of Opposite Party No.1 to the Opposite Party No.2 on/or about 20/07/98. In support of his contention Ld.Advocate referred to annexure Exh.‘C’ to the written statement. It is contended that Opposite Party No.1 sold shares in good faith by accepting the request of the Complainant and credited Rs.13,270/- in the Complainant’s FAST Account on 20/07/98. As such, mandate under the contract was accomplished.
According the Advocate Barve, for the first time on 13/01/02 Opposite Party No.1 came to about the bad delivery of 100 shares of DEIL from the copy of letter addressed to the buyer by Opposite Party No.2. In the aforesaid letter Opposite Party No.2 had warned that RECI Demat only – last date 22/01/2000 Else auction. The Complainant was already aware about the said objection memo but never approached Opposite Party No.1. Opposite Party No.1 vide phonogram informed the Complainant but the Complainant kept quite. Consequently due to the non removal of objection the share in question were auctioned on 20/01/2000. Opposite Party No.1 has admitted that first memo was incorrect. Copy of first memo was not sent to the Opposite Party No.1. It is alleged that there is collusion between the Complainant and Opposite Party No.2. If the Opposite Party No.2 raised correct objection on 30/10/98 and conveyed to the Opposite Party No.1 the bad delivery could have been rectified easily by obtaining from the Complainant fresh transfer form. On 30/10/98 share were traded in physical form and rectification could have been a physical form. As per the rules after auction of the share, Opposite Party No.1 had made payment to the Exchange. Subsequently, Opposite Party No.1 debited the amount in the Complainant’s account. It is vehemently submitted that there was no negligence on the part of Opposite Party and there is also no deficiency in service on the part of Opposite Party No.1 and therefore, complaint be dismissed with cost against Opposite Party No.1.
As mentioned above, Opposite Party No.2 in their written statement have admitted that Opposite Party No.2 is an acting as a Registrar and Share Transfer Agent of DEIL. According to Opposite Party No.2, it was mandatory for Opposite Party No.1 bank to register Power of Attorney by Complainant with Opposite Party No.2 before delivering any securities in the market. However, Opposite Party No.1 has not registered Power of Attorney given by the Complainant with Opposite Party No.1 and Mr. Bharat J. Patel, Transferee of 100 Shares of DEIL lodged share with Opposite Party No.2 for registration in October, 1998. On scrutiny of transfer document, Opposite Party No.2 noticed that Opposite Party No.1 is a Constituted Power of Attorney by Complainant but Power of Attorney given by the Complainant to Opposite Party No.1 to execute transfer document etc. was not registered with Opposite Party No.2 and therefore, transfer documents were under objection. It is admitted by the Opposite Party No.2 that as official of Opposite Party No.2 had inadvertently punched a wrong code incorrect objection memo was generated. Subsequently, at the instance of Mr. Bharat J. Patel objection memo was corrected, giving correct reason as “the Transfer Deed singed by Power of Attorney Holder but Power of Attorney is not registered with her”
The transaction in question took place during the period 1998 to 2000 i.e. prior to amendment of defination of ‘Consumer’ in Sec.2(1)(d)(ii) of the Consumer Protection Act, 1986, which come into effect from 15/03/2003. In the month of June, 2008, the Complainant had given instructions to Opposite Party No.1 to sale 100 Shares of Digital Equipment (India) Ltd. According to the Opposite Party No.1, after receipt of instructions from the Complainant Opposite Party No.1 delivered the Complainant’s 100 Shares of DEIL in the market through broker M/s. Dimensional Securities Pvt. Ltd. on 10/07/1998 alongwith Transfer Deed singed by their Collection Manager Mr. Anil Kaul, whose Power of Attorney registered with Opposite Party No.2. According to Opposite Party No.1 when the Complainant had given instructions for sale of 100 Shares of DEIL, it was obligatory on the part of Complainant to furnish duly signed Transfer Deed to Opposite Party No.1. But the Complainant failed to submit duly singed Transfer Deed. Therefore, Opposite Party No.1 was forced to deliver the said shares in the market through broker. If according to the Opposite Party No.1 duly singed Transfer Deed of the Complainant was necessary then it was possible for the Opposite Party No.1 to ask the Complainant to submit duly singed Transfer Deed. There is no evidence to prove that at any time Opposite Party No.1 asked the Complainant to give signed Transfer Deed in respect of said. Opposite Party No.1 alongwith written statement has produced Power of Attorney executed by the Complainant in favour of Opposite Party No.1 at the time of opening of FAST Account with the Opposite Party No.1. In the irrevocable Power of Attorney executed by the Complainant in favour of Opposite Party No.1, it is stated that the Complainant has authorized Opposite Party No.1 Bank to transfer shares or disposed off securities of the Complainant or any of them. To rectify remedy and remove any difficulty in Transfer Deed, etc. and to sign and execute all forms, contract, declaration and instruments as may be necessary or expedient for the purpose to give delivery thereof. In view of irrecoverable Power of Attorney executed by the Complainant in favour of Opposite Party No.1 signature of the Complainant on Transfer Deed was not required and therefore, we do not find substance in the contention raised by the Opposite Party No.1 that Transfer Deed in respect of the said shares ought to have been signed by the Complainant.
