1994 (4) TMI 230 - Commission - Companies Law

Consumer dispute - Whether private placement or purchase of shares of a public limited company and their subsequent non-delivery would come within ambit of consumer dispute - Held no Consumer - Whether complainants who had deposited money with a company for buying its equity shares but to whom those shares had neither been allotted nor delivered could be considered consumers for purposes of Act - Held no

Summary

Issues:
Whether the private placement or purchase of shares of a public limited company and their subsequent non-delivery fall under the scope of a consumer dispute.

Analysis:
The judgment revolves around the issue of whether the complainants, who purchased shares from certain companies but did not receive the shares, can be considered consumers under the Consumer Protection Act. The respondent's counsel argued that the complainants did not meet the definition of consumers and thus the complaints were not maintainable. The complainants alleged that they deposited money for shares that were not allotted or delivered to them, seeking refunds and interest. The District Forum consolidated the cases but did not address the fundamental issue of the complainants' consumer status. The judgment emphasized that the complainants did not qualify as consumers based on previous decisions and the definition of goods under the Sale of Goods Act.

The judgment cited precedents, including Pfizer Ltd.'s case, where it was held that applicants seeking shares in public issues were not consumers under the Act. The judgment also referenced the National Commission's decision in Sqn. Ldr. Gurdial Singh's case, which concluded that the sale of shares with a repurchase condition did not constitute a consumer dispute. The complainants' argument that non-delivery of shares amounted to a defect in goods was dismissed based on precedent, which stated that mere delay in delivery did not constitute a deficiency of service under the Act.

The judgment further distinguished a previous case, Ram Kumar Ashwani's case, where the issue of shares was considered goods but did not establish a consumer dispute. Ultimately, the judgment concluded that the private placement or purchase of shares and their non-delivery did not qualify as a consumer dispute. As a result, the complaints were deemed not maintainable, and the appeals were dismissed. The parties were left to bear their own costs due to the complexity of the issue and the District Forum's failure to address it.