Kishor Vandravanas Goradia & Anr. vs Siemens Ltd. & Anr.

This Revision Petition, under Section 21(b) of the Consumer Protection Act, 1986 (for short "the Act"), has been filed by the Complainants, against the order dated 15.10.2009, passed by the Maharashtra State Consumer Disputes Redressal Commission at Mumbai (for short "the State Commission"), in First Appeal No. 1479 of 2008. By the impugned order, the State Commission has dismissed the Appeal, preferred by the Complainants against the order dated 29.9.2008, passed by the Consumer Disputes Redressal Forum, Central Mumbai District, Mumbai (for short "the District Forum") in Complaint No. 36 of 2007, whereby the District Forum had allowed the Complaint and directed the Respondents/Opposite Parties to jointly and severally pay to the Complainants a sum of Rs. 20,000 as compensation for deficiency in service relating to the equity shares held by them in the Respondent No. 1 Company and Rs. 3,000 towards costs. 2. The factual matrix of the matter, as stated in the Complaint, is that the Complainants were holding 278 shares of the face value of Rs. 10 each of Siemens Ltd., (for short "the Company"), Opposite Party No. 1 in the Complaint and Respondent No. 1 herein, against Folio No. SIK-001594. When the Complainants found that they were not receiving dividend on the said shares, for quite some time, vide their letter dated 8.12.2005, they requested the Company''s Registrars and Transfer Agents, namely, Tata Share Registry (TSR) for doing the needful in the matter. However, there was no response from their side. In the following month, i.e. January, 2006, the Complainants received two cheques, both dated 6.1.2006, drawn on Standard Chartered Bank, bearing Customer Ref. No. 20101632 and 20101633, in the sums of Rs. 1,912 and 1,434 respectively. Since there were no details on the said cheques, except for the warrant and folio numbers, on 25.1.2006, the Complainants wrote a letter to the said Bank, requiring it to furnish the details about the name of the Company; number of shares; rate of dividend and the year for which the said cheques towards the dividend were issued. Not being satisfied with the information furnished on oral enquiry, the Complainants contacted the Company. They were informed that according to the Transfer Agents, they had no share holding in the Company under the afore-stated Folio number as on issue of duplicate share certificate in respect of the said shares, the same were dematerialized and sold in the market. Pursuant to the request by the Complainants to forward the documents pertaining to the issue of duplicate shares to them, the TSR, vide its letter dated 16.3.2006, forwarded a copy of the transfer deed dated 7.8.2002, transferring the duplicate shares in the name of one Amrut K. Mehta. On 10.4.2006, the Complainants also received more documents from the TSR, inter alia, a copy of the FIR dated 2.1.2002 for loss of 478 shares, purportedly lodged by Kishor Goradia (Complainant No. 1), with the Police; copy of share transfer form for transfer of the said 478 shares dated 1.8.2002 and a copy of the correspondence for issue of duplicate certificate. From the said documents, the Complainants claimed to have learnt about the transfer of 478 shares of the Company, including the 278 shares held by them, in the name of one Amrut K. Mehta, as also the fact that their signatures on the share transfer form had been forged. It was noticed that the address of the witness, the transferee, viz. Amrut K. Mehta and that of the Complainants, being 14/16, Gandhi Mansion, B.M. Lane, Kalbadevi, Mumbai-400002, where the duplicate share certificates had been dispatched by the Company, was the same. Since the original share certificates in respect of the said 278 shares were still in the possession of the Complainants and had not been sold, the Complainants got issued a notice, dated 5.5.2006, to the Company, calling upon it to restore their shareholding. However, the Company, vide its letter dated 25.5.2006, expressed its inability to do so. 3. Seemingly, left with no other option, the Complainant filed the Complaint before the District Forum alleging deficiency in rendering of services on the part of the Opposite Parties in not verifying the signatures and address of the Complainants; dispatching the duplicate share certificates at the forged address to facilitate the transfer, dematerializing and the subsequently selling them in the market. They prayed for a declaration that the Opposite Parties were deficient in providing service to the Complainants; a direction to the Opposite Parties to jointly or severally restore the shareholding of 1390 shares of face value of Rs. 2 and to pay a compensation of Rs. 1,00,000 for mental harassment and litigation expenses of Rs. 25,000. It was alleged that before transferring the shares, the Company ought to have contacted the Complainants at the address notified in its records and adhered to the guidelines issued by the Stock Exchange, to the effect that if the value of the shares, in respect of which duplicate shares had been applied for, exceeded Rs. 50,000, it was necessary to issue a public notice about the loss of the shares, which was not done. It was pleaded that on account of negligence of the Company, the Complainants were wrongfully deprived of their rightful shareholding of 1390 shares as the 278 shares, initially held by them, had been sub-divided into 5 equity shares of face value of Rs. 2 w.e.f. 21.6.2006, and subsequently bonus shares were issued. The market value of the said shares was stated to be Rs. 16,68,000. 