MADAN LAL JAGGI vs PRABHAT TYAGI

THE complaint which has given rise to this appeal, was filed by Mr. Prabhat Tyagi, hereinafter referred to as the complainant, against the appellant, Mr M.L. Jaggi and another alleging that he had been selling and purchasing shares of various companies through the appellant, M.L. Jaggi, who was working as a sub-broker affiliated with M/s. M.P. Soni & Co., opposite party 2, who was a member of Delhi Stock Exchange Association Ltd. During the period from 31.1.92 to 2.4.92, the complainant purchased equity shares as per details mentioned in the complaint, the net rate including the commission chargeable by the opposite parties. THE complainant made payment through account payee cheque'' as per details mentioned in para 4 of the complaint in favour of opposite party 1. THE payment included the commission. On 1.4.92, opposite party delivered the shares detailed in para 5 of the complaint. On further persuasion, he delivered some more shares detailed in para 6 of the complaint and promised to deliver the remaining shares but later on his intentions turned dishonest and he neither delivered the remaining shares as detailed at Serial No. 5 to 8 of the table given in para 5 of the complaint nor returned the money which he had received towards the price thereof.

THE second grievance of the complainant was that the shares which had been delivered to the complainant included one lot of 50 ordinary shares of TISCO. THEy were sent to the company for being transferred in the name of the complainant. THE complainant was informed by the company that the signatures of the second transferor differed from the specimen signatures as per their record and they could not be transferred in his name. THE complainant approached opposite party 1 to have the transfer deeds duly signed by the transferor but to no effect. As a result of the above, the complainant had suffered various losses which were quantified and the complainant claimed a sum of Rs. 58,809/-alongwith interest @ 24% p.a. The complaint was contested on behalf of both the opposite parties. Various objections regarding maintainability of the complaint were raised. The objections were disposed of by District Forum II by its order dated 24.3.94. The District Forum came to the conclusion that the complaint was maintainable and fixed the case for final arguments. Aggrieved by the order, opposite party 1 has preferred this revision.

We have heard Mr. O.P. Aggarwal, Advocate for the appellant and have carefully gone through the records. None appeared at the time of hearing on behalf of the respondents i.e., the complainant and opposite party 2.

MR. Aggarwal has relied on a number of decisions in support of the contention that the present complaint was not maintainable and the remedy, if any, open to the complainant was to file a suit in the Civil Court. We have gone through the decisions and in our view, the revision petition has no merit and the same must, therefore, be dismissed. We shall, however, briefly deal with the case law cited before us. These are as follows: 1. G. Krishan Moorthy Chetty v. K.V. Chowdhary & Another, II (1995) CPJ 25 (AP). The complainant instructed the opposite party to purchase shares on his behalf. The shares were not delivered by the opposite party. On a complaint filed by the complainant, the District Forum directed the opposite party to pay Rs. 11,509/-to the complainant. In appeal, the Andhra Pradesh State Commission observed that no prayer had been made by the complainant that the opposite party should be directed to deliver 200 shares of Essar Gujarat and proceeded to add that even if such a prayer Were made it was not open to the Forum to give such a direction in view of the provisions of Section 14 of the Consumer Protection Act. With utmost respect we are unable to agree with the decision of the Andhra Pradesh State Commission. In our view, the correct position is that if a person enters into an agreement for the sale or purchase of shares on payment of commission, the broker or sub-broker, as the case may be, undertakes to render service on payment of consideration and if there is any deficiency found in rendering those services, the complainant can file a complaint and one of the directions which can be given is to make good the deficiency. This, in our view, would include in appropriate cases either handing over of the agreed shares at the price on which they were purchased in accordance with the instructions or to refund the money received for the purchase thereof.

Tata Timken Ltd. v. Smt. V. Jayalakshmi, II (1995) CPJ 206 (NC). This is a well-known decision in which the National Commission followed the decision of the Supreme Court in Morgan Stanley decided by the Supreme Court. The case is distinguishable from the facts of the present case as the complainant had sought remedy against the company which had floated the shares and the direction sought was to allot the shares applied for or to return the amount paid in this behalf. The decision is clearly covered by the law laid-down by the Supreme Court in Morgan Stanley and the facts of the present case, on the other hand, related to service agreed to be provided by a sub-broker and broker, who cannot be equated with a company which has floated the shares.

S.V. Sampath Kumar v. Rampal Attal, II (1995) CPJ 153 (AP) In this case, upholding the decision of the District Forum, it was held by the Andhra Pradesh State Commission that the Sauda book relied on by the District Forum, had been maintained in the ordinary course of business and no fault could be found therewith. The legal question of maintainability was not gone into. This case does not advance the case of the appellant.

Som Nath Jain v. R.C. Goenka & Anr., I (1994) CPJ 27 (NC). This case related to various transactions of sale and purchase of shares. These transactions were statedly entered into on the basis of telephonic instructions. It was held that the case would need a detailed probe including examination and cross-examination of witnesses. The complainant had also failed to provide the margin money and going by the version of the opposite party there was a debit balance of 19.82 lakhs in one account and a credit balance of 10.26 lakhs in nine other accounts. It was in these facts and circumstances that the complainant was relegated to his remedy by a Civil Court and it was further observed that the National Commission entertained serious doubts as to whether the complaint itself was maintainable under the Consumer Protection Act. Suffice it to say that it was nowhere held that such a complaint was not maintainable.

L.C. Malhotra v. J.C. Mehta & Co., I (1992) CPJ 389 A perusal of the decision shows that it was based on its own facts where the complainant who had initially given two cheques to the opposite party, had stopped payments of those cheques when the share certificates were sent to the opposite party for replacement. No proposition of law put forward by the learned Counsel for the appellant was laid down in the decision.

Techno Combine Associate v. Union of India & Others, I (1994) CPJ 480 (Haryana). This related to case of a franchisee regarding his grievance against the department for raising certain bills. It has no application to the facts of the present case.

S. fames Vincent v. Greater Cochin Development Authority & Anr. I (1994) CPJ 174 (NC). This was a case relating to suppression of the material facts regarding the pendency of a Civil Court suit. In the facts of the present case, on the other hand, it was found by the District Forum that the Civil Suit related to some other transactions. It is not disputed in appeal that even that suit stands dismissed. Ganga Dhar & Anr. v. Unit Trust of India & Anr., I (1994) CPJ 382 (Haryana). It was held that the debentures had been purchased for re-sale and the complainant was not a consumer. The view that we have taken is, that sale or purchase of shares on payment of commission constitutes service and, therefore, the exception relating to re-sale was not applicable. The case of service was covered u/Section 2(1)(d)(ii) whereas re-sale was an exception in the case of purchase of commodity which is dealt with u/Section 2(1)(d)(i) of the Consumer Protection Act. 7. For these reasons, we find no merit in the revision, which is dismissed with costs quantified as Rs. 2,500/which shall be paid within 30 days of the receipt of a copy of this order failing which the District Forum would initiate necessary proceedings u/Section 27 of the Consumer Protection Act. The revision having failed, the case will now be disposed of by the District Forum II according to law. For the purpose, the parties are directed to appear before District Forum II on 14th April 97. A copy of this order be conveyed to both the parties as well as District Forum II.

Appeal dismissed with costs.