Sri Shyamal Gupta, Member

The complaint case since been allowed by the Ld. District Forum, aggrieved with such decision, this Appeal is preferred by M/s ICICI Prudential Mutual Fund Company.

Brief narrative of the complaint case are that the Complainant, attracted by the rosy picture drew up by the OP No. 4 about the future prospect of mutual fund product being floated by the OP Nos. 1 to 3, decided to invest his hard earned money with the OP Nos.  1 to 3 and accordingly issued requisite cheques besides complying with necessary formalities.  In due course of time, the OP Nos. 1 to 3 sent policy documents to the Complainant.  Later on, for the purpose of meeting his financial need, the Complainant approached the OP Nos. 1 to 3 for encashment of the Folio and return of the money invested with its normal appreciation.  However, to the utter surprise of the Complainant, the OP Nos. 1 to 3 informed that there was zero unit in his Folio.  After severe perseverance of the matter with them, he came to know that notwithstanding proceeds of the cheques issued by him were duly realized by the OP Nos. 1 to 3, thanks to wrong attachment of cheques, proceeds thereof was utilized for the purpose of issuance of policies in favour of another person, who incidentally happened to be an employee of the OP No. 4.  As vigorous follow up of the matter with the OPs did not yield any positive result, the instant complaint case was filed.

By filing WV, the OP Nos. 1 to 3 submitted that, on receipt of cheques from the Complainant, they issued provisional units in favour of the Complainant.  However, as the cheques were subsequently dishonoured, by issuing a letter dated 02-07-2009, OP No. 3 communicated the fact of cancellation of the units to the Complainant.  After long five years, the Complainant enquired about his investment from the OP No. 3, when again the Complainant was apprised of the actual position.

On the other hand, the OP No. 4 in its WV stated that it was engaged in the distribution of mutual funds and other investment products.  As a distributor of mutual fund, its role was limited to creating awareness about mutual funds amongst prospective investors.  All details of investors, along with details of cheques/drafts accompanying the application forms used to be deposited with the mutual fund companies by the investors  and thereafter  due processing started.  This OP denied that it was an agent of the OP Nos. 1 to 3.  

Decision with reasons

Notice was duly served upon all the Respondents.  However, the Proforma Respondent, i.e., Respondent No. 3 did not participate in this proceeding; other Respondents duly defended their case through their respective Ld. Advocates.

Ld. Advocate appearing on behalf of the Appellants disputed the maintainability of the complaint case on the ground that the instant case was hopelessly time-barred.  Further, it was argued by him that since the complaint case pertains to alleged fraud, it was not a consumer dispute at all. 

On due consideration of the submission advanced by the Ld. Advocate appearing on behalf of the Appellants regarding the maintainability of the case and after going through the material on record, however, we found no substance into the contention of the Appellants.

It is claimed by the Appellants that the fact of dishonor of cheques were duly communicated to the Respondent No. 1 by issuing necessary letters in the year 2009 itself and in order to prove such fact, they filed copies of some letters that they allegedly issued to the Respondent No. 1.

However, on scrutiny of the concerned letters, we find that the same are printed on plain papers.  Surprisingly, in struck contrast, all other letters on record are found to be made on company letter heads.

Further, no credible poof is put forth on record by the Appellants in order to establish the despatch of purported letters and receipt of the same by the addressee, i.e., the Respondent No. 1.

It is hardly believable that despite knowing about arbitrary cancellation of units, the investor would not raise any hue and cry and remain a mute spectator for long five years. 

We have also noticed that in none of the letters issued in the year 2014, the Appellants made any whisper about issuance of any letter to the Respondent No. 1 in this regard way back in the year 2009.

If preponderance of probabilities is anything to go by, there is no reason to disbelieve the claim of the Respondent No. 1 that he got wind of the alleged mess for the first time in the year 2014, when he approached the Appellants for pre-mature encashment of the funds. 

Seen against this backdrop, filing of the complaint case in the year 2015 does not suffer from any sort of infirmity.  Objection raised on behalf of the Appellants in this regard is not at all tenable.

The complaint case, for all intents and purposes, had been filed over alleged negligence on the part of the Appellants/Respondent No. 2, who, according to the petition of  complaint, faltered in ensuring issuance of proper certificates in favour of the Respondent No. 1 despite receipt of due premium from him.  There can be no manner of doubt that the nature of complaint, as stated in the petition of complaint, perfectly falls within the realm of consumer dispute.  Accordingly, on this score too the instant complaint was very much maintainable before the Ld. District Forum.  

As regards the merit of the complaint, it is clearly manifested from the bank statement of the Respondent No. 1 that requisite money was debited from the account of the Respondent No. 1.  Undisputedly, proceeds thereof reached the coffers of the Appellants. Since the Respondent No. 1 did not personally deposit the application/proposal forms, but through the Respondent No. 2, if any goof-up took place in attaching correct cheques along with the application/proposal forms, the Respondent No. 1 cannot be made to bear the brunt under any circumstances. 

The entire imbroglio, as it appears, arose over wrong attachment of cheques along with the proposal forms. Although the Respondent No. 2 sought to distance itself stating that it was not an agent of the Appellants and its function stood confined to creating awareness about mutual funds amongst investors, the proposal forms belies their contention.  Perusal of the photocopies of proposal forms reveals that the Respondent No. 2 happened to be the agent of the Appellants bearing Agency Code No. ARN-0006. 

Being the agent of Appellants, it was the bounden duty of the Respondent No. 2 to ensure proper submission of documents with the Appellants which, palpably, it failed to ensure leading to the misery of the Respondent No. 1.  Thus, it was a clear instance of gross deficiency in service on its part.

The Appellants too cannot shrug off their vicarious responsibility in the matter, more so, as they did not take any positive step to put the record straight when the Respondent No. 1 brought the matter to their notice. 

In our considered opinion, therefore, the instant complaint was rightly allowed by the Ld. District Forum. Having said that, we cannot endorse the decree passed in the matter in its entirety.  First of all, it seems that the Ld. District Forum completely exonerated the Respondent No. 2 of all liabilities in the matter although it was primarily responsible for the entire situation.  Secondly, it appears that the Ld. District Forum awarded both interest and compensation which is not permissible in law.  It also transpires that the Ld. District Forum imposed penal damages upon the Appellants.  In  the peculiar facts and circumstances of the case, it appears to us that imposition of such cost was unwarranted.  For all these reasons, we are inclined to modify the impugned order as under.

The Appeal, accordingly, succeeds in part.

Hence,

O R D E R E D

The Appeal stands allowed on contest in part against the Respondent No. 1.  The impugned order is modified as under:

Appellants shall refund, within 40 days from today, the deposited sum of Rs. 2,94,000/- to the Respondent No. 1 along with simple interest @ 9% p.a. over the aforesaid sum of Rs. 2,94,000/- w.e.f. 29-04-2015 till full and final payment is made.   Respondent No. 2 shall pay compensation to the tune of Rs. 60,000/- to the Respondent No. 1 for its abject failure to ensure proper submission of documents with the Appellants.  Non-compliance of this order within 40 days henceforth shall make it liable to pay simple interest @ 9% p.a. over the sum of Rs. 60,000/- w.e.f. 29-04-2015 till full and final payment is made. Appellants shall also pay jointly/severally along with the Respondent No. 2, litigation cost to the tune of Rs. 10,000/- to the Respondent No. 1.

Let the LCR be returned to the Ld. District Forum together with a copy of this order.