STERLITE INDUSTRIES (INDIA) LTD. vs Kumuda Bhaskarn

THIS revision petition has been filed under section 21(b) of the Consumer Protection Act, 1986 against the order dated 18.3.2011 passed by the Karnataka State Consumer Disputes Redressal Commission, Bangalore in Appeal Nos. 1403 of 2010 and 1595 of 2010.

THE factual matrix of this case are that the complainant Nos. 1, 2 & 3 who are respondents herein are shareholders and also holders of debentures of M/s. Sterlite Industries (India) Ltd. who are petitioners herein and were OP No. 2 before the District Forum. Complainant Nos. 1 & 2 jointly owned 100 equity shares and the 3rd complainant individually held another 100 equity shares of the petitioner Co. The petitioner Co. cancelled the share certificates held by the respondents/complainants without following the procedure established by law including the procedure which was specified in the scheme approved by the Hon''ble High Court of Bombay. As per the averment, the procedure laid down in the scheme approved by the High Court was not followed by the petitioner/OP No. 2 and OP No. 1, respondent No. 4 herein who was the Registrar and Transfer Agent for the shares/debentures of the petitioner Co. In the circumstances, it was alleged by the complainants that for no fault of theirs they were made to suffer both mental agony and financial loss. Their repeated requests and demands made to the OPs to redress their grievance went in vain. Alleging deficiency in service and unfair trade practice on the part of the OPs, the three complainants filed a joint complaint before the District Forum. On appearance, the OP Nos. 1 & 2 filed their version mainly contending that as per the scheme approved by the High Court of Bombay, the necessary option forms along with repurchase consideration warrants were sent to the complainants but since they failed to respond to the option as per the instructions forwarded by the OPs, it was deemed that the three complainants were not interested to retain their shares and hence the same were considered under the above scheme for repurchase and cancellation. Thus denying any deficiency in service of any kind on their part, the OPs prayed for the dismissal of the complaint. Both the parties led their evidence and after hearing their arguments, the District Forum allowed the said complaint vide its order dated 17.2.2010 which read as under: - "The complaint is allowed. It is held that there is deficiency in service by the opposite parties. It is held that the cancellation of share certificates of the complainants by the opposite parties is illegal. It is held that the complainants are entitled for restoration of those shares by recalling the order of cancellation of shares, by the opposite parties. Hence, the opposite parties are hereby directed to restore the shares of the complainants bearing No. 04006608 to 040066707 and bearing No. 040369208 to 040369307.

The opposite parties are hereby directed to give all the benefits to the complainants, relating to the said shares, as if the shares were never cancelled. The opposite parties shall be liable to pay compensation of Rs. 10,000/ -(Rupees ten thousand) to the complainants. The opposite parties shall be liable to pay Rs. 5,000/ -(Rupees five thousand) to the complainants as cost. The opposite parties are granted 30 days time from today to comply this order."

AGGRIEVED of the aforesaid order, OP No. 2/petitioner filed an appeal before the State Commission while OP No. 1 did not challenge the order. It was submitted by the petitioner Co. that the District Forum had erred in not considering the fact that the transaction in question is a commercial transaction. It was further submitted that the petitioner Co. had strictly followed the scheme approved by the High Court by issuing the required notice and remitting the repurchase consideration warrant and had also obtained the necessary approval from the RBI. However, the District Forum lost sight of these aspects. It was also brought out by the petitioner Co. that the transaction in question pertains to the year 2002 whereas the consumer complaint came to be filed in 2009 and as such it was barred by limitation. With these and few other grounds, the petitioner Co. prayed for setting aside the order of the District Forum and accepting the appeal filed by it. After going through the record and hearing the parties, the State Commission dismissed the appeal and upheld the order of the District Forum vide its impugned order which is now under challenge through the present revision petition before us.

