INDIA INFOLINE COM. SECURITIES LTD. vs VINOD KUMAR SHARMA

-THIS is an appeal filed against the order dated 17.2.2003 passed by the District Forum, Howrah in the Forum Case No. 99/2002. The present appellant was the O.P. before the Forum whereas the present respondent was the complainant. The complainant''s case in brief was as under: On 15.3.2002 the complainant submitted one Dematerialisation (Demat) Request Form duly filled in along with an option letter dated 9.3.2002 issued by Alpha System Pvt. Ltd., Bangalore, who are the registered share transfer agent of Mphasis BFL Ltd., in respect of 100 equity shares for converting the shares into Demat Form. These documents were duly acknowledged by the O.P. who was also paid the service charge for dematerialisation of the above shares. As per the rules and regulations of National Securities Depository Ltd. the whole process of dematerialisation of the shares should be completed within 3 weeks from the date of submission of the Demat Request Form. After the stipulated time was over when the complainant enquired at the Kolkata Office of the O.P. he came to know that dematerialisation of the shares was still pending. The complainant was also informed by the share transfer agent (Alpha System Pvt. Ltd.) that they had not received the documents and option letter from the O.P. Company, as a result of which they could not realise the said 100 shares in Demat Form in time i.e., within the stipulated period of 3 weeks, and after 24.4.2002 they despatched the physical share certificates to the complainant without converting them into Demat Form. Thereafter the complainant was compelled to open a new Demat Account with the Bank of Punjab and submitted fresh Demat Request Form along with the said share certificates which had been sent by Alpha System Pvt. Ltd. after 24.4.2002. THIS time Bank of Punjab did the needful timely to convert the shares into Demat Form by 21.5.2002. According to the complainant due to negligence and deficiency in service on the part of the O.P. the 100 shares could not be demateralised in time, as a result of which the complainant could not sell the said shares at the prevailing market price of Rs. 690/- per share and in the process suffered a loss of Rs. 15,000/- approximately due to large depreciation in the market price of the said shares. The complainant sent a notice on 2.5.2002 to the O.P. demanding Rs. 15,000/-. The O.P. refused to accept the notice and finding no other alternative the complainant filed a case before the Forum, praying for a direction upon the O.P. Company to pay a compensation of Rs. 15,000/-. The O.P. did not contest the case in the Forum and the matter was heard ex parte and judgment passed. The Forum on examining the documents was satisfied that the complainant duly proved the documents filed by him and held that there was deficiency in service on the part of the O.P. causing financial loss to the complainant. However, the Forum did not agree to the demand of Rs. 15,000/- as made by the complainant and observed that the complainant could have sold off the shares earlier instead of waiting till the 1st week of July, 2002 for effecting the sale. On this basis the Forum concluded that the appropriate compensation amount should be Rs. 5,000/-. The Forum in its impugned order directed the O.P. to pay a sum of Rs. 5,000/- as compensation to the complainant within a period of 30 days from the date of the order. Being aggrieved by this order of the Forum the O.P. has come in appeal before the Commission. In the memo of appeal the main grounds taken by the appellant are as under: (1) The Kolkata office of the appellant is not the Branch office for depositor-related service of the appellant because the Kolkata office is maintained only as a Liaison office for providing E-broking service. According to the appellant the complaint should have been filed in the Mumbai office of the appellant.

(2) According to the appellant the Demat Request Form and option letter as submitted by the complainant were received by their Mumbai office on 26.3.2003 and the appellant without wasting any time forwarded the Demat Request Form and other documents to Alpha System. According to the appellant there was no negligence on their part by way of any delay.

(3) The complainant has committed fraud by submitting Demat Request twice, firstly to the appellant and then to Bank of Punjab.

(4) The Forum passed impugned order ex parte without giving an opportunity to the appellant of being heard which is against the principle of natural justice.

On the basis of the above grounds the appellant prayed that the impugned order of the Forum be set aside. The complainant/respondent filed a written statement against the memo of appeal wherein the following main points were taken. (1) Upon inquiry with the Alpha System the respondent came to know that even after 35 days from the date of lodgement of the Demat Request Form the appellant had not sent the documents in respect of the said 100 shares, as a result of which Alpha System could not release the shares in Demat Form within the stipulated date i.e., 6.4.2002. As a matter of fact when National Securities Depository Ltd. took up the complaint with the Alpha System, the latter replied stating the same thing that they had not received the Demat Request Form along with the option letter from the appellant till 19.4.2002 whereafter he sent the physical share certificates to the complainant.

