National Consumer Disputes Redressal Commission (NCDRC): NCDRC has held that though trading in shares is a commercial transaction outside the purview of Consumer Protection Act but those who buy shares as an investment are covered under the definition of “consumer”. The court was hearing a revision petition filed by Venve Light Metal Ltd. challenging the order of State Commission which directed the Firm to refund the amount of unallotted shares to the complainant with interest. Earlier, the complainant had paid an amount of Rs 1 lakh by cheque and Rs 1.40 lakhs in installments through cash payment for allotment of shares of Venve Light Metal Ltd. but neither were the shares issued nor was the money refunded to the complainant. The complainant filed a complaint before District Forum claiming Rs 2.40 lakhs
along with interest but her complaint was dismissed. The Firm had contended before Forum that it had already allotted 10,000 shares of Rs.10 each for the amount of Rs1 lakh and there was no record of the remaining Rs 1.40 lakhs. Being aggrieved, complainant filed an appeal before the State Commission, which while observing that the company failed to produce any document to show that shares had be received by the complainant, set aside the order of the District Forum and allowed the appeal, with directions to the petitioner to pay Rs.2,40,000/-to the complainant with interest @ 9% on Rs.1,00,000/-from 31.1.2000 and on Rs.1,40,000/-from 31.1.2001, together with cost of Rs.2,000/-. In revision, after perusing the Board Resolution of the Firm, NCDRC observed that it is clear that the Firm had received the entire consideration from the Complainant and deficiency on the part of the Firm is writ large. While also rejecting the plea taken by the Firm for the first time in the revision that complainant is not a consumer since she is trading in shares, NCDRC upheld the order of the State Commission and imposed costs of Rs 10,000/ on the Firm.
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI
REVISION PETITION No. 3941 OF 2007
(Against order dated 10.09.2007 in First Appeal No.306 of 2005 of A.P. State Consumer Disputes Redressal Commission, Hyderabad)
Venve Light Metal Ltd.
Versus
Smt.Arpitha Reddy,
BEFORE:
HON'BLE MR.JUSTICE V.B.GUPTA, PRESIDING MEMBER
HON’BLE MR.SURESH CHANDRA, MEMBER
Pronounced on 1st August,2014
Present revision petition has been filed by Petitioner/Opposite Party assailing the impugned order dated 10.09.2007 passed by A.P.State Consumer Disputes Redressal Commission, Hyderabad (for short, ‘State Commission’).
2. Brief facts are that Respondent/Complainant paid an amount of Rs.1.00 lakh by way of cheque and Rs.1.40 lakh by way of cash in installments for allotment of shares and the same had been acknowledged by petitioner in their Board Meeting held on 31.1.2001. But petitioner did not allot the shares nor refund, the amount. Therefore, respondent got issued legal notice dated 11.4.2002 demanding to pay Rs.2.40 lakhs with interest @ 24% p.a. from 31.1.2001, to which petitioner replied on 25.4.2002 expressing its inability to pay on the ground that they do not have particulars and requested the respondent to furnish the particulars. Accordingly, respondent furnished copy of the Board Resolution dated 31.1.2001 and Bank Statement showing withdrawal of an amount of Rs.1.00 lakh by the petitioner. In response to respondent’s notice dated 4.5.2002, petitioner issued reply dated 16.5.2002 admitting receipt of Rs.1.00 lakh and stated that the cheques issued by the respondent, bearing Nos. 200509 and 200510 of Andhra Bank, Malakpet could not be realized. According to the respondent, she informed her banker that she lost two cheques and instructed not to honour them. The petitioner has no authority to retain the cheques issued by her. Thus, respondent prayed to direct the petitioner to pay Rs.2.40 Lakhs with interest @ 24% p.a., from 31.1.2001 together with costs of the complaint.