LEARNED Shri Manish Garg, Advocate has appeared for the petitioner Co. and Shri Khalid Arshad, Advocate has appeared on behalf of the respondent Nos. 1, 2 & 3. Respondent No. 4 was proceeded ex parte. During the course of arguments, learned counsel for the petitioners has contended that both the Fora below ought to have appreciated that the complaint in question was hopelessly barred by limitation and as such they ought to have refrained from entertaining it in view of the fact that the scheme of arrangement had been duly approved by the Hon''ble High Court in the year 2002 and had not been interfered by the Apex Court and as such when the entire scheme had been worked upon and implemented in the year 2002 itself, the complainants could not have any grievance against the said scheme by filing a complaint in this regard in the year 2009. Besides this, it was submitted by the counsel for the petitioners that the complaint of the respondent Nos. 1, 2 & 3 cannot be maintained under the Consumer Protection Act since these respondents are not covered within the definition of consumer. According to the counsel, their holding of the shares/debentures of the petitioner Co. tantamounted to a commercial transaction and as such their complaint was not maintainable before the consumer fora. In support of this contention, learned counsel has referred to and relied on the following judgments of this Commission: - 1. Order dated 12.7.2013 in the case of M/s. Sterlite Industries (India) Ltd. Vs. Ganapati Finsec Pvt. Ltd. (R.P. No. 3345 of 2012)

Order dated 1.8.2012 in the case of A. Asaithambi Vs. The Company Secretary, M/s. Satyam Computer Services Ltd. & Ors. (R.P. No. 1179 of 2012)

Order dated 16.4.2014 in the case of Sudhangsu Bhushan Dutta Vs. The Joint Managing Director, Mansukh Securities & Finance Ltd. & Ors. (R.P. No. 3367 of 2013)

Order dated 24.7.2013 in the case of Shashikant S. Timmapur Vs. Karvy Stock Broking Ltd. (R.P. Nos. 2752 to 2754 of 2011 and other revision petitions disposed of by this common order)

REGARDING the transmission of the option forms to the complainants, learned counsel submitted that the dividend warrants sent by the petitioner Co. were being received and enchased regularly by the complainants/respondents. However, in response to a query from us, he fairly admitted that there was no proof with the petitioner Co. regarding the receipt of the option forms in question by the respondents in terms of the scheme approved by the High Court but he reiterated that the option forms of the repurchase consideration warrants were actually sent by the petitioner Co. In the circumstances, learned counsel argued that since the complaint in question emanated from a commercial transaction and was hopelessly barred by limitation, the same could not be entertained by the Fora below. Considering the fact that the petitioner Co. has acted in accordance with the scheme approved by the High Court, the impugned order cannot be sustained in the eye of law and must be set aside.

ON the other hand, learned counsel for the respondents submitted that the plea regarding the commercial transaction was being raised by the petitioner Co. for the first time since there is no whisper about this argument in the pleadings of the company before the District Forum. In view of this, the petitioner Co. cannot be allowed to raise this argument at this stage. Regarding limitation, learned counsel reiterated that this question has been examined in great detail by both the Fora below and since respondents were not aware of the scheme and they had also not received the option forms in question, the Fora below were right in accepting the complaint since it was based on a continuing cause of action. In view of this, he supported the impugned order and pleaded for dismissal of the revision petition with cost. We have carefully considered the rival contentions and have also perused the record. We may note that both the District Forum and the State Commission have returned their concurrent finding in favour of the complainants/respondents while non -suiting the defence put up by the petitioner Co. Perusal of the order passed by the District Forum shows that the District Forum has considered the issues regarding jurisdiction of the Consumer Fora, the complaint being barred by limitation or otherwise and the deficiency in service on the part of the OPs in great detail and has returned its findings giving detailed reasons in support thereof. The State Commission while upholding the order of the District Forum and dismissing the appeal of the petitioner Co., has recorded the following reasons in its impugned order: - "8. At the outset, it is not in dispute that these complainants are the Share Holders and Holders of Debentures with the OPs. It is the grievance of the complainants that without their consent and knowledge and without following the proper procedure established under law and even without following the scheme approved by the Hon''ble High Court of Bombay, OPs arbitrarily cancelled their share certificates. Due to which they have suffered both monetary loss and mental agony. Their repeated requests and demands made to OPs to pay them compensation went in vain. There is nothing to discard the sworn testimony of the complainants. It is a quality of evidence that is more important than that of quantity. As against this unimpeachable evidence of the complainants, the defence set out by the OPs appears to be defence for defence sake just to save their skin out of sin may be to jerk their responsibility and obligation.

