KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION VAZHUTHACAUD THIRUVANANTHAPURAM APPEAL NO.121/05 JUDGMENT DATED 4/6/2010 PRESENT SRI.M.V.VISWANATHAN -- JUDICIAL MEMBER SRI.M.K.ABDULLA SONA -- MEMBER Peninsular Capital Market Ltd, Shares and stock Brokers, S.T.Reddiar & Sons Building, 3rd Floor, Veekshanam Road, -- APPELLANT Kochi – 35. (By Adv.U.K.Ramakrishnan & Ors.) Vs. 1. V.A.Gopalakrishnan, Astrologer, Near S.S.Temple, Payyannur. 2. Sindurekha, -- RESPONDENTS Proprietor, Lekha Investments, 2nd Floor, T.P.Complex, Main Road, Payyannur 607 307. (R1 By Adv.V.N.Ramesan Nambisan) JUDGMENT SRI.M.V.VISWANATHAN,JUDICIAL MEMBER The above appeal is directed against the order dated 30th November 2004 of the CDRF, Kannur in OP.318/01. The complaint therein was filed by the first respondent herein as complainant against the appellant as the first opposite party and the second respondent as the second opposite party to get refund of Rs.10,000/- collected from the complainant towards the value of shares and also for interest on the said amount at the rate of 18% per annum. The complainant has also claimed compensation of Rs.20,000/- for the mental agony suffered by the complainant and also cost of the proceedings. The complainant alleged that the first opposite party is an authorized trading member at Cochin stock exchange and the second opposite party was franchisee of the first opposite party, that the complainant opened a demat account with the first opposite party with ID.No.10065133 and paid the membership charge of Rs.50/-, that the complainant paid a sum of Rs.10,000/- to the second opposite party being the authorized franchisee of the first opposite party at Payyannur for the purchase of 20 shares of Mahanagar Telephone. Having the total value of Rs.5740.45 and that a balance of Rs.4259.55/- was credited in the account of the complainant, that the opposite parties failed to issue the share certificate as assured and they also failed to refund the balance amount. Hence the complaint was filed for the aforesaid reliefs. 2. Opposite parties 1 and 2 entered appearance and denied the alleged deficiency in service. They contended that the complainant is not a consumer coming within the ambit of the Consumer Protection Act, 1986, that the complainant is only a prospective investor and no shares were allotted in his name. The first opposite party has also contended that the Forum below had no jurisdiction to entertain the complaint and that the second opposite party is not their franchisee. Thus, the first opposite party prayed for absolving it from the liability. The second opposite party vehemently contended that he is the authorized franchisee of the first opposite party and that the first opposite party is a depository participant with National Securities Depository Ltd. and authorized to keep shares of the clients and that the first opposite party has been collecting money from the clients through their franchisees and that the second opposite party has no independent existence of its own. Thus, the second opposite party prayed to absolving them from the liability and to fasten the liability if any on the first opposite party, the member brokers and trader. 3. Before the Forum below, the complainant was examined as PW1 and Exts.A1 to A8 documents were marked on the side of the complainant. No evidence was adduced from the side of the opposite parties. On the basis of the evidence on record, the Forum below passed the impugned order dated 30th November 2004 directing the opposite parties to refund Rs.10,000 with interest at 12% per annum from 15.3.2000 till realization along with compensation of Rs.5000/- and cost of Rs.500/-. It is against the said order, the present appeal is filed by the first opposite party therein. 4. We heard the learned counsel for the appellant/first opposite party and the first respondent/complainant. There was no representation for the second respondent/second opposite party. The counsel for the appellant submitted his arguments based on the grounds urged in the memorandum of the present appeal. He argued for the position that the complainant is not a consumer as defined under Section 2 (1) (d) if the Consumer Protection Act and that the complainant can only be considered as a prospective investor. He also relied on the decision rendered by the Hon. Supreme Court of India in Morgan Stanley’s case reported in II (1994) CPJ 7 (SC). The learned counsel for the appellant has also relied on the decisions rendered by this State Commission in OP.111/2000, OP.1/01 and OP 100/01 and vehemently argued for the position that the first respondent/complainant cannot be considered as a consumer as defined under Section 2 (1) (d) of the Consumer Protection Act, 1986. It is further submitted that the compensation ordered by the Forum below over and above the interest on the decreed amount is unwarranted. Thus, the appellant prayed for setting aside the impugned order passed by the Forum below. On the other hand, the learned counsel for the first respondent/complainant relied on the decision rendered by this Commission in A.380/04 which was preferred from the order passed by the CDRF, Kannur in OP.272/2000 wherein the appellant and first opposite party and second respondent/second opposite party were the opposite parties. Therefore, the first respondent/complainant prayed for dismissal of the present appeal. 