Nagaraj Narayan Katti vs ITC LTD.

THE instant complaint swirls around the question of shares. The key question which falls for consideration is ''whether the Shareholders or their Legal Representatives are ''consumers'' under the Consumer Protection Act, 1986?''. The present complaint has been filed by Shri Nagaraj Narayan Katti, complainant No. 1 and his wife, Mrs. Sushma Nagraj Katti, complainant No. 2.

ITC Ltd. Investor Service Cell, opposite party No. 1 issued various shares in the name of Shri Narayan Rango Katti and Mrs. Indira Narayan Katti, father and mother of complainant No. 1. The shares issued are as under: (a) 150 shares under Certificate Nos. 12932 and 12933 dated 25.1.1955.

(b) 275 shares under Certificate No. 16096, 30252 and 30253 dated 20.3.1970.

(c) 70 shares under Certificate Nos. 59597, 60300 dated 14.11.1974.

(d) 99 shares under Certificate No. 122237 dated 10.2.1977.

(e) 118 shares under Certificate Nos. 201073 and 201074 dated 14.6.1978

(f) 142 shares under Certificate

(g) 15 Nos. of bonds bearing certificate Nos. 278679 and 278680 dated 29.8.1980. te 097044 issued under Share Exchange Scheme.

Unfortunately, the second holder, namely, Indira Narayan Katti expired during the year 1983. On 31.3.1984, the name of Smt. Indira Narayan Katti was deleted by opposite party No. 1 and it inserted the names of both the claimants along with the name of first holder, Shri Narayan Rango Katti. That is to say, 75 shares issued under Certificate No. 047009 dated 1.7.1984 by opposite party in the name of late Shri Narayan Rango Katti and both the complainants on 1.7.1984. Again on 1.7.1985, 75 shares issued under Certificate No. 183308 by opposite party No. 1 in the name of Shri Narayan Rango Katti.

IN the year 1988, Shri Narayan Rango Katti expired. After the death of their parents, the complainants shifted to Bangalore from Pune. The opposite party was duly informed about the death of first holder as well as change of address. The opposite party No. 1 sent a letter dated 29.12.1990 at the new Bangalore address, which shows that opposite party No. 1 had updated their records. Vide letter dated 1.8.1991, the opposite party No. 1 showed their inability to change the records in spite of being aware of the death of first holder and also informed that warrant No. 57290 for Rs. 1,167,90 was retained. It is averred that in the process of shifting, the entire correspondence with respect to these shares got misplaced. However, the complainants were able to retrieve some of the correspondence from their chartered accountant in Pune in June, 2011. They sent the document by speed post to opposite party No. 1 on 16.7.2001. The complainants contacted Mr. Ajoy Singh, Officer, Investor Service Cell, opposite party No. 2 several times on phone, but received no response.

THE complainants were shocked to receive e -mail dated 25.1.2012 in which it was stated that a total of 6424 shares of Rs. 10 each which were originally standing in the joint names of Mr. Narayan Rango Katti, Mr. Narayan N. Katti and Mrs. Sushma Nagraj Katti under account No. 11/8976, have been sub -divided into shares of Rs. 1 each and along -with bonus shares, new share certificate amount to a total of 96,360 shares of Rs. 1 each were sent to 49/2, Rambag Colony, Pond Road, Pune -411038 on 25.10.2005. The complainants were shocked to read that they were dematerialized on 16.8.2006 under Demat Account No. 1N301330/19779875 for which Stock Holding Corporation of India, opposite party No. 3 acted as the Depository Participant. The complainant wanted the details. The opposite party No. 1 did not furnish the same. In the meantime, it also came to knowledge of the complainants that three persons were arrested for fraudulent transfer of shares in which one of the Demat account was for the shares of the complainants. On inquiries with unit 5, EOW, Mumbai, the complainants were also apprised of the fact that tow accused Mr. R.N. Shukla and Mr. J.R. Shukla were arrested on 28.11.2008 under EOW, CR No. 67/2008. It is stated that the opposite parties 1 and 3 were deficient in discharge of their services. The complainants made demand that new shares be issued. Ultimately, the present complaint with the following prayer was made: 17. The complainants therefore pray that: (a) The Hon''ble Commission be pleased to direct opponent No. 1 to issue 96,630 new shares in the joint names of two complainants or in the alternative pay a sum of Rs. 2,25,33,786 along with interest @ 18% p.a. from the date of complaint till payment.