4. The Company resisted the Complaint on diverse grounds, including its maintainability on the plea that the Complainants were not "Consumers" within the meaning of Section 2(d) of the Act. On merits, it was pleaded that as on 14.11.1999, the shareholding of the Complainants was 478 equity shares of Rs. 10 each and not of 278 equity shares of Rs. 10 each; the transferee, Amrut Mehta was not impleaded as a party in the Complaint with mala fide intention, as both the Complainants and the transferee were in collusion and were attempting to defraud the Company; since the equity shares, subject matter of the Complaint, had been transferred in the name of Amrut Mehta in the year 2002, the claim made by the Complainants was beyond the period of limitation; as per the Securities and Exchange Board of India (Registrar to an Issue and Share Transfer Agents) Regulations, 1993, by 30.1.2005, the entire share registry work of the Company, along with all the records in physical as well as in electronic form, was being handled by Opposite Party No. 2 as its Registrar and Share Transfer Agent and therefore, the Company had no role to play in the matter of issuance of duplicate share certificate, transfer and dematerialization of equity shares; before issuing the duplicate share certificates, all the formalities, including a copy of the FIR filed with the Police, indemnity bond, affidavit and surety, pre-requisite for issue of duplicate share certificates, had been obtained by the Opposite Party No. 2 from the Applicant; the signatures of the Complainants, as per the record and on the affidavit and Indemnity Bond, attested by the Notary Public and witnessed by Advocate Jagjivandas K. Nathani, were also tallied and therefore, there was no negligence on the part of the Company in the issue of Duplicate Scrips and in the transfer of the shares. It was also averred that the jurisdiction to restore the equity shares was vested only in the Company Law Board as per the provisions of the Companies Act, 1956 and thus, the direction as prayed for in the Complaint, could not be issued under the Act. 5. Despite service, Opposite Party No. 2 did not enter appearance before the District Forum. Hence, it was proceeded against ex parte. 6. Rejecting the preliminary objection regarding the maintainability of the Complaint and upon consideration of the evidence adduced by the contesting parties, the District Forum arrived at the conclusion that both the Opposite Parties were negligent and careless in issuing duplicate shares and further, since Opposite Party No. 2 was their Agent at the relevant time, the Company was responsible for their acts as well. One of. he factors which weighed with the District Forum to form the said opinion was that the registered address of the Complainants was "4, Fulchand Nivas, 1st Floor, 25, Dr. Purandare Marg, Chowpatty Sea Face, Mumbai-400007", on which address in the year 2006 the Opposite Parties had sent the dividend warrants to the Complainants, whereas the duplicate share certificates were dispatched by Opposite Party No. 2 at "14/16, Gandhi Mansion, B.M. Lane, Kalbadevi, Mumbai-400002". In so far as the question of issuance of duplicate shares to Amrut Mehta was concerned, who had subsequently got them dematerialized and sold in the market, the District Forum observed that the Police was investigating the matter as to who had committed the fraud in the transaction. Accordingly, while partly allowing the Complaint, the District Forum directed the Opposite Parties to jointly and severally pay to the Complainants a sum of Rs. 20,000 towards compensation for the deficiency in service and Rs. 3,000 towards litigation expenses. 7. Being dissatisfied with the relief granted by the District Forum, despite a finding in their favour that the Opposite Parties were negligent and careless in issuing duplicate shares and dispatching the same at an address which was not their address, the Complainants preferred Appeal before the State Commission seeking enhancement of the Compensation. The Company also challenged the said order before the State Commission but its Appeal was dismissed as barred by limitation. Dissatisfied with the order of dismissal of its Appeal as time barred, the Company preferred Revision Petition being R.P. No. 2774 of 2010. However, this Commission did not interfere with the said order. Pertinently, the Company did not carry the matter further, with the result that the order of the District Forum, in so far as the Company and Respondent No. 2 was concerned, attained finality. 