It reveals from the documents produced on record that as per procedure followed in such transactions, Opposite Party No.1 was required to register Power of Attorney given by the Complainant with Opposite Party No.2 who was acting as an Registrar and Share Transfer Agent of DEIL before delivery of the said shares in the market. In the instance case Opposite Party No.1 without registering Power of Attorney given by the Complainant in their favour with Opposite Party No.1, delivered the Complainant’s 100 Shares of DEIL in the market through broker Dimensional Securities Pvt. Ltd. Opposite Party No.1 had registered only Power of Authority executed by the Bank in favour of their Officer Mr. Anil Kaul. The said shares were purchased by Mr. Bharat J. Patel when Mr. Bharat J. Patel lodged transfer documents with Opposite Party No.2 that time Opposite Party No.2 scrutinized the said documents and it was found that Transfer Deed of Shares in question was singed by the Officer of the Opposite Party No.1 Bank, however, Power of Attorney given by the Complainant was not registered with Opposite Party No.2. Even though Opposite Party No.1 was assigned by well qualified officers, still Opposite Party No.1 committed mistake by delivering of 100 shares of Complainant of DEIL in market for sale without registering Power of Attorney executed by the Complainant in favour of Opposite Party No.1, with Opposite Party No.2 and it amounts to negligence and eficiency in service on the part of Opposite Party No.1.
Opposite Party No.2 has clearly admitted in their written statement that after scrutiny of documents submitted by Mr. Bharat J. Patel, they noticed that Transfer Deed was not singed by the Complainant and the Complainant’s Power of Attorney was not registered with Opposite Party No.2. However, while generating objection memo officer of Opposite Party No.2 had inadvertently punched the wrong objection code due to the reason for the objection memo, it shows as “Signature of Power of Attorney holder is registered with us but Transfer Deed is singed by the original holder.” Generating wrong objection memo is also deficiency in service on the part of Opposite Party No.2.
Opposite Party No.1, in their written statement have raised contention that on 20/07/98 they forwarded Power of Attorney executed by the Complainant in their favour to Opposite Party No.2 for registration under Certificate of Posting. Alongwith written statement the Opposite Party No.1 has produced photo copy of alleged certificate of posting. It bears postal stamp of Juhu Post Office dtd.21/07/98. It is addressed to Opposite Party No.2, but nowhere there is mention of name of Complainant original certificate of posting was not produced before this Forum for inspection. Documents produced at Exh.‘C’ alongwith written statement of Opposite Party No.3 appears doubtful and unsafe to rely. Opposite Party No.2 in their written statement have specifically stated that for the first time Opposite Party No.1 delivered Power of Attorney granted by the Complainant in favour of Opposite Party No.1 only on 07/04/2000 and the said Power of Attorney was registered by Opposite Party No.2 under Registration No.1066. Therefore, we do not find substance in the contention raised by the Opposite Party No.1 that on 20/07/98 Opposite Party No.1 has sent Power of Attorney executed by the Complainant in favour of Standard Chartered Bank to Opposite Party No.2 for registration.
