DIFCOS, INVESTMENT CONSULTANT vs CAPT. R.V.S. RAO

THE opposite party in C.D. No. 399/92 in the District Forum, Hyderabad is the appellant herein. THE respondent-complainant filed the above Consumer Dispute against M/s Difcos, Investment Consultant, Hyderabad the opposite party for compensation of Rs. 67,000/- with interest at 12% p.a. from 28.3.1992.

THE case of the complainant is that on 14.3.1992 he placed an order with the opposite party, a share consultant, for purchase of 500 shares of Andhra Cement at the rate of Rs. 36.00 per share and 100 shares of Essar Gujarat at the rate of Rs. 145/- per share. On the same day, the opposite party gave Purchase Advice No. 555 informing the complainant that Difcos bought as ordered by the complainant and on the complainant''s account 500 shares of Andhra Cement at Rs. 36/- and 100 shares of Essar Gujarat at 145/- and the amount was received by way of adjustment. According to the prevailing practice, when ever shares are purchased by the share consultant in the market, the share certificates have to be delivered to the purchaser within 10 or 15 days. But the opposite party did not deliver the 500 shares of Andhra Cement within 10 or 15 days inspite of repeated demands. THE rate of Andhra Cement shares had risen to a maximum level and the rate was Rs. 170/- per share and as shares were not delivered, the complainant asked the opposite party to sell these shares at Rs. 170/- per share. But the opposite party has neither delivered the shares to the complainant nor sold them at Rs. 170/-. Had the opposite party delivered the share certificates within time or sold them as requested by the complainant, the complainant would have made a profit of Rs. 67,000/-. Hence the claim for compensation of Rs. 67,000/- with interest at 12% p.a. from 28.3.1992. The opposite party filed its version that he had offered to sell 500 Andhra Cement shares to the complainant, explaining that the same were in non-trading lots of 100 each and the duly split shares wide Transfer deeds signed and witnessed are expected from the seller party at Vijayawada. He got them through Mr. A Pumachandrudu, an Officer of Vijaya Bank, Somajiguda Branch, 5295 shares belonging to his father''s company at Vijayawada. It was further stated that on 16.3.1992, he delivered the shares to Andhra Cement Company Limited for splitting into trading lots of 50 each and that the company gave split shares on 21.3.92. The shares were handed over to Mr. A. Pumachandrudu forgetting signatures on the transfer deeds at Vijayawada Branch of Andhra Bank. But the said Pumachandrudu failed to deliver back the shares for about five to six weeks, and the complainant was being informed of the same. But in the meanwhile, news of proposed merger of the Andhra Cement Limited Company with ACC Limited and that for every 100 snares 1 ACC share will be given were published in news papers. Probably, that was the reason why Sri Purnachandrudu went back on his work. It was further stated that by the end of April 1992, the complainant was informed of the situation and on 2.5.92 the complainant gave an ultimatum to the opposite party to buy from the market, and deliver the same to him. Therefore, the opposite party purchased the same at the cost of Rs.35,800/- as against Rs. 18,000/- for which he contracted to buy for the complainant on 14.5.1992 but the complainant refused to receive the same.

Exs.A.1 to A.13 and Ex.B.1 to B.5 were marked by the respective parties in the District Forum. On consideration of the evidence the District Forum held that there is deficiency in the performance of service by the opposite party and the opposite party is liable to compensate the complainant for the loss and injury sustained by him and the claim of the complainant for compensation at Rs. 170/- per share is reasonable. Although the compensation worked upto Rs. 85,000/- since the complainant claimed only Rs. 60,000/- the complaint was allowed and the opposite party was directed to pay Rs. 67,000/- with interest at 12% p.a. from 2.4.92 together with costs of Rs, 500/-.