8. Maintaining the order passed by the District Forum, the State Commission has observed that no power is vested in the Consumer Fora to direct restoration of the shares transferred in the year 2002, and if the allegation of the Complainants was to be believed, as a matter of fact, it is the Company which is the victim of fraud. Inter alia observing that the Complainants had not adduced any evidence to prove that the market value of the shares as on the date of filing of the Complaint was Rs. 16,68,000 and that they had suffered mental torture, the State Commission has declined to issue direction for restitution of the shares or to enhance the compensation, as prayed for in the Complaint. Hence, the present Revision Petition by the Complainant. 9. We have heard Ms. Devina Sehgal and Mr. C. Mukund, respectively on behalf of the Complainants and the Company at some length. We have also gone through the written submissions filed on their behalf. 10. Although during the course of hearing as also in the Written Submissions, a valiant attempt was made by learned Counsel'' appearing on behalf of the Company to rake up issues relating to limitation and limited jurisdiction of this Commission under Section 21(b) of the Act, to deal with the subject controversy, as according to the Company, it lies exclusively within the domain of the Company Law Board, since the Complainants are not "Consumers", within the meaning of Section 2(1 )(d) of the Act. However, in our view, the order of the District Forum dated 29.9.2008; clearly holding them deficient in rendering service to the Complainants in the entire transaction having attained finality qua the company, at this juncture, it is estopped from raising all such pleas. Nevertheless, the Company can defend the decision of the Lower Fora in so far as the quantum of the compensation in favour of the Complainants is concerned. 11. Therefore, the question with which we are concerned in the present petition is whether the compensation awarded to the Complainants by the Fora below for the alleged loss suffered by them for losing valuable security viz. 278 equity shares, held by them in the Company, is adequate? As afore-stated, the finding of "deficiency" on the part of the Company has already attained finality. 12. It is trite that although the word ''Compensation'' is not defined in the Act, but it is of very wide connotation. It not only constitutes actual loss or expected loss, it may extend to mental or even emotional sufferings. In Lucknow Development Authority v. M.K. Gupta, III (1993) CPJ 7 (SC) : 1993 (SLT Soft) 657 : (1994) 1 SCC 243, explaining the width and scope of the powers invested in the Consumer Fora under the Act, the Hon''ble Supreme Court has observed that the Commission has been vested with jurisdiction to award value of goods or services and determine compensation for any loss or damage suffered by a consumer, which in law is otherwise included in the wide meaning of compensation. The Consumer Fora is entitled to award not only the value of the goods or services but also to compensate a Consumer for the injustice suffered by him due to deficiency in service in sale of goods or rendering of service, as the case may be. 13. On the question of determination of compensation for the loss or injury suffered by a Consumer/Complainant on account of deficiency in service, the following observations by a three Judge Bench of the Hon''ble Supreme Court in Charati Singh v. Healing Touch Hospital & Ors., VI (2000) SLT 867 : 87 (2000) DLT 573 (SC) : III (2000) CPJ 1 (SC) : (2000) 7 SCC 668 are also apposite: "While quantifying damages, Consumer Forums are required to make an attempt to serve the ends of justice so that compensation is awarded, in an established case, which not only serves the purpose of recompensing the individual, but which also at the same time, aims to bring about a qualitative change in the attitude of the service provider. Indeed, calculation of damages depends on the facts and circumstances of each case. No hard and fast rule can be laid down for universal application. While awarding compensation, a Consumer Forum has to take into account all relevant factors and assess compensation on the basis of accepted legal principles, on moderation. It is for the Consumer Forum to grant compensation to the extent it finds it reasonable, fair and proper in the facts and circumstances of a given case according to the established judicial standards where the claimant is able to establish his charge." 