1997 (10) TMI 322 - Commission - Companies Law

Summary

Issues:
Jurisdiction of Consumer Fora to entertain the dispute.
Determination of compensation awarded by the District Forum.

Analysis:

Jurisdiction of Consumer Fora:
The appeal challenged an order directing the State Bank of India to pay compensation and costs to the complainant for failing to remit the application and demand draft for equity shares to IPCA Laboratories. The State Bank of India contended that the Consumer Fora lacked jurisdiction based on a Supreme Court judgment regarding prospective investors. However, the Commission distinguished the case, emphasizing that the bank's services were hired by IPCA Laboratories for collecting applications and money, and the failure to fulfill this obligation constituted deficiency in service. Referring to a similar case before the Punjab State Commission, it was established that the complainant fell within the definition of a 'consumer' under the Consumer Protection Act. The Commission upheld the District Forum's finding that the bank's negligence warranted compensation for the complainant.

Determination of Compensation:
The Commission acknowledged that the compensation awarded by the District Forum was excessive considering the shares were not allotted, and the money was returned to the complainant. Therefore, the Commission reduced the compensation from Rs. 2,000 to Rs. 1,000, deeming it just and equitable. The modification in the compensation amount was the only change made to the District Forum's order, with the costs remaining the same. The appeal by the State Bank of India partly succeeded, and the modified order was upheld.

This judgment clarifies the jurisdiction of Consumer Fora in cases involving hired services and the obligation to fulfill such services. It also highlights the importance of determining just and equitable compensation based on the circumstances of the case, particularly when shares were not allotted, leading to a reduction in the compensation amount awarded by the lower forum.