AGGRIEVED by the same, the opposite party preferred the above appeal. The learned Counsel for the appellant contended that the complainant is not a consumer within the meaning of Section 2(d)(1) of the Consumer Protection Act, 1986, as he purchased the shares only for the purpose of resale. Secondly, it is a direct sale to the complainant and that therefore does not come within the provisions of 2(d)(ii) of the Act, 1986. The above contentions can be disposed of together. It is not in dispute that the complainant asked the opposite party and placed an order on 14.3.92 for purchase of 500 shares of Andhra Cement Limited at Rs. 36.00 and 100 shares of Essar Gujarat. It is also not in dispute that within two days the opposite party delivered the share certificates of Essar Gujarat. It is also not in dispute that he did not deliver the share certificates of Andhra Cement Limited. It is the case of the opposite party that it is direct sale from the party to another and that therefore he is not liable to pay any compensation. But the Purchase Advise clearly shows that DIFCO Company acted on the orders of the complainant and it placed orders to purchase the same for normal delivery. It was not mentioned that it is a direct sale from one party to another. There is no material to show that this is direct sale. On the other hand, in the version of the opposite party it was stated that he informed the complainant that the shares were in non-trading lot and that after conversion of the same into trading lot and getting the signatures on the transfer form, the shares will be delivered to the complainant. It is the opposite party, according to its own version that undertook the conversion of the share? into trading lot and to get the signatures on the transfer form and to deliver the shares certificate to the complainant. It is also mentioned in the opposite party version that it has received the shares duly split up on 21.3.92 and that he asked Mr. Purnachandrudu to get the transfer forms signed by his father. It is evident that it is not a direct sale from party to party and the opposite party informed the complainant that he purchased the shares on behalf of the complainant. He did not disclose in the purchase advise from whom he purchased. Thus, it can be reasonably inferred that the complainant was not aware from whom the shares were purchased by the opposite party. It can only be a purchase in the open market. There is no material to show that the opposite party informed the complainant that the shares are from non-trading lot of 100 and have to be split up into trading lotto effect transfer. Since the normal practice is that the shares have to be delivered within 10 or 15 days from the date of purchase and even though the split up shares were delivered to the opposite party on 21.3.92, he did not hand over to the complainant. We are therefore satisfied that there is deficiency of service and it will come within the purview of Section 2(d)(ii) of the Consumer Protection Act, 1986. The opposite party did not dispute that the consideration was not paid for his service. Therefore, the complainant is a consumer within the meaning of Section 2(d)(ii).

ACCORDING to the complainant as the opposite party did not deliver shares he asked the opposite party to sell those shares at the rate of Rs. 170/- per share as on 2.4.1992. ACCORDING to the reply filed to the statement of the opposite party the complainant stated that the opposite party has not delivered the shares certificates despite frequent trips, the complainant approached !he son of B.G. Rao on 31.3.1992 and requested him to sell shares for which he agreed. But B.G. Rao called the complainant on the next day and informed him that his son did not know what to talk and do and he would not sell these shares as he is not having them. He wanted to settle the matter by paying an additional sum of Rs. 7000/-. Thus, it is the complainant''s version that he also requested the opposite party to sell the shares on 1.4.92. But the opposite party refused to do so. The opposite party did not adduce any evidence or produce documentary evidence to indicate that although inspite of repeated requests Pumachandrudu refused to effect transfer and hand over the shares. Infact, when the opposite party got possession of the shares on 213.92 he should have handed them over to the complainant to take appropriate action for getting the transfer effected and registered. This leads to an inference that the version of the complainant that because of the rise in prices the opposite party sold them at higher price and made profit for himself is true. It is next submitted by the appellant that on 2.5.92 the complainant insisted on the delivery of shares and that therefore the opposite party purchased 500 shares concerned in the market and received the same on 14.5.92 and without taking delivery of the same the complaint was filed on21.5.92. Except the version of the opposite party, there is nothing on record to show that on 2.5.92 the complainant gave an ultimatum to purchase shares and on 14.5.92 the opposite party purchased the same on behalf of the complainant. There is nothing in writing to indicate either the complainant demanded on 2.5.92 to purchase shares and that the opposite party informed the complainant to take delivery of the shares said to have been purchased by him from Madras. In the absence of anything in writing we are not prepared to believe the version of the opposite party that the complainant demanded to purchase of the shares on 2.5.92, and after purchase, he did not take delivery of the same. It is submitted on behalf of the respondent-complainant that infact he suffered a loss of Rs. 85,000/- and he asked for compensation of Rs. 67,000/- only. He also requested for delivery of share certificates. Since the case relates to deficiency of service only the District Forum did not direct return of shares. As the complainant claimed compensation of Rs.67,000/- only the District Forum allowed the compensation claimed by him.

IT is now contended on behalf of the complainant that this forum may enhance compensation from Rs. 67,000/- to 85,000/-. Since there is no appeal preferred by the complainant and since he claimed only Rs. 67,000/- the District Forum rightly granted Rs. 67,000/- with interest at 12% p.a. we are not inclined to enhance the compensation.

IT is contended that it is a personal contract for purchase of shares and does not come within the purview of the Consumer Act. Since it is merely a contract to purchase shares in the market, it cannot be said as a contract of personal service. IT is merely a contract for service. For the aforesaid reasons, we agree with the finding of the District Forum. The appeal fails and is accordingly dismissed without costs. One months time from today is granted to deposit the amount of compensation, by the appellant herein. Appeal dismissed.