3. Petitioner in its written statement admits the payment of Rs.1.00 lakh by way of cheque no.200508 dated 20.1.2000 but denied the payment of Rs.1.40 lakhs. Petitioner denied the loss of cheques by the respondent and stated that in fact they were in its (petitioner) possession in assurance of payment of Rs.1.40 lakhs. It is further stated that there was change of Management with effect from 5.11.2001 and as per records of the Company, they have received only Rs.1.00 lakh but not Rs.2.40 lakhs from the respondent. The husband of the respondent created an agreement dated 31.1.2001 with a malafide intention to make wrongful gain of Rs.1.40 lakhs. Respondent had paid Rs.1.00 lakh only for which, petitioner had already issued 10,000 shares of Rs.10/- each but not Rs.2.40 lakhs as alleged.
4. District Consumer Disputes Redressal Forum, Hyderbad (for short, ‘District Forum’)dismissed the complaint of the respondent, vide order dated 28.1.2005.
5. Being aggrieved, respondent filed an appeal before the State Commission, which set aside the order of the District Forum and allowed the appeal, with directions to the petitioner to pay Rs.2,40,000/-to the respondent with interest @ 9% on Rs.1,00,000/-from 31.1.2000 and on Rs.1,40,000/-from 31.1.2001, together with cost of Rs.2,000/-.
6. Hence, this revision.
7. We have heard the learned counsel for the parties and gone through the record.
8. It has been contended by the learned counsel for the petitioner that buying of shares by the respondent and allotment of the shares is a purely commercial transactions between the respondent and the petitioner. Therefore, respondent is not a consumer under the Consumer Protection Act, 1986(for short, ‘Act’). It has further been contended that petitioner has relied upon the alleged agreement dated 31.1.2001, which is not at all an agreement since, it does not fulfill the essential ingredients of the agreement, such as signatures of both parties and signatures of witnesses etc. The so-called agreement does not contain any particulars of payment of Rs.1.40 Lakh and the number of shares allotted to the respondent and value of each share. The alleged agreement is a forged document, which was specially created by the respondent’s husband with a malafide intention to dishonestly obtain shares worth of Rs.2.4 Lakhs, by only paying Rs.1 Lakh to the petitioner.
9. Further,it is contended that though the respondent paid Rs.1.00 Lakh on 20.01.2000, but until the new Management took up the Management of the company on 5.11.2001, the respondent chose to remain silent for all these years particularly for almost 2 years and started creating problems for the new Management for the reasons best known to her.
10. In support of its contentions, learned counsel has relied upon the following judgments;
(i) Vimal Raosaheb Chougule
Raosaheb Sidhapa Chougule (Dr.) Vs. Stock Holding Corporation of India Ltd. and Ors.
IV (2013)CPJ 34(NC);
(ii) Sterlite Industries(India) Ltd.
Vs.Ganapati Finsec Pvt.Ltd.
III((2013) CPJ,656 (NC) and
(iii) Shashikant S.Timmapur Vs. Karvy
Stock Broking Ltd. and Anr. III(2013) CPJ 594(NC).
11. On the other hand, it has been contended by learned counsel for the respondent, that as per Resolution of the Board which was proved as Exhibit A-4 before the District Forum, Petitioner-Company in its meeting held on 31.1.2001 has resolved to issue Rs.2.40 Lakhs worth of shares, for which consideration has already been received. Under these circumstances, there is no ambiguity or illegality in the impugned order.
