By Smt. C.S. Sulekha Beevi, President,

Facts that give rise to the above complaints are the same and opposite parties are also same. The question to be considered is the same in all matters and so the cases are disposed together by this common order.

1. In response to the capital issue floated by Maruthi Udyog during June, 2003, inviting applications for allotment of equity shares of Rs.10/-, at a premium of Rs.115/- per share, the complainantin O.P.No.336/03 applied for allotment of 1000 shares and a demand draft for Rs.1,15,000/- was taken by him. The complainant in O.P.No.337/03 applied for 200 shares and a demand draft for Rs.23,000/- was taken by him. The complainant in O.P.No.338/03 applied for 100 shares and a demand draft for Rs.11,500/- was taken by him. The complainant in O.P.No.339/03 applied for 300 shares and a demand draft for Rs.34,500/- was taken by him. The duly filled application forms along with demand draft was handed over to Sri.V.Surendran, Lakshmi Investments Services, Nilambur. This Surendran handed over the entire documents along with similar applications to Sri.Shankar, Manager, Financial Services, ICICI Bank, Cochin. That later these papers along with demand draft was handed over to second opposite party who is appointed by Maruthi Udyog as authorised agent. The last date for bidding was 19-6-2003. After this date complainants came to know that they were not alloted any shares and so approached V. Surendran and enquired the matter. Complainants were informed that second opposite party had bid and lodged the entire applications with first opposite party Bank on 19-6-2003 itself. When complainants contacted Maruthi Udyog, through V. Surendran to their dismay and anguish, came to know that no such applications were received by Maruthi Udyog. To the correspondence issued by complainants to second opposite party a reply was received confirming that the applications were bid and lodged with ICICI Bank, Ernakulam branch on 19-6-2003 itself. Complainants then send a registered notice on 21-8-2003 to first opposite party but there was no response. Complainants again send another notice to both respondents on 23-9-2003. First opposite party replied stating that the applications along with demand draft were received only on 18-7-2003 by ordinary post and that the demand draft has been already returned to Lakshmi Investment Services, Nilambur. Complainant alleges that due to failure on the part of opposite parties to forward the applications along with demand draft to Maruthi Udyog within time, the complainants were not alloted shares and thus sustained loss. That shares of Maruthi Udyog was traded at the peak price of Rs.350/- per share on 05-11-2003. If opposite parties had completed processing, bidding, and forwarding within time, each complainant ought to have been allotted at least 350 shares. Each complainant then could have sold 350 shares @ Rs.350/- and could have obtained a value of Rs.1,22,500/-. After deducting the issue price of Rs.125/- per share, the profit accrued for each complainant would have been Rs.78,750/-. If opposite parties were diligent in completing the procedures for allotment within time, Maruthi Udyog would have allotted shares to complainants which could have been send back and against the amount outstanding, the complainants could have purchased shares from open market @ Rs.165/- per share and could have made profit of Rs.79,735/-. It is alleged that due to deficiency in service of opposite parties each complainant suffered pecuniary loss of Rs.1,58,485/- (Rs.78,750/- + Rs.79,735/-). Hence these complaints to direct both opposite parties to jointly and severally pay to each complainant damages along with cost.

2. Instead of filing version, first opposite party has filed only a preliminary objection disputing the territorial jurisdiction of this Forum and the maintainability of these complaints. It is submitted that none of the opposite parties actually and voluntarily resided or carried on business or had branch office or worked for gain within the jurisdiction of this Forum and therefore this Forum lacks territorial jurisdiction to try these complaints. It is also stated that the complainants are not consumers but are only prospective purchasers of shares of the company and so the complaints are not maintainable. That complaints are preferred alleging loss of profit to the complainants due to loss of chance to sell the shares intended to be purchased and therefore complainants do not fall within the definition of consumers. It is further stated that the purchase of shares intended for resale is of commercial nature and for profit making purpose and on such score also the complainants are not consumers.

3. Second opposite party filed detailed version admitting that complainants had applied for shares as stated in the complaint. That second opposite party is a syndicate member to the public offer/bidding and first opposite party is the Bank appointed by Maruthi Udyog. That function of second opposite party in the entire process is bidding only and to enter the bid amount and details of the application into the system of NSE (National Stock Exchange) and thereafter forward the same to first opposite party, who has to collect the cheque/demand draft and forward it to the Registrar in issue appointed by Maruthi Udyog viz., M/s M.C.S. Ltd. That in the instant case, the last date fixed for bidding was 19-6-2003. After second opposite party received the applications of complainants, the data including bid amount was entered into the NSE system. Thereafter the applications were forwarded by hand to first opposite party on 19-6-2003 itself. First opposite party has received the applications and has given acknowledgement for the same. The original of this acknowledgement is produced with version in each case. It is not correct to say that first opposite party received the applications after bidding by ordinary post only on 18-7-2003. Second opposite party has correctly and properly executed the function reposed upon it by the Company. On lodging the applications after bidding, it is for first opposite party to collect the amount and forward the same to the Registrar in issue. If there is any shortcoming on the part of first opposite party, the second opposite party cannot be fastened with liability. Without prejudice to the above contentions it is submitted that the complainants are not entitled to any of the amount claimed in the complaint. The allegation that complainants ought to have been allotted shares by the Company is denied as incorrect. That it is absolute discretion of the Company as to whether shares are to be allotted or not. There is no assured allotment of shares. The claim raised in the complaint are purely speculative calculations. That complainant is not a consumer as against second opposite party. That Maruthi Udyog being the Company for whom second opposite party has acted is a necessary party. That there is no deficiency in service on the part of second opposite party and the complaints are only to be dismissed.

