1994 (2) TMI 230 - Commission - Companies Law

Consumer - First opposite party, SCL, was a share broker and was a member of Madras Stock Exchange - In September 1990, complainant delivered to first opposite party, 100 shares of UBPL and 100 shares of TVSEL through a Chartered Accountant - There was no response from first opposite party and when contacted he told that share certificates were stolen from his office - Complainant came to know that first opposite party had transferred shares in name of other person -Thereafter first opposite party in order to cover up its misdeed agreed to replace shares but share certificates had not yet been issued - Similarly complainant paid Rs. 7,335 to first opposite party for purchase of 500 shares of SVL through a cheque but first opposite party failed to deliver share certificates - Complainant wrote to second opposite party, Madras Stock Exchange to intervene but it expressed its helplessness to convince first opposite party in this matter - Whether complainant could be regarded as a consumer as regards first opposite party, SCL and had availed of its services for sale of 100 shares each of TVSEL, UBPL, and for purchase of 500 shares of SVL for consideration - Held, yes - Whether complainant could claim to be a consumer qua second opposite party, Madras Stock Exchange, which had not rendered any service to complainant for consideration - Held, no - Whether first opposite party could be held guilty of gross deficiency of service and negligence - Held, yes

Issues Involved:
1. Whether the complainant is a consumer in respect of the opposite parties 1 & 2 or any of them?
2. Whether there has been any deficiency of service or negligence on the part of the opposite parties or any of them?
3. To what relief, if any, is the complainant entitled and against whom?

Issue-wise Detailed Analysis:

1. Whether the complainant is a consumer in respect of the opposite parties 1 & 2 or any of them?

The first opposite party is a share broker, and the second opposite party is the Madras Stock Exchange. The business of a share broker involves buying and selling shares for others, for which the broker receives a brokerage/commission, which qualifies as a service under section 2(1)(o) of the Consumer Protection Act, 1986. The complainant claimed to have direct dealings with the first opposite party, supported by communications (Exhs. A6 and A8) directly from the first opposite party to the complainant. Even if the complainant dealt through Mr. R. Govindaraj, the latter acted as the complainant's agent, making the complainant the principal who hired the services of the first opposite party. The first opposite party's contention that no commission or brokerage was received does not negate the implied promise to pay brokerage, making the complainant a consumer as per section 2(1)(d)(ii). Regarding the second opposite party, the Madras Stock Exchange, it did not render any service to the complainant for consideration, and thus, the complainant cannot be considered a consumer in relation to the second opposite party.

2. Whether there has been any deficiency of service or negligence on the part of the opposite parties or any of them?

The complainant delivered 100 shares of T.V.S. Electronics Ltd. and 100 shares of U.B. Petroproducts Ltd. to the first opposite party for sale. The first opposite party claimed the shares were misplaced or stolen and promised replacement shares, which were never received by the complainant. Evidence (Exhs. A3, A4, and A5) showed that the shares were transferred to third parties, indicating dishonesty and gross deficiency of service by the first opposite party. Additionally, the complainant paid Rs. 7,335 for 500 shares of Shyam Vinyl Ltd., which were transferred but not delivered to the complainant. The first opposite party's counter-statement about retaining shares due to another transaction involving Indo-Gulf Fertilizers shares was unsupported and irrelevant. The first opposite party failed to deliver the shares, demonstrating gross deficiency of service. The second opposite party, Madras Stock Exchange, was not guilty of deficiency of service as it attempted to mediate the dispute and suggested arbitration, which the complainant did not pursue.

3. To what relief, if any, is the complainant entitled and against whom?

The first opposite party is liable for gross deficiency of service and negligence. It must refund the price of the shares and the amount paid for the Shyam Vinyl Ltd. shares with interest. Specifically:
- Rs. 3,200 for 100 U.B. Petroproducts Ltd. shares with 24% interest from 19-12-1990.
- Rs. 3,200 for 100 T.V.S. Electronics Ltd. shares with 24% interest from 31-12-1990.
- Rs. 7,335 for 500 Shyam Vinyl Ltd. shares with 24% interest from 12-10-1991.
- Rs. 10,000 as compensation for pain and agony.
- Rs. 2,000 as costs to the complainant.
All payments are to be made within one month from the date of the order. The complaint against the second opposite party is dismissed without costs.

Conclusion:

The Commission found the first opposite party guilty of gross deficiency of service and ordered compensation and refunds with interest to the complainant. The second opposite party was not found liable. The Commission also suggested that the Madras Stock Exchange take appropriate action against the first opposite party to ensure proper functioning and public confidence.

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