5. The points that arise for consideration are:- 1. Whether the complainant in OP.318/01 on the file of CDRF, Kannur can be considered as a consumer as defined under Section 2 (1) (d) of the Consumer Protection Act, 1986? 2. Whether there was any deficiency in service on the part of the opposite parties 1 and 2 as alleged by the complainant in OP.318/01? 3. Is there any sustainable ground to interfere with the impugned order dated 30th November 2004 passed by CDRF, Kannur in OP.318/01? 6. POINTS 1 TO 3:- The definite case of the first respondent/complainant is that he availed the services of the opposite parties 1 and 2 for the purpose of purchasing 20 shares of Mahanagar Telephone. It is also the case of the first respondent/complainant that the second respondent/second opposite party was the then franchisee of the appellant/first opposite party Peninsular Capital Market Ltd, and that the complainant opened a demat account with first opposite party with ID.No.10065133 and that he paid a sum of Rs.10,000/- to the second opposite party being the franchisee of the first opposite party for the purchase of 20 shares of Mahanagar Telephone. It is the further case of the complainant that he was informed by the second opposite party regarding purchase of 20 shares of Mahanagar Telephone amounting to Rs.5740.45 and a balance of Rs.4259.55 has been credited in the account of the complainant and that evidencing the said transaction financial statement and account details were given by the second opposite party. 7. The complainant as PW1 filed proof affidavit and he was examined before the Forum below as PW1. The complainant deposed in support of his case in the complaint. His oral evidence is further strengthened by A1 to A8 documents. A perusal of the testimony of PW1 would show that he availed the services of the opposite parties 1 and 2 for the purchase of 20 shares of Mahanagar Telephone and he was made to believe that 20 shares of Mahanagar Telephone have been purchased in the name of the complainant by the opposite parties 1 and 2. PW1 was cross examined by the counsel for the first opposite party. But nothing could be brought out to dis-believe the testimony of PW1. 8. The evidence of the complainant as PW1 is strengthened by A1 to A8 documents. A1 is the transaction statement issued by the first opposite party, Peninsular Capital Market Ltd ( Depository Division) to the complainant. This document would make it clear that the second opposite party, Lekha Investments is a franchisee of the first opposite party, Peninsular Capital Market Ltd. It would also show that the first respondent/complainant had opened an account with the appellant/first opposite party. It would further show that the appellant/first opposite party accepted Rs.50/-, as the membership charge from the complainant. Thus, the transaction between the complainant and opposite parties are established through the testimony of PW1 with Ext.A1 document. 9. Ext.A2 is the bill issued by the second opposite party evidencing the purchase of 20 shares of Mahanagar Telephone costing Rs.5740.45/-. Thus, A2 bill would show that the second opposite party franchisee of the first opposite party purchased 20 shares of Mahanager Telephone in the name of the complainant. This evidence would make the case of the complainant that he purchased 20 shares of Mahanagar Telephone through the opposite parties 1 and 2 as acceptable. 10. Admittedly, appellant/first opposite party is the trading member and an approved authorized broker. There is no case for the appellant/opposite party that the second opposite party was a trading member or an authorized broker. On the other hand, the status of the appellant/first opposite party as the trading member and an approved authorized broker is not disputed by any of the parties. It is further to be noted that the second respondent/second opposite party in their written version categorically contended that the second opposite party is only an authorized franchisee of the first opposite party (appellant) and that the second opposite party had no independent existence and it can only acted as franchisee of the first opposite party trading member. The available evidence on record would also make it clear that the second opposite party has been acting and functioning as the franchisee of the first opposite party. If that be so, the second opposite party can only be an agent of the first opposite party. The relationship between the opposite parties 1 and 2 can be treated as that of principal and Agent. Thus, the first opposite party will be answerable and liable for all the acts and deeds of their Agent, the second opposite party. 11. Ext.A3 is the financial statement for the year 1999-2000 issued by the second opposite party to the complainant. It is based on the ledger maintained by the second opposite party in the name of the complainant. A3 financial statement would show that a sum of Rs.10,000/- was paid by the complainant and a sum of Rs.5740.45 was debited with balance of Rs.4259.55. Thus, A3 document would support A2 bill. It can very safely be concluded that the second opposite party debited the said sum of Rs.5740.45 for effecting purchase of 20 shares of Mahanagar Telephone in the name of the complainant Gopalakrishnan. Ext.A4 account details furnished by the second opposite party to the complainant would also support the case of the complainant regarding purchase of 20 shares of Mahanagar Telephone with the credit balance of Rs.4259.55. A5 is the statement of holding as on 31.12.2000 issued by the first opposite party in the name of the complainant. A5 document would show the existence of financial transaction between the complainant and the first opposite party. 