1994 (12) TMI 274 - Commission - Companies Law

Summary

Issues:
1. Whether the complainant is a consumer?
2. Whether the complainant is entitled to any relief?

Analysis:

Issue 1: Whether the complainant is a consumer?

The complainant placed an order with the opposite party, a share broker, for the purchase of shares. The opposite party argued that the transaction does not fall under the Consumer Protection Act as it was for profit and not a consumer transaction. The Supreme Court precedent highlighted that an applicant for share allotment cannot be considered a consumer before shares are issued. However, in this case, the complaint was against the broker, not the company issuing shares. The nature of the agreement between the complainant and the opposite party was crucial in determining consumer status. The agreement was analyzed to ascertain if it was a forward contract, potentially void under the Indian Contract Act.

Issue 2: Whether the complainant is entitled to any relief?

A forward contract involves reciprocal promises between parties for future transactions, often speculative in nature. The agreement between the complainant and the opposite party was deemed a forward contract, akin to a wager, as it focused on price fluctuations without actual delivery of shares. As per the Indian Contract Act, agreements by way of wager are void. Consequently, the complainant could not claim shares, price differences, or compensation. However, the complainant was entitled to a refund of the advance payment made, based on principles of quantum meruit and unjust enrichment. The opposite party was directed to refund the advance amount with interest.

In conclusion, the complaint was partly allowed, with the opposite party ordered to refund the advance payment to the complainant. Other claims made by the complainant were disallowed, and each party was directed to bear their respective costs.