MAHESH TAKHTANI vs CASTROL INDIA LTD.

THIS appeal has been filed by the complainant against the order of the District Forum No.1 dated. 2.11.92 by which the complaint has been dismissed.

BRIEFLY the facts of the case are that the complainant on 5.1.87 purchased 50 shares of Indrol Lubricants & Specialties Ltd. (now named as Castrol India, respondent No.1) of the value of Rs. 10 each from Mrs. Lalita Gupta, respondent No. 3 @ Rs. 459/- per share through a sub-broker. The share-scrips were handed over to the complainant by the broker. It is alleged, that the scrips were lost and a report about their loss was lodged by him with the police. The loss was also reported to Delhi Stock Exchange and respondent No.1. The complainant filed a Civil Suit in the Court and obtained a stay order on 26.2.87 that the shares be not transferred by respondent No.1 in favour of any other person.

In March, 1987 bonus shares were issued in the ratio of 1:1; but respondent No.1 forwarded those shares to respondent No. 3. Subsequently in 1989 right issue in the ratio of 1:5 was issued by respondent No.1 and offer in that regard was also sent to respondent No. 3 and not to the complainant. In 1990 respondent No.1 issued 50 duplicate shares certificates to the complainant and asked him to collect 70 shares from respondent No. 3 to whom those had been sent.

THE complainant requested respondent No.3 to transfer those shares in his favour. However, she replied that she had not received 50 shares issued by the Company and refused to transfer right shares in his favour, though, he offered full payment plus interest to her. THEreafter, he requested the Company to issue 50 bonus shares and ask respondent No.3 to hand over 20 shares to him. Respondent No.1 it is alleged took no action. Respondent No.1 again issued bonus in the ratio of 3:5 and the same were again sent by them to respondent No. 3. In 1992 respondent No. 1 again declared bonus shares in the ratio of 3:4. The complainant again requested the respondent No.1 not to dispatch the said shares to respondent No. 3. It is averred, that it is evident that respondent Nos. 1 & 2, the registrar, failed to render proper service to the complainant. He has prayed that respondent No. 1 be directed to issue bonus and right shares as mentioned above, to him. He has further claimed damages and costs of litigation.

THE complaint was contested on behalf of respondent Nos. 1 and 2. Respondent No.3 was proceeded against ex-parte. THE learned District Forum dismissed the complaint on preliminary objection that the complainant was not a consumer as defined in the Consumer Protection Act, as he had not paid any consideration for hiring such service to the Company. He has come up in appeal to this Commission. The only question that arises for determination is, whether the complainant is a consumer. The learned Counsel for the acquisition has vehemently argued that the complainant is a consumer as defined in the Act and finding of the Forum to the contrary is erroneous. In support of his contention he has pleased reliance on a decision of Madras State Commission, in N. Maduram Financial Services (P) Ltd. v. Modern Woollens Ltd. Jaipur, 1992 (2) CPR 451. On the other hand contention of the learned Counsel of the respondent is that for transferring the shares no consideration is paid by the purchase of the shares to the company and therefore, it cannot be said that the complainant hired the services of the company. We have duly considered the arguments. The question is not free from difficulty. The capital of the company is subscribed by the share holders and from that capital the company runs business and earns profit. It out of the profits so earned, pays a part of the amount to the share holders as dividends and utilises the balance for running the business. As a proof of payment of share money, the company issues the share scrips. The consideration for issuing share scrips is included in the price of the shares. Therefore, it cannot be said that the company when it issues share scrips or transfers the shares to the purchaser from a share holder does so without consideration. We are, therefore, of the view that the complainant is a consumer as defined in the Act.

IN the above view we are fortified by the observation of the Madras State Commission in N. Maduram Financial Services case (supra). It was observed therein by the learned Commission that the transfer of the existing debentures / shares by the holders of the debenture/share certificates, to purchaser from them are services rendered by the company within the meaning of Section 2(1)(o) of the Act. It is further observed that those who purchase the shares /debentures from the existing holders and seek the transfer from company in their name are the persons who have hired services of company for consideration. The consideration being value of shares/ debentures and they are therefore, consumers within the meaning of Section 2(1)(d)(ii) of the Act.

FOR the aforesaid reasons we accept the appeal set-aside the order of the District FORum and remand the case to it for deciding the complaint on merits. The parties are directed to appear before the District FORum No.1 on 18.11.93. Appeal allowed.