4. Evidence in each case consists of the affidavit filed by each complainant and Exts.A1 to A7 marked for the complainants. First opposite party has neither filed any counter affidavit nor adduced any documentary evidence. No counter affidavit filed by second opposite party. Either side has not adduced any oral evidence.

5. Points for consideration:-

(i) Whether this Forum has territorial jurisdiction.

(ii) Whether complainant is a consumer.

(iii) Whether opposite parties are deficient in service.

(iv) If so, reliefs and costs.

6. Point (i):-

First opposite party has disputed the territorial jurisdiction of this Forum to try the case. It is contended by complainants that the application forms along with demand draft was entrusted to Sri.V. Surendran, Lakshmi Investment Services, Nilambur, which is well within the jurisdiction of this Forum. Thereafter this Surendran entrusted the forms along with demand draft to first opposite party who in turn entrusted to second opposite party. Ext.A3 is a letter issued by first opposite party to V. Surendran, Lakshmi Investment Services, Nilambur returning the demand drafts of the complainants through V. Surendran. Ext.A3 sufficiently proves the contention of complainants to be true. Thus it is evident that part of the cause of action arose within the territorial jurisdiction of this Forum. We therefore have no doubt to conclude that this Forum has jurisdiction to try the complaints. Point found in favour of complainant.

7. Point (ii):-

It was contended by both opposite parties that complainants are only prospective purchasers of shares and therefore are not consumers. It is the case of complainants that due to failure to forward the applications after bidding complainants were not allotted shares by the Company. The claim made in the complaint is explicitly for loss of profit due to loss of chance to sell the shares which were intended to be purchased. Admittedly no shares were allotted to any of the complainants. It was held by Apex Court in 1994 II CPJ 7 SC., Morgan Stanley Mutual Fund Vs. Kartick Das that shares for which an application is made for allotment would not be goods as under Sec.2(1)(1) of Consumer Protection Act. That till allotment of shares take place, “the shares do not exist”. Therefore they can never be called “goods”. It was also held that a prospective investor is not a consumer within the meaning of Consumer Protection Act. Similar view was taken by National Commission in Om Prakash Sahni Vs. State Bank of India 2003 (II) CPJ 100 NC.

8. We have to say that though the principles laid in the above decisions are squarely applicable to the facts of this case, it can be pressed into application only against second opposite party in the present case. The complainants can be held to be prospective investors as against Company (Maruthi Udyog) only. Second opposite party is the authorised agent for bidding the shares of the Company. In our view since no shares are allotted complainants are not consumers as against Company as well as second opposite party.

9. The service rendered by first opposite party Bank, according to us rests on an entirely different footing. The bank is appointed as an agent for the facility of receiving applications and demand draft on behalf of the Company. This is a facility rendered as part of Banking service for which Banks usually collect service charges or commission. The complainants in this case though not allotted with any shares cannot be considered as prospective investors as against the first opposite party Bank for the reason that the service rendered was a banking facility service of receiving applications and forwarding the same in the process of allotment. The Apex Commission in Lawang T. Pulger Vs. ICICI infotech Services 2004 (2) CPJ 41 NC has taken a similar view and held that the non issuance of safety bonds to complainant due to lack of interbranch communication between banks and also the act of bank in not returning the demand draft for several years amounted to deficiency in service. Being a service rendered as part of banking service, complainants cannot be considered as prospective investors as against first opposite party Bank. It is also contended by first opposite party, that shares are purchased for resale and therefore the transaction come within the exclusion of 2(1)(d)(i) of Consumer Protection Act being goods intended for commercial purpose. We are unable to accept this contention. Complainants have availed the service of first opposite party for making an investment. The purchase of shares though for resale cannot be treated in par with goods purchased for resale intending to make profit in a commercial nature. The purchase and sale of shares is an investment to the consumer. For these reasons we hold that complainants are consumers as against first opposite party Bank and that complaints are maintainable.

10. Point (iii):-

From the discussions already made, the consideration on this point is limited to the extend whether first opposite party is deficient in service.