(b) The Hon''ble Commission be pleased to direct the Opponent Nos. 1 to 3, jointly and severally to pay to the complainants a sum of Rs. 10,00,000 towards costs of litigation.

(c) Pending the hearing and final disposal of the complaint, the opponent Nos. 1 and 2 be directed by an order of mandatory injunction to give public notice informing the fact that the said shares are the subject matter of criminal complaint with the EOW in Mumbai.

(d) Pending the hearing and final disposal of the complaint, the Hon''ble Commission be pleased to direct the opponent Nos. 1 and 2 to furnish the names of the present holders of the said shares originally standing in the names of Complainants.

(e) Pending the hearing and final disposal of the complaint, the opponent Nos. 1 and 2 be restrained by an order of temporary injunction from entering/accepting the names of any persons/companies/originations, who may purchase the said shares from the date of filing of the complaint.

(f) Pending the hearing and final disposal of the complaint, the Hon''ble Commission be pleased to direct opponent Nos. 1 and 3 to deposit a sum of Rs. 2,25,33,786 in this Hon''ble Commission.

(g) Interim and ad interim reliefs be granted in terms of prayer Clause (c), (d), (e) and (f) above.

(h) For any other reliefs in the interest of justice.

AT the very outset, the learned Counsel for the opposite parties 1 and 2 moved an application that this case is not maintainable. On the other hand, learned Counsel for the complainants made the following submissions. The opposite parties have not filed written version as required under Section 13 of the Consumer Protection Act, 1986. He explained that the opposite party was served long ago. Mr. Siddharth Banthur, Advocate was present in the Commission on 16.1.2013. Seven months have elapsed, but no written statement has been filed. Their defence is liable to be struck off.

WE find no force in these arguments. The complainants have already filed an application on behalf of opposite party No. 1 seeking direction to decide the jurisdictional issue at the first instance and dismissal of complaint being not maintainable. The Hon''ble Apex Court in an authority reported in K. Sagar, Managing Director, Kiran Chit Fund, Musheerabad v. A. Bal Reddy and Another, (2008) 7 SCC 166, was pleased to hold as under: 8. In the aforesaid background, we are of the view that the issue relating to jurisdiction has to be decided by the Forums first. We, therefore, set aside the impugned order of the National Commission confirming the order passed by the State Commission, and remit the matter to the State Commission to consider the question of jurisdiction. Consequently, this question has to be decided, first of all.

The second submission made by learned Counsel for the complainants was that arguments were heard and the notice was issued. The complainants challenged the notice. This Commission vide its order dated 4.2.2013 declined to hear the request made by the opposite parties, in this Commission. However, liberty was given to the complainants to file proper application.

WE are unable to agree with the contentions raised by learned Counsel for the complainants that after issuance of notice, it can be set aside only by the Appellate Court, for twin reasons. Firstly, the National Commission can review its order at any time if the same is warranted by law. Secondly, the complainants can move an application regarding jurisdiction, at any time. There lies no rub. The Hon''ble Apex Court has already authoritatively laid down that jurisdictional matter has to be decided first of all. Consequently, the arguments urged by learned Counsel for the complainants must be eschewed out of consideration.

The last submission made by learned Counsel for the complainants was that this is not a case of buying the shares. This is a different case where the complainants have highlighted the deficiency on the part of the opposite parties. She contended that this should not be equated with other cases of shares which have earlier been decided.

ALL these arguments are bereft of force. The complainants have claimed the amount of shares in this case. We are of the considered view that this Commission has no jurisdiction to decide this case. This view finds support from number of authorities. The Hon''ble Supreme Court in Morgan Stanley Mutual Fund v. Kartick Das, II (1994) CPJ 7 (SC) : 1994 (4) SCC 225, has held: 26. The consumer as the term implies is one who consumes. As per the definition, consumer is the one who purchases goods for private use or Consumption. The meaning of the word ''consumer'' is broadly stated in the above definition so as to include anyone who consumes goods or services at the end of the chain of production. The comprehensive definition aims at covering every man who pays money as the price or cost of goods and services. The consumer deserves to get what he pays for in real quantity and true quality. In every society, consumer remains the centre of gravity of all business and industrial activity. He needs protection from the manufacturer, producer, supplier, wholesaler and retailer.