12. Ext.A8 is the receipt dated 16.3.2000 issued by the second respondent/second opposite party, Lekha Investments to the complainant. A8 receipt would show that a sum of Rs.10,000/- was paid by the complainant to the second opposite party Lekha Investments. The other details attached to A8 document would also make it clear that the second opposite party/Lekha investments has been maintaining account in the name of the complainant and 20 shares of Mahanagar Telephone were purchased by the second opposite party through their principal, the trading member and broker Peninsular Capital Market Ltd (appellant/first opposite party). The other details attached to A8 document would also make it clear that the brokerage was also collected by the opposite parties from the complainant. There was a consumer – service provider relation ship between the complainant on the one part and the opposite parties 1 and 2 on the other part. Thus, it can very safely be concluded that the first respondent/complainant availed the services of the opposite parties 1 and 2 for consideration. 13. The evidence of the complainant as PW1 and the documentary evidence adduced from the side of the complainant would clinchingly establish. The fact that the appellant/first opposite party was the trading member and broker attached to various stock exchanges and that the second respondent/second opposite party has been acting as the authorized franchisee of the appellant/first opposite party. The evidence on record would also show that the first respondent/complainant entered into transaction with the opposite parties 1 and 2 for the purchase of 20 shares of Mahanagar Telephone and that the opposite parties made the complainant to believe that they effected purchase of 20 shares of Mahanagar Telephone in the name of the complainant. It would further show that the second opposite party received a sum of Rs.10,000 from the complainant for the purpose of effecting purchase of 20 shares of Mahanagar Telephone. They also received brokerage for rendering the said service. There is no case for the opposite parties that they were rendering free services to their customers. Thus, the services availed by the complainant can be considered as service as defined under section 2 (1) ( O) of the Consumer Protection Act, 1986. Section 2 (1) (O) defines ‘service’ as follows:- “Service” means service of any description which is made available to potential users and includes, but not limited to, the provision of facilities in connection with banking, financing, insurance, transport, processing, supply of electrical or other energy, board or lodging or both, housing construction, entertainment, amusement or the purveying of news or other information, but does not include the rendering of any service free of charge or under a contract of personal service” 14. The aforesaid definition given for service would make it clear that service used or availed or hired in connection with financial transaction would come under terms “service”. If that be so, the services availed by the complainant from the opposite parties would bring the complainant within the purview of the Consumer Protection Act, 1986. The Section 2 (1) (d) of the Consumer Protection Act defines the term ‘Consumer’. Consumer means any person who— i) buys any goods for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose or ii) hires or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised or partly paid and partly promised, or under any system of deferred payment, when such services availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purpose. 15. The aforesaid definition given for consumer would make it clear that a person availed services for consideration can be considered as a consumer coming within the ambit of the Consumer Protection Act, 1986. In the present case on hand, the complainant in OP.318/01 on the file of CDRF, Kannur availed the services of the opposite parties 1 and 2 for the purpose of securing 20 shares of the Mahanagar Telephone and that the opposite parties rendered services to the complainant for that purpose and the said services were rendered on consideration or on a promised consideration. Thus, it can very safely be concluded that the complainant before the Forum is a consumer coming within the ambit of the Consumer Protection Act, 1986. 16. The appellant/first opposite party has got a case that the Forum below had no territorial jurisdiction to entertain the complaint in OP.318/01. Admittedly, the second opposite party Lekha Investments is functioning at Payyannur within the territorial limits of the CDRF, Kannur. It is also come out in evidence that the second opposite party/Lekha Investments as the franchisee of the first opposite party accepted a sum of Rs.10,000/- from the complainant at Payyannur. The aforesaid amount was accepted by the second opposite party for the purpose of purchasing 20 shares of Mahanagar Telephone . It is the case of the complainant that the opposite parties failed to hand over the share certificates. They did not refund the amount of Rs.10,000/- received from the complainant. Thus, the complainant alleged deficiency in service on the part of the opposite parties in rendering service. Thus, part of the cause of action has arisen within the territorial limits of the CDRF, Kannur. The Forum below has rightly entertained the complaint in OP.318/01. 