N.MADURAM FINANCIAL SERVICES (P) LTD. vs Modern Woollens Ltd.

THIS is a complaint under Section 17 read with Section 12 of the Consumer Protection Act.

THE complainant purchased 100 debentures of the opposite party-company of the face value of Rs. 120/- per debenture which were fully convertible into shares. THEy were purchased from Mrs. K. Brinda, Abiramapuram, Madras-18. THE numbers of the share certificate and debenture certificate are set out in the complaint. THE complainant sent these debenture/share certificates to the opposite party on 13.2.91 for transferring in its name and all necessary transfer deeds stamped and signed. But in spite of repeated reminders there was no response. THE complainant therefore gave a notice through Counsel on 19.11.91. THE opposite party has been sending printed letters stating that the matter was receiving attention. THE transfer has not yet been effected. THE complainant therefore filed this complaint for directing the opp. party to issue certificates in respect of the debenture/share certificates in favour of the complainant and also to issue debentures to which the complainant is entitled under the opposite party''s letter dated 11.1.92 or in the alternative to pay to the complainant sum of Rs. 10,800/-, and also damages in the sum of Rs. 60,000/-. The opposite party has not entered appearance, but has sent its reply by post. It is contended that the complainant is not a consumer within the meaning of Section 2(1)(d)(ii) of the Consumer Protection Act and the petition is not maintainable. It is also contended that the office of the opposite party is situate at Jaipur and this Commission has no jurisdiction. On merits it is contended that the opposite party did not know about the purchase of these debentures/shares by the complainant from Mrs. Brinda and the opposite party has never received debentures/shares from the complainant.

Exhibits A1 to A9 are marked by consent. An affidavit has been filed by the complainant. Complainant''s Counsel was heard.

ON the above pleadings, the following points arise for consideration. 1. Whether the complainant is a consumer entitled to maintain this complaint? 2. Whether this Commission has territorial jurisdiction? 3. Whether there has been any deficiency of service or negligence on the part of the opposite party and to what relief is the complainant entitled? Point No. 1: The opposite party is a company incorporated under the Indian Companies Act and has issued shares and debentures. The complainant claimes to have purchased 100 debentures from Mrs. K. Brinda and the numbers of the share/debenture certificates are given in the complaint. It claims to have sent these debenture/ share certificates to the opposite party for transferring the same in its name, but the opposite party has not effected transfer. Hence this complaint. According to the opposite party it is not rendering any service to the complainant for consideration and the complainant is not therefore a consumer who has hired the services of the opposite party for consideration. This contention cannot be accepted. As a company incorporated under the Indian Companies Act, the opposite party issue debenture/share certificates which are purchased by the members of the public. The allotment of debenture/share certificates by the company to the members of the public who offer to purchase the same, and the transfer of the existing debenture/ shares by the holders of these debenture/share certificates to purchasers from them are services rendered by the company within the meaning of Section 2(1)(o) of the Consumer Protection Act. Those who purchase the shares/debentures from the company and those who purchase the shares/ debentures from the existing holders and seek the transfer from the company in their name are persons who have hired the services of the company for consideration, the consideration being the value of the share/debentures and they are therefore consumers within the meaning of Section 2(1)(d)(ii) of the Act. The point is found against the opposite party.

POINT No. 2: It is the case of the complainant that he has purchased these shares/Debentures from Mrs. K. Brinda at Madras and hence part of cause of action arises at Madras and this Commission has therefore jurisdiction to entertain this complaint. Point No. 3: The case of the complainant is that he has sent all these 100 debentures whose numbers are quoted in the complaint to the opposite party on 13.2.91 for transfer of the same in its name. The case of the opposite party is that these debentures/share certificates have not been received by it, but the correspondence passed between the parties would clearly prove that these debenture/share certificates have been received by the opposite party. Exhibit A1 is the copy of letter sent by the complainant to the opposite party on 13.2.91 along with the debenture/share certificates. Exhibit A2 is the letter of the opposite party dated 16.7.91 to M/s. P.C.S. Data Products Limited with a copy to the complainant wherein it is stated that the opposite party has received a number of complaints from the complainant regarding the non-transfer of the 100 debenture/share certificates and asking M/s. P.C.S. Data Products Ltd., who are the opposite party''s Transfer Agents to look into the matter. Exhibit A3 is the notice issued by the complainant to the opposite party through an advocate with copy to the Chairman, SEBI, Bombay, Registrar of Companies, Jaipur and Executive Director, Jaipur Stock Exchange Ltd. Jaipur. To this the opposite party has sent Exhibit A4 letter to the complainant''s advocate stating that they have referred the matter to their Registrar and Transfer Agent and that the advocate would hear from them shortly. Exhibit A5 is another letter dated 13.1.92 written by the opposite party to its Transfer Agent, M/s. P.C.S. Data Products Ltd. with copy to the complainant and its advocate requesting M/s. PCS Data Products Ltd., to look into the matter immediately. Under Exhibit A6 dated 27.1.92 the Jaipur Stock Exchange Limited has written to the opposite party about the complaint made by the complainant. Exhibit A7 is another letter dated 3.2.91 from the opposite party to the complainant''s advocate stating that the matter has been referred to their Transfer Agent. Exhibit A8 dated 11.2.92 from Securities & Exchange Board of India to the complainant''s advocate stating that the matter has been taken up with the opposite party. In none of its letters the opposite party has questioned the receipt of the debenture/share certificates from the complainant. On the other hand the opposite party has stated that matter has been referred to its Transfer Agent for consideration. It is only for the first time in the reply statement sent by post to this Commission, the opposite party has taken the stand that these debenture/share certificates have not been received by it. The complainant''s Managing Director has filed an additional affidavit stating that these certificates were sent to the opposite party by registered post under Exhibit A1 dated 13.2.91. We accept the affidavit and on a consideration of all these documents referred to above, we hold that the complainant has sent the 100 debenture/share certificates to the opposite party for transfer and the opposite party has failed to effect the transfer. There has been gross negligence and deficiency of service on the part of the opposite party. The complainant has claimed transfer of these debenture/share certificates in its name and to issue debentures to which the complainant is entitled as per the opposite party''s offer dated 11.1.92 or in the alternative to pay to the complainant a sum of Rs. 43,8000/-. The claim is well founded and the complainant is entitled to the same. The complainant is also put to much mental worry on account of these protracted correspondence and non-transfer of certificates. It will be entitled to damages in the sum of Rs. 10,000/-.

IN the result we order as follows: 1. The opposite party shall issue transfer certificate in favour of the complainant in respect of the debenture/share certificates mentioned in the complaint and also issue the debentures to which the complainant is entitled under the opposite party''s offer dated 11.1.92 within one month from the date of receipt of this order or in the alternative to pay to the complainant a sum of Rs. 43,800/- with interest thereon at 18% from the date of the complaint till payment. 2. The opposite party shall also pay to the complainant a sum of Rs. 10,000/- by way of damages. 3. The opposite party shall also pay to the complainant Rs. 1,000/- as costs. Complaint allowed with costs.