MAJOR GEN. D.M.GUPTA vs Unit Trust of India

- THIS order will dispose of four appeals being Nos. A-570, A-571 and A-469 all of 1994 and A-122 of 1995. These appeals are directed against a common order of District Forum-II dated 4.7.94 filed by both the parties.

BRIEF facts of the case are that Maj. Gen. (Retd.) Dayal Mohan Gupta, his wife and daughter applied for the allotment of 5000 units each under the Master Gain-92 of the Unit Trust of India. Application Forms were given at the counter of U.T.I, on 18.5.92 alongwith cheques of the request amount of Rs. 50,000/- in each case as the application money. The money was credited to the account of UTI and debited to the accounts of the said applicants on 15.6.92. The certificates were to be issued by 30th September 92. The certificates were due for listing in the Stock Exchange in February, 93. The said applicants failed to receive the certificates. About 10 days after the listing the applicants disposed of the certificates @ Rs. 11.30 net through a stock broker. If the transaction had gone through each of the 3 applicants would have received a sum of Rs. 56,500/- instead of the amount invested namely Rs. 50,000/-. As the U.T.I, failed to deliver the certificates to the applicant the transaction was cancelled and the applicants were debited cancellation charges of Rs. 2,000/- each. The prices of the units plummeted to Rs. 7/- per unit, after brokerage the net rate was Rs. 6.85 paise per unit. The applicants thus lost Rs. 4.45 per unit and suffered a loss of Rs. 22,250/- each. As all efforts to secure the units failed, the applicants. lodged 3 Complaints Nos. 2221, 2222 and 2223 of 1993 in August, 1993 claiming compensation on account of gross deficiency in service. Appearance was entered on behalf of the opposite party, they were given time to file their written version. They failed to file the same as well as failed to appear at later stages of the case. Accordingly the learned District Forum proceeded to dispose of the 3 complaints. The main findings of the District Forum are: - (i) That the complainants were not entitled to compensation on account of the loss alleged to have been suffered because of their entering sale transaction of the units which they did not possess. (ii) There was clear evidence of applications having been made in time and the application money having been deposited. The plea that the application forms were not traceable did not absolve the opposite party from its liability and there was gross deficiency in service on its part. It was, therefore, directed, (a) that the opposite party shall furnish Unit Certificates to the complainants within 30 days of the order, (b) In the alternative, the opposite party shall refund Rs. 50,000/- to the complainants with interest @ 18% compounded annually from 15.6.92 till date. of payment, (c) The complainants shall be paid damages and costs amounting ''to Rs. 5,000/- each failure to comply with the above said order would render the opposite party liable to pay to the complainants interest @ 24% per annum on the entire sum payable under the order, (d) The opposite party should fix responsibility and recover the amount of damages awarded in these cases from whosoever is found responsible for misplacing the applications of the complainants and for not issuing the Unit Certificates, in time. Dissatisfied with the above order, the complainants preferred one set of 3 appeals on behalf of the opposite party a revision was initially filed. Later on the 3 appeals have been preferred against the order of District Forum with applications for condonation of delay.

We have heard the Maj. Gen. D.M. Gupta (retd.) in his own appeal and as authorised agent of the two other appellants and Mr. Sanjay Agarwal, Advocate for the U.T.I.

THERE is no dispute that respondent No. 3 M/s. Datamatics Ltd. were the Registrars of the Issue Master Gain 92. They maintained an inward register, a Photostat copy of the page 5 thereof has been placed on record. Its authenticity and correctness have not been disputed. At S. Nos. 113 to 121 are the particulars of the 3 complainants alongwith applications made by them and the application money given by them vide 3 cheques each. This record was all along available. It is, therefore, idle to suggest that the application forms of the complainants had been misplaced and delay in issuing the Unit Certificates occurred for want of necessary particulars including particulars regarding payment in respect of all those applications. Admittedly the Unit Certificates were received by the complainants on 9.11.94 after about 4 months of the decision by the District Forum. We have no hesitation in affirming the findings of the District Forum that this was a clear case of deficiency in service.

WE are, however, unable to agree with the District Forum that the. complainants could not deal with the Unit Certificates and could not, therefore, enter into any transaction with regard to their sale. The applications having been made in time alongwith application money and the case being one of firm allotment, in law no other formalities remained to be done and complainants became owner of the Unit Certificates applied and paid for by them. WE see no legal difficulty in complainants proceeding to dispose of the Unit Certificates through broker. It is entirely a different matter that as complainants were not in a position to deliver the Unit Certificates, the broker cancelled the deal and levied Rs. 2,000/- in each case as cancellation charges. The fact that the cancellation charges were levied and debited to the accounts of complainants stands duly supported by the certificate issued by the broker. It is not disputed that the price of Unit went down to Rs. 7/- which would mean Rs. 6.85 per unit after paying brokerage. The complainants thus clearly suffered a loss of Rs. 22,250/- each. This could have been avoided if the unit certificates had been delivered in time and the same could be disposed of at the then prevailing price of Rs 11.30. It was contended by Mr. Sanjay Agarwal that even though there was no specific order of District Forum to issue the Unit Certificates from retrospective effect, the same have been issued with retrospective effect implying that the complainants would be eligible for all the benefits accrued to all the investors from the date of allotment under the scheme. He further contended that the complainants were not entitled to any additional compensation. We are not impressed by this contention. In law, the complainants were entitled to allotment without there being any change in the date thereof and consequently to all the benefits which accrued to others who were given allotment under the scheme in due course. We have dealt with both sets of appeals on merits as objection regarding limitation taken on both sides was not pressed. For these reasons, we dispose of these appeals in the following terms.- (1) The U.T.I, shall pay Rs. 22,250/- in each case filed by the complainants towards loss suffered by the complainants due to deficiency in service on account of non-delivery of Certificates in time. (2) Rs. 2,000/- in each case as cancellation charges paid by the complainants. (3) Interest @18% per annum on the sum of Rs. 22,250/- and Rs. 2,000/- from 25.2.93 and 10.7.93 respectively till the date of payment. (4) Rs. 5,000/- each on account of costs and damages as awarded by the District Forum. (5) We make it clear that it will be open to the authorities to fix responsibility and take appropriate action according to law against those found responsible.

A copy of this order be communicated to the parties. Appeal allowed.