State Bank of India vs GURRAM RADHA RANI

THE complainant in O.P. No. 731/94, District Forum, Nellore applied for 500 shares of Krobs Bio Chemicals Limited on 4.3.94 enclosing a D.D. for Rs. 5,000/- drawn in favour of the Manager, State Bank of Hyderabad, Nellore which was acknowledged by the opposite party Bank on 5.3.94. THE said D.D. was encashed and was credited and adjusted to the account of Krobs Bio-Chemicals Limited in the account of the opposite party books on 7.3.94 as evidenced by Ex. A6. As there was no intimation of allotment of shares, the complainant approached the opposite party for verification whether the application was forwarded to the Registrar of the issue or not. THE complainant was informed that her application was not forwarded to the Registrars of the issues. THE date of closure of the issue was 12.3.94 but in May, 1994 the opposite party issued a letter to the complainant addressed to Karvy Consultants Private Limited i.e. the Registrars copy addressed to Krobs Bio-Chemicals Limited asking them to accept the D.D. for Rs. 5,000/- with duplicate application and to allot shares tothe complainant but the Karvy Consultants, Hyderabad and Krobs Bio-Chemicals Limited did not entertain the request as the last date for submission of the application was over. Alleging that she incurred expenditure in going hither and thither, she claimed damages of Rs. 24,000/- being the value of shares at the rate of Rs. 48/- per share on 25.7.94 and Rs. 5,000/- being the amount paid by her and Rs. 10,000/- towards expenditure, in all a sum of Rs. 34,000/- with interest.

THE opposite party stated that the application was not presented in time. THE draft under deposit was not drawn in respondents branch. No immediate follow up action was taken by the complainant, hence there is no negligence on the part of the opposite party. The District Forum found that the application was sent on 4.3.94 and the D.D. was also taken on 4.3.94 and it was sent through courier on 4.3.94 and the same was acknowledged as evidenced by Exs. Al to A3. The receipt of the cover was acknowledged on 4.3.94 by the opposite party. It is also seen from Ex. A5 the letter written by the opposite party that the complainant applied for 500 shares. Ex. A6 is the acknowledgement by the opposite party to show that Rs. 5,000/- covered by the D.D. was adjusted to the account of Krobs Bio-Chemicals Limited. Hence the version of the opposite party that Rs. 5,000/- was given by way of D.D. on 18.3.94 cannot be accepted. Since the application was made and the amount was realised well before the last date of the application i.e. 12.3.94, the District Forum allowed the complaint and directed the opposite party to refund the amount of Rs. 5,000/- with interest thereon at 12% p.a. from 5.3.94 till the date of payment and also pay damages of Rs. 20,000/- and costs of Rs. 300/-.

Aggrieved by the said order, this appeal is preferred. It is firstly submitted that the complainant is merely a prospective investor and buyer of shares and in view of the decision of Supreme Court of India in Morgan Stanely Mutual Fund v. Kartick Das, II (1994) CPJ 7(SC), the complaint is not maintainable. But in the instant case the prayer is not for allotment of shares but for refund of the money by the opposite party which was received by it well within time for allotment of shares but the opposite party failed to send the same to the Registrars of Krobs Bio-Chemicals Limited in time for allotment of shares. The complaint is not against the Company or its Registrars but against the Bank, which having received the application alongwith D.D. in time and realised the amount well before the last date and failed to send the application to the Company for allotment of snares to the complainant. On account of the negligence and laches on the part of the opposite party the complainant was deprived of allotment of shares, she, therefore, claimed compensation at the rate of Rs. 48/- per share for 500 shares by way of damages. We are, therefore, of the view that the principles laid down by the Lordships of the Supreme Court of India in the aforesaid case have no application to the instant case. It is next submitted that directing payment of Rs. 20,000/- towards damages is excessive. The contention is that by mere application for allotment of 500 shares, it cannot be presumed that the complainant would have been allotted those shares. Allotment of shares depends on so many factors and it cannot with certainty be said that the Company would have allotted shares to the complainant. Moreover, the complainant is not entitled for loss profits calculating on the basis of the market value of the shares an on 25.7.94 i.e. the date of complaint. We see sufficient force in the aforesaid contention. No doubt the complainant is not entitled for loss of profit calculating the market value of the shares as on the date of the complaint, but it cannot be denied that due to negligence and laches on the part of the opposite party in not sending the application in time, the complainant underwent anxiety in approaching the Bank, the Registrars and the Company.

HAVING regard to the circumstances, we quantify the damages suffered by the complainant at Rs. 5,000/-. In the result, we modify the order of the District Forum with regard to damages and reduce the same from Rs. 20,000/- to Rs. 5,000/- and confirm the order of the District Forum in other respects. In the result the appeal is allowed in part. There shall be no order as to costs in this appeal. Order modified. ________________