14. It is trite that in considering the quantification of compensation, a precise calculation is difficult, as no clear or strait jacketed principles can be designed for the said purpose. Hence, the exercise would invariably involve discretion and consideration of a plethora of variables, depending on the facts and the circumstances of the case. Some broad factors that may be considered while scrutinizing claims for compensation/damages include: (a) background of the parties, both the injured and the negligent or defaulting party; (b) the degree of negligence or the severity of the defaulting act that caused the injury to the complainants; (c) the degree of proximity or causation of defaulting acts resulting in the injury; and (d) consideration of alternative modes of redressal of the Complainant''s grievance like restitution, general and specific damages, other means of nonmonetary compensation, etc. Needless to add that the above parameters are only illustrative and not exhaustive. 15. Thus, the core question falling for consideration on facts at hand is with regard to the basis or yardstick to be applied for quantification of the loss, claimed to have been suffered by the Complainants for having been deprived of the ownership of 278 equity shares held by them in the Company. 16. Valuation of shares is not an exact science and inherent in it is some amount of guess work. Undoubtedly, ownership of equity shares carries with it other valuable rights, like right to receive dividend, bonus/right shares, right to transmit the shares, right to vote, etc. and on transfer of shares, those rights also sail along with them. (See: Vodafone International Holdings BV v. Union of India & Am., I (2012) SLT 547 : (2012) 6 SCC 613. 17. One of the standard norms, usually applied to assess the loss is the extent of earnings on the concerned security. Pithily put, it is not only the amount of dividend the Complainants would have earned on the said equity shares, other benefits accruing therefrom like issue of bonus/rights shares, etc., would be equally relevant factors for estimating the loss suffered by the Complainants. In this regard, in compliance with our order dated 13.7.2015, the Complainants have placed on record the details of the dividends declared by the Company from year to year. Additionally, according to the Complainants, as per the information furnished by the Company, in the year 2006 the Company had split the face value of the share from Rs. 10 to Rs. 2; in February, 2008, the Company had declared bonus shares in the ratio of 1:1 and therefore, their total share holding in the Company, as in the year 2015, would have been 2780 shares. According to the Complainants from the year 2002 to the year 2015, they would have earned total dividend of Rs. 1,22,181. A statement showing the value of the share for the said period has also been filed by the Complainants. As per the said statement, although in December, 2006, the average closing share price was Rs. l,134.45p but in December, 2008, it reduced to Rs. 287.10 (share price in December, 2007 is not on record), probably because of the reduction in the face value to Rs. 2 in the year 2006. Thus evidently, the equity shares held by the Complainants in a multi-national Company were valuable security. 18. In the Complaint, the Complainants have prayed for restitution of 1390 equity shares. Regard being had to the fact that the shares in question have already been registered in the name of a third person, it would not be possible to direct restitution of shares by fresh allotment from the fully subscribed equity of the Company. Similarly, at this juncture it would not be possible to determine the exact amount of loss, which the Complainants would have suffered, on the basis of the stated statistics, more so, when the element of uncertainty in such kind of scrips cannot be altogether ruled out. It cannot be said with any amount of certainty that the Complainants would have continued to retain the shares or may have sold the same or a part thereof. Nevertheless, bearing in mind the afore-noted broad factors, we are of me view that the present case calls for enhancement of the compensation fixed by the lower Fora. 19. Hence, keeping in focus the cost of the shares (1390) as on the date of filing of the Complaint, and the stated amount of dividend (Rs. 1,22,000) [computed by the Complainant on 2780 shares] and taking an overall view of the matter, in our opinion, ends of justice would be subserved if an additional lump sum compensation of Rs. 5,00,000 (Rupees five lac only) is awarded in favour of the Complainants and against the Company, in addition to the amount of compensation (Rs. 20,000) already awarded by the Fora below. 20. Resultantly, we allow the Revision Petition and direct that the aforesaid additional compensation shall be paid by the Company to the Complainants within 4 weeks of receipt of a copy of this order, failing which the afore stated amount shall carry interest @9% p.a. from the date of the complaint till actual realization. It will, however, be open to the Company to recover the said amount from Respondent No. 2, its Share Registrars, if so advised. 21. The Revision Petition stands disposed of in the above terms, leaving the parties to bear their own costs. Revision Petition allowed.