17. The appellant/first opposite party much relied on the decision rendered by the Hon. Supreme Court in Morgan Stanley’s Case reported in II (1994) CPJ 7 (SC). It is true in the said case it has been held that the shares of a company can be treated as goods only on allotment and that as far as the purchaser of the shares is concerned he becomes consumer only on allotment of the said shares in favour of the purchaser. In that reported case, there was no allotment of shares in favour of the complainant therein. In such a situation it was held that the complainant therein can only be treated as a prospective buyer of shares. In other words he can be considered as a prospective investor and that he cannot be termed as a consumer as defined under the Consumer Protection Act, 1986. But the facts of the case in Morgan Stanley are entirely different from the present case on hand. It is held by the Hon. Supreme Court that the decisions are to be cited for a proposition after reading the facts of the case and reasoning contained therein “(2009) (IV) CPR 421 (SC) at Para 14 to 18”. So, the proposition in Morgan Stanley case (supra) cannot be made applicable in the present case. As far as the complainant in this case is concerned he availed the services of the opposite parties for the purpose of securing shares of Mahanagar Telephone. The said services were availed for consideration. But the opposite parties were deficient in rendering the services assured. It is based on the aforesaid deficiency in service the complainant approached the Forum below. 18. The appellant/first opposite party has also relied on the decisions rendered by this State Commission in OP.111/2000, OP.1/01 and OP.100/01. It is to be noted that in all the aforesaid cases the appellant was a party. It is also to be noted that those decisions were rendered by this State Commission based on the principle enunciated by the Hon.Supreme Court in Morgan Stanley’s case. We have already held that the facts of the case in Morgan Stanley’s case cannot be made applicable in the present case as those facts are entirely different from the facts in the present case. 19. This State Commission had occasion to consider the deficiency in service on the part of the trading number and its franchisee in another case came up before this Commission as Appeal No.318/04. The aforesaid appeal was preferred from an order passed by CDRF, Kannur in OP.No.272/2000. The aforesaid complaint was filed against the very same opposite parties namely Peninsular Capital Market Ltd. and Lekha Investments. This State Commission had occasion to consider the applicability of the proposition laid down in Morgan Stanely Mutual Fund Vs.Kartick das reported in II (1994) CPJ 7 (SC) and also the other decisions rendered by this State Commission in OP.No.111/2000 and OP.1/ 01. The facts in the said Appeal 318/04 were similar to the facts in the present case. By the judgment in the said A.318/04 this State Commission upheld the findings of the Forum below by relying on the definition of ‘service’ under Section 2 (1) (0) of the Consumer Protection Act. So, the Forum below can be justified in holding that the complainant herein is a consumer as defined under Section 2 (1) (d) of the Consumer Protection Act and that there was deficiency in service on the part of the opposite parties. 20. The Forum below directed the opposite parties to refund the sum of Rs.10,000/- which was collected by the opposite parties from the complainant. The opposite parties were also made liable to pay interest at the rate of 12% per annum from the date of acceptance of the said amount by the second opposite party. Over and above refund of the amount with interest, the Forum below has also awarded compensation of Rs.5000/-to the complainant. It is to be noted that there is no acceptable evidence to show that the complainant suffered any such mental agony on account of the deficiency in service on the part of the opposite parties. The financial loss suffered by the complainant is adequately compensated by ordering refund of the said sum of Rs.10,000/- with a reasonable interest at the rate of 12% per annum. So, this Commission is of the view that the further compensation of Rs.5000/- ordered by the Forum below is unwarranted and the same is liable to be deleted. Hence we do so. The Forum below is perfectly justified in awarding cost of Rs.500/- to the complainant. Thus, the impugned order passed by the Forum below is modified accordingly. These points are answered accordingly. In the result, appeal is allowed partly and thereby the impugned order dated 30th November 2004 passed by CDRF, Kannur in OP.318/01 is modified. The opposite parties 1 and 2 in OP.318/01 are made jointly and severally liable to refund Rs.10,000/- with interest at the rate of 12% per annum from 15.3.2000 till realization with cost of Rs.500/-. The order directing payment of compensation of Rs.5000/- to the complainant is deleted. As far as the present appeal is concerned, the parties are directed to suffer their respective costs. M.V.VISWANATHAN -- JUDICIAL MEMBER M.K.ABDULLA SONA -- MEMBER | 