On the outset it has to be stated that there is no contra evidence tendered by first opposite party. After receiving evidence on the side of complainants through affidavit and documents, the case was posted for counter affidavit of opposite parties to 05-7-2008, 05-8-2008, 03-9-2008 and 06-10-2008. Thus even after receiving sufficient opportunity and also being assisted by a lawyer, first opposite party has shied away from adducing any evidence. From the materials on record it is clear that the shares were bid on 19-6-2003. After biding second opposite party has to lodge the applications with first opposite party Bank who has to forward it with demand draft for clearing. Second opposite party has consistently contended that they had lodged the applications after bidding to first opposite party on 19-6-2003 itself by hand. Along with version second opposite party has produced in each case the original of the acknowledgement issued by first opposite party Bank to second opposite party on receiving the applications. Complainant has produced the photo copy of these acknowledgement which is Ext.A1. As per Ext.A1, it is evident that the applications were received by first opposite party Bank after bidding on 19-6-2003 itself. No reasonable explanation is offered by first opposite party for not forwarding the applications to Register in issue. The only defense raised by first opposite party Bank is available from the reply letter issued by first opposite party to the counsel for complainants. The relevant portion of this letter which is Ext.A6 reads as under:

“As per the records maintained with M/s Karvy Consultants Ltd. The applications in question were bid at 11.43 a.m. On 19-6-2003 and it is the bounden obligation on the part of the Syndicate Member M/s Karvy Consultants Ltd. to send the same immediately to our Bank. It is clearly borne out by our branch records that no such applications in question were received by us on 19-6-2003 and all the other applications duly received by the branch on that date were tallied and sent to clearing on 20-6-2003 itself. Subsequently after the issue was closed we received a cover containing the subject bid applications and the demand Drafts on 18-07-2003 by ordinary post.”

Thus in Ext.A6 first opposite party contends that the applications could not be forwarded to register in issue within time because second opposite party failed to lodge the applications within time and that they received it only on 18-7-2003 by ordinary post. Ext.A1 acknowledgement issued by first opposite party proves this contention of first opposite party to be totally false. Hence it is vehemently clear that the complainants were not allotted with shares due to the failure on the part of first opposite party Bank to forward it within time to Register in issue for allotment. The deficiency is obvious. We therefore hold first opposite party to be deficient in service.

11. Point (iv):-

The claim made by complainants in the complaint is totally speculative and prays to have it realised from both opposite parties jointly and severally. We have already found that second opposite party is not liable in any manner. When Maruthi Udyog has appointed first opposite party as an agent for the facility of collecting application and demand draft then customers repose confidence in that Bank for carrying out the process of allotment. The failure has definitely resulted loss to complainants. It was submitted by the counsel for complainants that the demand draft of the complainants was retained by first opposite party Bank and returned only after about 2 months on 25-8-2003 and thereby complainants suffered loss of interest. In our opinion an amount of Rs.5,000/- to each complainant for the loss, inconveniences, hardships and for the deficiency meted by the complainants would be sufficient compensation to the complainants and will also help to improve the quality of service rendered by first opposite party.

12. In the result we partly allow this complaint and order that first opposite party shall pay Rs.5,000/- (Rupees five thousand only) as compensation to each complainant together with cost of Rs.1,000/- (Rupees one thousand only) also to each complainant within one month from the date of receipt of copy of this order.

Dated this 17th day of December, 2008.

Sd/-

C.S. SULEKHA BEEVI, PRESIDENT

Sd/-

MOHAMMED MUSTAFA KOOTHRADAN, Sd/-

MEMBER E. AYISHAKUTTY, MEMBER

APPENDIX

Witness examined on the side of the complainant : Nil

Documents marked on the side of the complainant : Ext.A1 to A7

Ext.A1 : Photo copy of acknowledgement. .

Ext.A2 : Photo copy of Bid-cum-application form.

Ext.A3 : Letter dated, 25-8-2003 issued by first opposite party to V. Surendran,

Lakshmi Investment Services, Nilambur.

Ext.A4 : Registered Lawyer Notice with acknowledgement dated, 21-8-2003

by complainant's counsel to first opposite party.

Ext.A5 : Registered Lawyer Notice with acknowledgement dated, 23-9-2003

by complainant's counsel to first opposite party.

Ext.A6 : Reply letter dated, 29-9-2003 by 1^st opposite party to

complainant's counsel.

Ext.A7 : Letter dated, 20-10-2003 by 2^nd opposite party to complainant's counsel.

Witness examined on the side of the opposite parties : Nil

Documents marked on the side of the opposite parties : Nil

Sd/-

C.S. SULEKHA BEEVI, PRESIDENT

Sd/-

MOHAMMED MUSTAFA KOOTHRADAN, Sd/-

MEMBER E. AYISHAKUTTY, MEMBER