SUBHASH MODI vs Union Bank of India

THIS is a complainant''s appeal against the decision of District Forum, Bhopal. The complainant had applied for 200 shares of respondent No. 2 M/s. Integra Hindustan Control Ltd., Baroda. The application was made through Jumerati Bhopal Branch of Union Bank of India-respondent No. 1. Admittedly, Jumerati Bhopal Branch of Union Bank of India mistakenly conveyed to the company that the applicant had applied for 100 shares only and instead of remitting Rs. 2,000/- deposited with it remitted Rs. 1,000/- only to the Company. Because of this, according to the complainant, he was not allotted any share as he was considered under the category of applicants who had applied for only 100 shares. According to the complainant, had his application and the money been correctly forwarded to the Company, he could have been considered in the category of applicants who had applied for 200 shares. On this basis, the complainant has asked for allotment of 100 shares of the respondent No. 2- Company and if that was not possible to be adequetely compensated.

THE respondents admitted the facts but did not admit the liability. THE company took a stand that it was the mistake of the Bank and when they came to know of it they promptly refunded the amount due alongwith interest at the rate of 15% per annum for the delayed period of 70 days. THE Bank took a stand that it was not accountable to the complainant as services of the Bank were not hired by the complainant. According to the Bank it was a matter between the Company and the complainant and the Bank was not concerned. We have heard the appellant in person and Shri Rawatiya the learned Counsel for the Bank. Respondent No. 2 chose to remain absent but has submitted written arguments which were considered.

We regret to state that the District Forum has considered the case in a very slip-shod manner and has not rendered a reasoned order. The Forum has neither fixed the liability on the Bank nor on the Company and has without stating reasons opined that the applicant should have accepted the amount of Rs. 1,162/- remitted to him. The Forum made an order that the amount of Rs. 1,162/- be again sent to the complainant by the Respondent No. 2 and Respondent No. 1- Bank should pay an amount of Rs. 250/- towards compensation to the complainant. We would, however, not send back the case for reconsideration because it can be disposed of on the basis of the material on record.

IT is true that whenever a Company hires the services of a Bank for the purpose of collecting application money for allotment of shares on its behalf, there is a privity of contract between the Company and the Bank alone. There is no privity of contract between the applicant for allotment of shares and the Bank though, the money is deposited in the Bank by the applicant for allotment of shares. IT is therefore, clear that in the present case the respondent No. 2 had hired the services of respondent No. 1 for collecting application money for the prospective allotment of its shares. The appellant was however beneficiary of such an arrangement with the approval of the Respondent No. 2 - Company. The complainant-appellant therefore squarely fell in the definition of ''consumer'' under Section 2(1)(d)(ii) of the Consumer Protection Act, 1986 hereinafter referred to as the ''Act''). The complainant therefore had a right to complain about the deficiency in service rendered by the respondent No. 1 - Bank in the transaction. So far as the main transaction between the complainant and the respondent No. 2-Company is concerned, it cannot be said to be a transaction between a consumer and a manufacturer or a trader. The transaction between the Company and the complainant was only about the consideration of application of the complainant for allotment of shares. Actually, offers were invited for allotment of shares. These offers were then accepted in accordance with the basis determined under the provisions of the Companies Act, 1956 and the rules made thereunder. There is thus no service involved in the transaction so far as the complainant and the respondent No. 2 are concerned. The transaction between the complainant and the Company there- fore did not involve any service and consequently, there would be no deficiency in service which can be complained of as against the respondent No. 2- Company.

LET us now consider the liability of the Bank towards the Company. As already pointed out as the services of the Bank were hired by the Company for the benefit of the applicants. The complainant as an applicant will be deemed to be a consumer vis-a-vis the Bank. If, there was any deficiency in service on the part of the Bank in the transaction, the complainant-appellant before us could maintain an action as a consumer under the Act. There is undoubtedly a deficiency in service on the part of the Bank as instead of forwarding Rs. 2,000/- with an intimation of having received an application for 200 shares, the Bank forwarded Rs. 1,000/- and information of the complainant having applied only for 100 shares to the company. This definitely was a deficiency in service which has also been admitted by the parties. The question therefore is what is the amount of compensation which should have been granted to the complainant. The complainant has not specified the basis on which he presumes that if the application as it was would have been forwarded without mistake he could have been allotted 100 shares of the company of which he alleges that he suffered a loss. Actually, the appellant himself has filed a reply to the written statement of the respondent No. 1 Union Bank of India to which he has appended Annexure-5 which is the basis of the allotment of the concerned shares of Respondent No. 2-Company. This shows that in the category of those who had applied for 100 shares of the company one applicant out of thirty applicants was alloted 100 share and in the categary of applicants who had applied for 200 shares one out of every sixteen applicants was allotted 100 shares. Because of the deficiency in service of the Bank, the complainant was considered with those who had applied for 100 shares and, therefore, suffered a lesser chance of 1:30 instead of his rightful claim to have been considered under the category of applicants who had applied for 200 shares in which category he stood a chance of 1:16. It is impossible to fathom as to whether the applicant would have been successful in getting allotment of any shares even if, his application had been correctly forwarded by the Bank. It was a matter of chance and nobody can say whether he would have been fortunate in falling under the category of one among sixteen even if his application for 200 shares could have been correctly forwarded. The claim for allotment of 100 shares of the Company or to be compensated on the basis that the complainant was entitled to 100 shares is therefore without any foundation. However, a reasonable compensation for having lost the chance of being considered for allotment in the right category has to be awarded to the complainant. We feel an amount of Rs. 500/- should be sufficient compensation for the deficiency in service of the Bank. For the aforesaid reasons we partly allow this appeal and direct the respondent No. 1 Union Bank of India to pay within a month of receipt of this order, a sum of Rs. 500/- as compensation and Rs. 500/- towards the costs of the complaint in prosecuting the complainant before the District Forum and appeal before the Commission. Since, the respondent No. 2 has admitted to refund a sum of Rs. 1,162/-, we direct that the said amount be refunded to the complainant by remitting it again to the appellant/complainant within a month from the receipt of this order. If this amount is not paid within time by the Respondent No. 2 Company it shall be paid by the Respondent No. 1-Bank who shall be entitled to get it back from the Company. Appeal partly allowed.