(2) The Kolkata Office of the appellant is having a full-fledged branch which was authorised to look after all business including depository-related services. Therefore, the appellant''s allegation that their Kolkata office was not supposed to provide the requisite service was baseless.

(3) The appellant did not send the Demat Request Form along with the option letter to Alpha System till 19.4.2002 as a result of which they could not release the said share in Demat Form within the stipulated time. As a consequence of this the respondent suffered financial loss.

(4) Though the respondent did not file any cross-appeal he tried to defend his claim for Rs. 15,000/- as compensation. According to the respondent he was compelled to wait till the 1st week of July, 2002 for selling of the shares because during the period from 21.5.2002 (date of receipt of the shares in Demat Form) and the 1st week of July the market prices were ruling at a very low level and only after the prices somewhat stabilised towards the end of June at the level of about Rs. 540/-, he decided to sell the shares in the 1st week of July and in the process incurred loss of Rs. 15,000/- as claimed by him.

DURING the hearing of the appeal the appellant was represented by its learned Advocate Mr. P.K. Basu while the respondent was present in person. The main argument of the learned Advocate for the appellant was that in case of purchase of shares for business or commercial purpose the Consumer Forum has no jurisdiction and the remedy for the complainant lies in regular suit filed in a Civil Court. In support of this contention one ruling was cited III (1992) CPJ 75 (NC). The respondent by and large argued on the same line as the stand taken by him in his written statement. He categorically contested the stand taken by the appellant that the documents were forwarded to Alpha System immediately on 26.3.2002. The respondent also explained how his finncial loss was to the extent of Rs. 15,000/- and not Rs. 5,000/- as awarded by the Forum. We have carefully gone through the impugned order, the memo of appeal and the written statement filed by the respondent. We find that there is hardly any merit in the appeal as filed by the appellant. The appellant''s stand that on receipt of the documents at their Mumbai Office on 26.3.2002 they immediately sent the same to Alpha System. But this version of the appellant has not only been challenged by the respondent/complainant but its falsity is also proved by the letter of Alpha System addressed to the complainant which clearly shows that the said documents were not received by them from the appellant Company within 35 days though the stipulated time period was only about 3 weeks. Therefore, we have no doubt at all in holding that the appellant failed to send the documents i.e., the Demat Request Form along with the option letter to Alpha System within the stipulated period of 3 weeks. The failure on the part of the appellant resulted in Alpha System despatching the physical share certificates to the complainant who subsequently got them converted into the Demat Form through Bank of Punjab. As a result the complainant suffered financial loss caused by the drop in market price of the share. Such failure on the part of the appellant definitely betrayed deficiency in service on their part and the Forum''s decision in this regard is in our opinion does not suffer from any infirmity or illegality. In regard to the contention of the learned Advocate for the appellant that in case of purchase of shares for business or commercial purpose the Consumer Forum has no jurisdiction, we find that the services of the O.P. were hired by the complainant not for any sale/purchase of shares but only for getting the service of conversion of the shares into the Demat Form which is essential for the purpose of selling the shares. Hence, the complainant really hired the services of the O.P. for consideration and, therefore, his complaint against the O.P. is very much maintainable before a Consumer Court under the C.P. Act. In regard to the respondent''s claim for compensation of Rs. 15,000/- as made in the written statement filed by him we are of the view that it is not possible to consider the prayer at this stage. Firstly, the complainant has not filed any appeal against the impugned order and, therefore, it must be inferred that he has accepted the award passed by Forum. Secondly, the complainant has not furnished necessary documents to establish his contention that the market prices ruled at very low levels during the period from 21.5.2002 to the end of June, 2002 and, therefore, the view taken by the Forum in this regard in the impugned order has not been effectively controverted with the help of necessary documentary evidence.

In the result, in our opinion the appeal is without any merit and deserves dismissal. At the same time the respondent''s request for enhancing the compensation amount cannot be acceded to.

IN view of the foregoing descussion we deem it appropriate to pass the following order: The appeal is dismissed on contest. The impugned order of the Forum is affirmed. However, there will be no order as to cost taking into account the facts and the circumstances. Appeal dismissed.