It appears that when purchase of shares in-question Mr. Bharat Patel realised that objection memo prepared by Opposite Party No.2 is incorrect so he again approached Opposite Party No.2 to issue objection memo with correct wording. Accordingly Opposite Party No.2 issued objection memo with correct wording as “the Transfer Deed is singed by Power of Attorney holder but the Power of Attorney is not registered with us.” According to the Opposite Party No.2, the said memo was sent to Mr. Bharat J. Patel and its copy was forwarded to the Complainant. Alongwith complaint, the Complainant has produced copy of aforesaid objection memo at Exh.‘C’. As per Opposite Party No.2, it was sent to the purchaser Mr. Bharat J. Patel to enable him to deliver the same to the bad delivery cell of the Stock Exchange for the replacement of shares by introducing brokers. It appears that Mr. Bharat J. Patel had sent copy of objection memo to DSPL through broker but DSPL did not rectify the said memo. Therefore, Mr. Bharat J. Patel sent the said memo to Stock Exchange, Mumbai for assistance and subsequently said shares were auctioned and the amount of Rs.1,35,525/- was debited in the account of DSPL. DSPL approached to Stock Exchange, Mumbai to review decision contending that it was not bad delivery, but it was only request letter. The plead of DSPL was rejected by the Stock Exchange, Mumbai and therefore, DSPL debited the amount to the account of Standard Chartered Bank who in turn debited the said amount in the account of Complainant on 29/03/2000. Aforesaid debit entry was the ultimate result of deficiency of service on the part of Opposite Party No.1 and thereby the Complainant had suffered financial loss.
It appears from the document on record, copy of objection memo dtd.13/12/99 was not sent to Opposite Party No.1. According to the Opposite Party No.1 after receipt of copy of memo dtd.13/12/99 the Complainant has not taken steps to rectify the defect and therefore, ultimately shares were auctioned on 22/01/2000. In view of irrevocable Power of Attorney executed by the Complainant in favour of Opposite Party No.2 we do not find substance in the above said contentions raised by the Opposite Party No.1. As discussed above, the auction of 100 Shares of the Complainant of DEIL took place mainly due to mistake committed by the Opposite Party No.1 when the said Shares were delivered in the market through broker for sale. Hence, we hold that the Complainant has proved deficiency in service on the part of Opposite Party Nos.1 & 2. In the result we answer point no.1 in the affirmative.
Point No.2 : The Complainant has prayed to direct Opposite Parties to credit an amount of Rs,135,525/- in her account which was illegally debited by Opposite Party No.1. As discussed above, due to the deficiency in service on the part of Opposite Party No.1, the Complainant had suffered loss. Therefore, we think it just to direct the Opposite Party No.1 to credit an amount of Rs.1,35,525/- in the FAST Account of the Complainant bearing No.22505353993. The Complainant has further prayed to direct Opposite Party No.1 to reveres all the consequential entries of penal interest and other charges levied as a result of debiting the Complainant’s account by Rs.1,35,525/-. As mentioned above the Complainant had suffered financial loss mainly due to the mistake and deficiency in service on the part of Opposite Party No.1. Therefore, we think it just to direct Opposite Party No.1 to reverse all the consequential entries of penal interest and other charges levied as a result of debiting the Complainant’s account by Rs.1,35,525/-.
The Complainant has also prayed for compensation for mental agony and harassment form the Opposite Parties. As discussed above, the Complainant has proved deficiency in service on the part of Opposite Party Nos.1 & 2, therefore, we think it just to direct Opposite Party Nos.1 & 2 to pay Rs.10,000/- each as compensation to the Complainant and Rs.2,000/- each as cost of proceeding to the Complainant. Hence, we answer point no.2 accordingly.
For the reasons discussed above, we pass the following order -
O R D E R
i.Complaint No.61/2001 is partly allowed.
ii.Opposite Party No.1 shall credit an amount of Rs.1,35,525/- (Rs.One Lac Thirty Five Thousand Five Hundred
Twenty Five Only) in the Complainant’s FAST Account bearing No.22505353993 within 1 month from the date of
receipt of this order.
iii.Opposite Party No.1 shall reverse all the consequential entries of penal interest and other charges levied as a
result of debiting the Complainant’s account by Rs.1,35,525/-(Rs.One Lac Thirty Five Thousand Five Hundred
Twenty Five Only).
iv.Opposite Party Nos.1 & 2 shall pay an amount of Rs.10,000/- (Rs.Ten Thousand Only) each as compensation for
mental agony & harassment to the Complainant.
v.Opposite Party Nos.1 & 2 shall jointly and/or severally pay Rs.2,000/- (Rs. Two Thousand Only) each towards cost
of this proceeding to the Complainant.
vi.Opposite Party Nos.1 & 2 shall comply with the aforesaid order within period of 1 month from the date of receipt of
this order.
vii.Certified copies of this order be furnished to the parties.
