1995 (3) TMI 384 - Commission - Companies Law

Summary

Issues:
1. Whether the complainant is entitled to interest on debentures under the Consumer Protection Act.
2. Whether the complainant is entitled to a refund after debentures were converted into shares.
3. Whether failure to pay dividend on shares constitutes a deficiency in service under the Consumer Protection Act.

Analysis:

1. The main issue in this case was whether the complainant, who subscribed to debentures, was entitled to interest under the Consumer Protection Act. The appellant argued that the complainant did not qualify as a 'consumer' as no service was being rendered. The Commission disagreed, stating that debentures imply a deposit of money with the company, constituting a service. Failure to pay interest on debentures amounts to a deficiency in service, making the complainant eligible for relief under the Act.

2. The second issue addressed was whether the complainant was entitled to a refund after the debentures were converted into shares. The Commission held that since the debentures had been converted, the complainant was not entitled to a refund. Therefore, the order directing the refund of the amount was deemed improper to that extent.

3. The final issue was whether the failure to pay dividends on shares could be considered a deficiency in service under the Consumer Protection Act. The Commission ruled that shareholders, unlike debenture-holders, do not deposit money with the company, and therefore, the failure to pay dividends does not constitute a deficiency in service. Consequently, the complainant could not file a complaint under the Act for non-payment of dividends.

4. The Commission referred to a previous decision where it was held that the complainant was not a 'consumer' when additional shares were not allotted. However, the Commission found that case not applicable to the present situation.

5. In conclusion, the Commission partly allowed the appeal, modifying the District Forum's order. The appellant was directed to pay interest on the debentures if not already done so, and the complainant was advised to seek legal remedy if dividends on shares were not received. Failure to comply within three months would result in action under the Act, leaving the parties to bear their own costs.

This judgment clarifies the application of the Consumer Protection Act regarding debentures, refunds, and dividend payments, providing a detailed analysis of each issue raised in the case.