As per the scheme formulated by the Hon''ble High Court of Bombay, complainants are expected to receive the option form. Though OPs says that they have sent the said option form to the complainants so as to enable them to exercise their option or retain the share. There is no proof that such option forms are duly served on the complainants. So the opportunity which the complainants would have got under the Scheme has been defeated due to the carelessness and negligence on the part of the OPs. In the event of non receipt of the duly signed and executed option form within the stipulated period of time, complainants cannot be blamed. The contention of the OPs that they have not received any intimation from the complainants in accordance and the manner prescribed in the scheme appears to be baseless. Unless there is a proof of service of the said option on the complainant, OP cannot arbitrarily act in cancelling the said shares.

THOUGH it is contended by the OPs that, it had dispatched the option form along with the share repurchase consideration warrant to all the share holders to express their dissent or consent on or before 21.06.2002, there is no proof of such service of the said document. It is much contended by the OPs that they have published the said fact in the local newspaper. Admittedly, the complainants are the NRIs, it cannot be said that they have taken note of the said publication. The other contention of the OPs is that the complaint is barred by time, but it does not hold force. When OPs acted arbitrarily without following the scheme, complainants will get recurring cause of action till they redress their grievance. There is no proof that the complainants had ever give any option to OPs to deal with their shares. When that is so, heavy burden lies on the OPs to establish the same. On the close scrutiny of the pleadings of OP -2 it rather shows that the said option was not sent. Notice to exercise their option by the share holders cannot be published in the newspaper why because along with it, the OPs were required to send the amount. Viewed from any angle, there appears to be a deficiency in service on the part of the OPs.

THE DF has thoroughly considered each and every aspect of the matter and rightly come to the conclusion that OPs are at fault and there is a deficiency in service on their part. There is a substantial proof that the complainants for no fault of theirs, they are made to suffer both monetary loss and mental agony. OPs have not strictly followed the scheme in letter and spirit thereby caused loss to the complainants. Under the circumstances, complainants deserve the relief, that finding of the DF appears to be just and proper. On the other hand, appellant has failed to show before this Commission that the impugned order suffers from any legal infirmity, unsustainable in law or that it suffers from any error apparent on the face of record requiring our interference." 10. We have no manner of doubt that the view taken by the State Commission is the correct view and we agree with the same. It has been fairly admitted by learned counsel for the petitioner Co. that there is no proof with the petitioner Co. to establish that the option forms and the repurchase consideration warrants sent by the petitioner Co. were actually received by the respondents. In the circumstances, it could not be held that the petitioner Co. had complied with the procedure laid down in the scheme approved by the High Court in so far as the grievance of the respondents is concerned and as such they had every right to approach the consumer fora for its redressal. The question of limitation has been appropriately dealt with by the District Forum as well as the State Commission. It is true that the plea regarding this consumer complaint involving commercial transaction does not find place in the pleadings of the OPs/petitioners before the District Forum. However, we have gone through the judgments relied on by the counsel for the petitioner Co. but none of them are applicable to the facts and circumstances of the present case. In the case of Ganapati Finsec Pvt. Ltd. (supra), where the present petitioner itself was a party, the complaint was held to be not maintainable because it involved transaction of purchase and sale of shares by a finance company which was obviously for commercial purpose. The ratio of the other three cases will also not be applicable to the facts and circumstances of the present case and as such no fault could be found with the impugned order on this count as well.

In view of the above, we do not find any infirmity or jurisdictional error in the impugned order based on concurrent findings of the two Foras below and hence dismiss the revision petition. No order as to costs.