12. The State Commission in its impugned order has observed;
“The only dispute between the parties is about payment of Rs.1.40 lakhs by the complainant to Opposite Party. It is not in dispute that an amount of Rs.1.00 lakh was encashed by Opposite Party towards allotment of shares. The Opposite Party contends that shares have already been allotted to the complainant but the complainant contends that no shares are allotted in her favour till date and that Ex. B2 is the only Return of Allotment in Form No. 2 alleged to have been filed before the Registrar of Companies. In fact the Opposite Party has not sent the share certificates for the said amount of Rs. 1.00 lakh. In the first instance Opposite Party pleaded ignorance about payments made by the complainant and later when the complainant sent the proofs as to payment of amounts Opposite Party admitted as to receipt of Rs.1.00 lakh by way of cheque. Therefore, we believe that Ex.A4 is a genuine document and that the Opposite Party has received an amount of Rs. 2.40 lakhs from the complainant in the light of Ex. A4 when compared with Ex.B1 since the signature of Vanga Rama Subba Reddy, present Director of Opposite Party Company found on both the documents is one and the same. Ex. A4 is the extract of the Board Resolution Dt. 31.1.2001 signed by none other than the Managing Director of the Company Sri K. Gopala Krishna. The Opposite Party failed to file the copy of share certificates alleged to have been allotted to the complainant for Rs. 1.00 lakh before this Commission and also the original Board Resolution Dt.31.1.2001 in support of their contention. The Opposite Party did not establish that the share certificates were already issued to the complainant. The Opposite Party failed to file the acknowledgement of complainant as to receipt of original share certificates allotted by them.
Having regard to the facts and circumstances of the case and based on the material available on record, we are of the considered opinion that though the Opposite Party received an amount of Rs.2.40 lakhs from the complainant they failed to send the share certificates nor refunded the amount. There is deficiency of service on behalf of Opposite Party in not allotting the share certificates in spite of several requests made by the complainant.
In the result the order of the Dist. Forum is set-aside and we allow this Appeal with a direction to Opposite Party to pay Rs. 2,40,000/-to the complainant with interest @9% on Rs.1,00,000/-from 31.01.2000 and on Rs.1.40,000/- from 31.1.2001 together with costs of Rs.2,000/-.Time for compliance six weeks”.
13. Petitioner himself has placed on record extract of Board Resolution in respect of the Board Meeting held on 31.1.2001. It was proved as Ex.A-4 before the District Forum. The extract of Ex.A-4 read as under;
“EXTRACT OF THE BOARD RESOLUTION
The board has resolved in his board meeting which held on 31.01.01 to issue Rs.2.4 Lakhs (Two lakhs forty thousand) worth of shares to Mrs. Arpitha Reddy W/o K.P.Reddy.
AGREEMENT
M/s. Venve Light Metals Ltd, Hyderabad is here by agreed to allot 2.4 Lakhs worth of the shares in the company with effect from 01.02.2001 the consideration for the value all ready received.
For Venve Light Metals Ltd.
Sd/-
K. Gopala Krishna,
(Managing Director)”
14. In view of the above documentary evidence placed on record by the petitioner themselves, which relates to their Company, it is manifestly clear that they had received the entire consideration from the respondent and have also allotted Rs.2.40 Lakhs worth of shares of their Company, to the respondent. However, petitioner after having received the entire consideration amount did not send shares worth Rs.1.40 Lakhs to the respondent. Therefore, deficiency on the part of the Petitioner-Company is writ large in this case.
15. Lastly, petitioner for the first time in this revision has taken the plea that respondent is not a consumer since she is trading in shares.
16. Respondent had simply applied for allotment of shares worth of Rs.2.40 Lakhs only. There are no allegations that respondent has been indulging in trading of the shares. Therefore, above contentions have no merit at all. Thus, none of the judgments(Supra) relied upon by the counsel for the petitioner are applicable to the facts of the present case.
17. Under these circumstances, we find no reason to disagree with the findings given by the State Commission. Hence, there is no infirmity or illegality in the impugned order. The present revision petition being without any merit, is hereby dismissed with cost of Rs.10,000/-(Rupees Ten Thousand only).
18. Petitioner is directed to deposit the cost by way of demand draft in the name of “Consumer Legal Aid Account” within four weeks from today.
19. In case, petitioner fails to deposit the cost within the prescribed period, then it shall also be liable to pay interest @ 9% p.a., till realization.
20. List on 05.09.2014 for compliance.
……..……………………
(V.B. GUPTA, J)
PRESIDING MEMBR
………………………….
(SURESH CHANDRA)
MEMBER
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