SANJEEV KUMAR ARORA vs SLM MANEK LAL INDUSTRIES LTD.

APPEAL No. 108 of 2000 has been filed by Sh. Sanjeev Kumar Arora, Mr. Tilak Raj Arora and Smt. Sneh Prabha Arora, all residents of House No. 553, Sector 8-B, Chandigargh, against respondent No. 1, M/s. SLM, Manek Lal Industries Ltd., Regd. Office Vashwani Mensions, Dineshaw Road, Mumbai, through its Managing Director and respondent No. 2, Company Secretary M/s. SLM Manek Lal Industries Ltd., Admn. Office Shell Inn House, 65, Bazar Gate Street, Fort, Mumbai, against the order of the District Consumer Disputes Redressal Forum-II, U.T., Chandigarh (for short hereinafter referred to as District Forum-II) dated 11.5.2000 in Complaint Case No. 191 of 1999. The appellants have prayed that they be given the prevalent market price of the shares as it existed on 18.1.1995 and the impugned order of the District Forum-II be dismissed.

THE appellant No. 1, M/s. SLM Manek Lal Industries Ltd. had purchased 2000 shares of M/s. Sagar Real Estate through M/s. Vijay and Sanjeev, Shares and Stock Brokers, B-114, Sector 14, Chandigarh on 18.1.1995 by investing a sum of Rs. 69,500/-. Some of the shares were in his name while the others were held by him jointly with appellants/complainants No. 2 and 3 who are his father and mother respectively. Only 1900 shares out of 2000 shares were transferred and 100 shares received back as bad delivery. Inspite of repeated reminders for the transfer of 100 shares the respondents failed to do so as a result of which the appellants/complainants filed the complaint No. 191 of 1999 in District Forum - II for deficiency in service on the part of the respondents. THE District Forum - II found the respondents guilty of deficiency in service for not delivering the shares within a reasonable period and withholding the shares in exchange of 100 shares sent by the appellants/complainants. Resultantly, the Forum gave compensation of Rs. 10,000/- for the loss caused to them and Rs. 1,000/- as costs to be paid within a period of one month of the receipt of the copy of the order failing which the respondents are liable to pay the interest rate of 12% per annum. The appellants have filed this Appeal No. 108 of 2000 for enhancement of the compensation of Rs. 10,000/- and the cost of Rs. 1,000/- granted by the District Forum-II being inadequate.

The respondent No. 1 refused to accept the summons and the registered A.D. in respect of respondent No. 2 has not been received back. After giving a number of chances to both the respondents none appeared on 1.12.2000, the final date of hearing. Hence, they have been proceeded ex -parte. We have heard the learned Counsel for the appellants, Mr. T.R. Arora, Advocate and have carefully perused the order of the District Forum-II Chandigarh and the record of the complaint case. We now proceed to examine the rival contentions of the parties.

BRIEFLY, the appellant/complainant No. 2 purchased 2000 shares of M/s. Sagar Real Estates on 18.1.1995 by investing a sum of Rs. 69,500/-. Some of the shares were in the name of the appellant No. 1, Shri Sanjeev Kumar Arora while the others were held by him jointly with appellants/complainant Nos. 2 and 3, Sh. Tilak Raj Arora and Smt. Sneh Prabha Arora, who are his father and mother respectively. When the shares were sent for transfer in the name of appellants/complainants out of 2000 shares only 1900 share were transferred while 100 shares were received back as bad delivery. In August, 1995, the appellants/complainants received an intimation from the respondent No. 1, i.e. M/s. Sagar Real Estate Developers Ltd. stood merged with M/s. SLM Manek Lal Industries Ltd. by an order of the Board for Industrial and Financial Reconstruction (BIFR) and that under the merger scheme 9 equity shares of Rs. 10/- each fully paid up will be exchanged for one equity share of Rs. 100/- fully paid up of M/s. SLM Manek Lal Industries Ltd. The last date for submission of the share certificates was fixed as 26th May, 1995. It has been alleged that the aforesaid intimation was despatched only on 16.8.1995 i.e. after date of submission of the share certificates. In pursuance to this offer the appellant/complainant No. 1 sent 19 certificates in respect of 1900 shares of M/s. Sagar Real Estate Developers Ltd. to the respondent by registered post on 25.8.1995 for exchange of fully paid up shares of the respondent No. 1. However, it was only after repeated reminders that the appellant/complainant received back 1900 shares in exchange of 2000 shares and that too as late as 21.11.1997. The main grievance of the complainant is that these shares were received back after a delay of more than two years and further no shares in exchange for the remaining 100 shares in the joint name of appellants/complainant Nos. 1 and 3, Sneh Prabha and Sanjeev Kumar Arora respectively, have been received back. They had claimed a sum of Rs. 1,50,000/- as compensation for harassment and mental agony. A notice of this complaint was sent to the respondents by District Forum-II but they chose to remain silent and neither appeared on the date fixed for the purpose nor filed any written statement. In the circumstances the District Forum-II, U.T., Chandigarh adjudged respondent Nos. 1 and 2 as ex parte.

THE District Forum-II in para No. 4 of the judgment after hearing the learned Counsel of the complainant and after having gone through the facts and record of the complaint case came to the conclusion "That being so, the O.Ps. are clearly guilty of deficiency in service in not delivering the shares within a reasonable period and withholding the shares in exchange for 100 shares sent by the complainants. THE question now which requires consideration is as to what compensation can be granted to the complainants for such a deficiency. THE complainants have put on record certain press reports relating to the period May to August, 1995 showing value of the shares of the O.P. as varying from Rs. 480-550 to 425-470 per share and Rs. 425/- per share in May, 1995". The appellants in their Appeal No. 108 of 2000 have stated that the reasonable time for returning the share after exchange given under Section 113 of the Companies Act, 1956 specifically enforces upon the companies to despatch the shares certificates within a period of 2 months from the date of Registration of the transfer of any share. Thus, the respondents were also bound to act according to the mandatory provisions of the Companies Act, but lacked in its responsibility which caused sufficient loss to the appellants/complainants. The value of the shares of the respondents ranged in May, 1995 was Rs. 425/- to 480/-. However, the value of the shares had come down to almost zero when the shares were transferred on 21.11.1997. After hearing the learned Counsel for the appellants/complainants Mr. T.R. Arora, Advocate and going through the record, we are of the considered opinion that the deficiency on the part of the respondents is well established. Even after finding the respondent guilty of deficiency in service the District Forum-II did not appreciate to calculate any cogent and valued reason with price of shares at the prevalent rate in May, 1995. It is, therefore, our considered opinion that a total compensation of Rs. (18000x400) = Rs. 72,000/- would be sufficient to be paid to the appellants/complainants for the loss caused to them. This includes the loss of 100 shares retained by the respondents. The order of the District Forum-II is accordingly amended to the extent of compensation. However, the cost of Rs. 1,000/- remains as allowed by the District Forum-II. Appeal allowed.