In the light of this, we will have to examine whether the ''shares'' for which an application is made for allotment would be ''goods''. Till the allotment of shares takes place, "the shares do not exist". Therefore, they can never be called goods. Under the Sale of Goods Act, all actionable claims and money are excluded from the definition of goods since Section 2(7) of the Sale of Goods Act, 1930 is as under:

(7) ''goods'' means every kind of movable property other an actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale. It will be useful to refer to Clause (6) of Section 2 of the Sale of Goods Act, 1930. That reads:

(6) ''future goods'' means goods to be manufactured or produced or acquired by the seller after the making of the contract of sale.

Certainly, Clauses (iii) and (iv) of Section 2(1)(c) of the Act do not arise in this case. Therefore, what requires to be examined is, whether any unfair trade practice has been adopted. The expression ''unfair trade practice'' as per rules shall have the same meaning as defined under Section 36A of Monopolies and Restrictive Trade Practices Act, 1969. That again cannot apply because the company is not trading in shares. The share means a share in the capital. The object of issuing the same is for building up capital. To raise capital, means making arrangements for carrying on the trade. It is not a practice relating to the carrying of any trade. Creation of share capital without allotment of shares does not bring shares into existence. Therefore, our answer is that a prospective investor like the respondent or the association is not a consumer under the Act.

From the above discussion, it is clear that the question of the appellant company trading in shares does not arise.

In view of our answers to Questions 1 and 2, it follows that the Consumer Disputes Redressal Forum has no jurisdiction whatsoever.

THIS must be borne in mind that this decision was made prior to the amendment. The amendment of ''consumer'', in Section 2(1)(d)(ii) and explanation brought out further changes in the definition of consumer. It was squarely laid down with the amendment w.e.f. 15.3.2003, that this does not include a person who avails of such services for any commercial purpose. The Explanation appended to this Clause further lays down, "For the purposes of this clause, ''commercial purpose'' does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self -employment". There is no evidence that the Complainants Nagaraj Narayan Katti and Smt. Sushma Nagaraj Katti were availing services for the purpose of earning their livelihood, by means of self -employment. No such averment was made.

THIS view is further supported by the case of Dr. V.K. Agarwal v. M/s. Infosys Technologies Ltd. and Ors., I (2013) CPJ 373 (SC), In O.P. No. 287 of 2001 decided on 24.7.2012. In the case of Chairman Cum Managing Director (ONGC) and Anr. v. Gurbir Singh Anand and Anr., Revision Petition Nos. 4243 to 4254 of 2011, decided by the Bench headed by Hon''ble Justice Ashok Bhan on 30.8.2012, also gave the same view. The SLP filed by the petitioner against the above said order was dismissed by the Hon''ble Apex Court. Similar view was taken in another case. First Appeal No. 362 of 2011, Ganapati Parmeshwar Kashi and Anr. v. Bank of India and Anr., decided by the Bench headed by Hon''ble Justice Ashok Bhan, on 21.8.2012. Aggrieved by the order passed in First Appeal No. 362 of 2011, a Special Leave to Appeal (Civil) No. 5401 of 2013 was filed before the Hon''ble Apex Court by the Appellant. The Hon''ble Apex Court was pleased to dismiss the said Civil Appeal.

LASTLY , this Bench, consisting of Justice J.M. Malik and Mr. Vinay Kumar in case of A. Asaithambi v. The Company Secretary and Others, in Revision Petition No. 1179 of 2012 decided on 1st August, 2012, took the similar view. The Apex Court in Civil Appeal No. 3684/2012 filed against the above said order, dismissed the SLP, vide order dated 14.12.2012.

FURTHER , same view was taken in Vijay Kumar Idusind Bank, II (2012) CPJ 181 (NC), Som Nath Jain v. R.C. Goenka and Anr., reported in I (1994) CPJ 27 (NC). This is, thus clear that Consumer Fora is not armed with the power to decide the question of shares. It entails huge evidence which cannot be decided in a summary procedure. Consequently we dismiss the complaint and give liberty to the complainants to approach the appropriate Forum for redressal of their grievances as per law including the decision in Laxmi Engineering Works v. P.S.G. Industrial Institute, II (1995) CPJ 1 (SC) : 1995 (3) SCC, 583.