1994 (3) TMI 281 - Commission - Companies Law

Deficiency - Complainant applied for 30 equity shares in a company - Company received application with share certificates and relevant documents on 18-2-1992 - It was, therefore, to send certificate duly certified by 18-4-1992 - It, however, sent it after a delay of one month and 13 days - Whether mere delay in effecting transfer of shares and communication to complainant could be held deficiency in service -Held, no

Summary

Issues:
1. Delay in transfer of equity shares and non-receipt of convertible debentures.
2. Claim for compensation for loss of profits and delay in transfer.
3. Deficiency in service by the company in transferring shares and communicating with the complainant.
4. Applicability of compensation under the Companies Act and Consumer Protection Act.

The judgment in the case involved a complaint regarding the delay in transferring equity shares and the subsequent non-receipt of convertible debentures. The complainant argued that due to the company's failure to transfer the shares promptly, he suffered a loss of Rs. 14,000 and missed out on potential earnings of Rs. 61,800 from the shares. The District Forum found that there was indeed a delay in sending the share certificates, leading to deficiency in service. However, the forum only awarded compensation of Rs. 2,000 for the complainant's agony during the process. The complainant's appeal sought additional compensation for loss of profits and a daily penalty of Rs. 500 as per the Companies Act.

The judgment discussed a previous decision by the National Commission in a similar case, where it was held that a mere delay in transferring shares did not constitute deficiency in service under the Consumer Protection Act. The National Commission emphasized that the issue of convertible debentures to shareholders did not involve a service-for-consideration arrangement, thereby dismissing the claim for compensation. The judgment highlighted that the District Forum's finding of deficiency in service based on the delay in transferring shares was not sustainable. The complainant's argument for compensation at the rate of Rs. 500 per day was deemed inapplicable under the Consumer Protection Act, as there was no proven defect in goods or service.

In conclusion, the appeal was dismissed as the District Forum's decision to award Rs. 2,000 in compensation was upheld. The judgment clarified that under the Consumer Protection Act, without a clear deficiency in service or goods, claims for additional compensation beyond the awarded amount could not be entertained. The court also noted that the absence of an appeal from the opposite party further supported the decision not to interfere with the District Forum's ruling. The complainant's claims for loss of profits and daily penalty were not considered valid under the prevailing legal framework.