Suresh Kumar son of Sh. Amrit Lal C/o Gajju Jain Colony, Moti Nagar, Ludhiana.
(Complainant)

Vs.
1. M/s Religare Securities Ltd. Regd. Office 19, Nehru Palace, New Delhi-110019 through its Managing Director or other legally authorised person.

2. M/s Religare Securities Ltd. Branch Officer Feroze Gandhi Market, Ludhiana, through its Branch Manager Sh. Dinesh Sharma.

(Opposite parties)

O R D E R

1. The case of the complainant in this complaint under section 12 of the Consumer Protection Act, 1986 is that had opened a demat account with opposite party no.2 through Sh. Pankaj Sharma, its dealer. He was allotted ID No. 12568654. Opposite party no.2 also opened a trading account to facilitate the trading in various securities and shares for the complainant. On 7.1.2008, complainant purchased shares of Petronet LNG @Rs.118/-, worth Rs.59,216.81p. and on 18.1.2008, purchased shares of Reliance Petroleum worth Rs.65,328.23p.

These transactions were against cash transactions, for which Rs.1,20,000/- were deposited with the opposite party. As index was likely to increase and investment in share market was likely to be beneficial, therefore, in order to increase his limit of trading account, issued two advance cheques bearing no. 142882 and 142883 in favour of opposite party for Rs.40,000/- and Rs.75,000/- respectively. Despite it, opposite party on 23.1.2008 intimated that a sum of Rs. 1,69,109.84p was outstanding against the complainant qua some share trading. But the complainant had never indulged in share trading in his account since opening of trading account, except purchase of shares on 7.1.2008 and 18.1.2008, as referred above. Thereupon the opposite party no.2 was approached intimating that claim raised may be due to error in calculation of dues. But they insisted for payment.

Therefore, complainant apprehending foul play on the part of opposite party, stopped the payment of his cheques. Because, opposite party without his consent, order or direction proceeded to trade shares in his account, in order to cause wrongful loss to the complainant and wrongful gain to themselves. On 10.1.08, opposite party purchased 1625 shares of NTPC in the account of the complainant without any confirmation, direction or order of the complainant and sold the same without his consent or confirmation. This was wrong and negligent act on their part amounting to deficiency in service. Because they could not have entered into transactions without his knowledge, confirmation or direction. Nothing was due against the complainant except Rs. 4544/-. Qua such deficiency notice dated 2.2.2008 was sent to the opposite party to render true accounts of transactions, but they failed to comply therewith. Complaints to SEBI and National Security Depository Limited against opposite party were also made.

After receipt of notice, opposite party threatened to sell his shares and executed the threat by selling 500 shares of Petronet LNG and shares of Reliance Petroleum without his consent and confirmation. Such act of the opposite party is claimed amounting to deficiency in service and has sought compensation of Rs.2,00,000/- from them and Rs.1,00,000/- for causing harassment, inconvenience to him.

2. Opposite parties contested the complaint by denying averments of the complaint. Claimed that the complaint is not maintainable. The cheques bearing no.142882 and 142883 amounting to Rs.40,000/- and Rs.75,000/- respectively issued by the complainant were dishonoured, resulting legal notice under section 138 of Negotiable Instrument Act, were served upon the complainant. As a counter blast to the said proceedings, complaint is filed by the complainant, which is devoid of merits.

Also claimed that this Fora has no jurisdiction to try the complaint and the complainant is not consumer under section 2 (1) (d) of the Consumer Protection Act, 1986. He has failed to disclose any unfair trade practice, negligence or deficiency in service on the part of opposite party. However, admitted that shares of Petronet LNG and Reliance Petroleum were purchased by the complainant on 7.1.2008 and 18.1.2008 respectively. But denied the same to be cash transactions as Rs.1,20,000/- were paid by the complainant towards margin /collateral security for his trading.

Transactions in share market are speculative in nature and it can not be guaranteed whether the index would increase or decrease. All transactions in the account of the complainant were done as per his desire/directions. Transactions are done at the order of confirmation of the clients. Complainant was regularly being sent contract notes and account statements periodically. Receipt of legal notice from the complainant is denied. Also denied giving threats to the complainant to sell his shares lying with them. Shares of Petronet LNG and Reliance Petroleum of the complainant were sold as per terms of member client agreement executed by the complainant with the opposite party. Because he failed to clear his outstanding dues towards the opposite party. Shares were not sold illegally. Complainant is not entitled for any relief and the complaint deserves dismissal.

3. In order to prove their respective versions, both the parties adduced their evidence by way of affidavits and documents.

4. We have heard the arguments addressed by the ld. counsel for the parties and have gone through the file and scanned the documents and other material on record.

5. Complainant in support of his allegations relied on his own affidavit Ex.CW1/A as well as statement Ex.C.1 qua purchase of Reliance Petroleum shares; Ex.C.2 qua shares of Petronet LNG. There is no need to elaborate such share purchased, being the matter not in dispute or denied. Consequently, we would straightway come to the point whether the opposite party of their own without order, confirmation or direction of the complainant purchased shares on his behalf and without direction disposed his that shares and consequently are guilty of negligence and deficiency in services towards him?

6. This dispute in our view owes a decision to member client agreement Ex.R5. Conditions no.1, 5, 40 to 43 of this agreement empowers broker i.e. opposite party to purchase shares on behalf of the client and also to sell such shares, if the client fails to maintain his account.

7. According to opposite party a sum of Rs.1,69,109.84p was due from the complainant as per statement Ex.C.3. When he failed to repay the same, shares of the complainant pertaining to Reliance petroleum and Petronet LNG were sold.

8. Complainant has also alleged that opposite party without authority, direction or instructions purchased shares of NTPC (as referred in statement Ex.C.3-A). So, only a sum of Rs. 4544/- was due from him to the opposite party. Therefore, they had wrongly in statement shown Rs.1,69,109.80p due from him. Two cheques of Rs.40-,000/- and Rs.75,000/- respectively were given by him to the opposite party to increase limit of trading account, but on seeing the conduct of opposite party payment thereof was got stopped by writing letter Ex.CW2/B dated 23.1.2008 to Manager of UCO Bank, Ludhiana.

9. Whereas opposite party has taken defence that transactions were done under directions and authority of the complainant and he failed to clear the margin, so, his shares were sold.

10. It is in these circumstances matter of consideration, whether the complainant is entitled to institute this complaint is this Fora?.

11. Such like question arose for consideration before Hon’ble national Commission in case Som Nath Jain Vs. R.C. Goenka & Anr. reported in 1 (1994) CPJ 27 (NC). In that case, dealing with sale purchase of shares, Hon’ble National Commission expressed serious doubt whether the complaint qua it would be maintainable under the Consumer Protection Act. Because, qua such transactions elaborate evidence need to be taken regarding purchase and sale of shares, their prevalent price in the market and evidence regarding passing of instructions by client to the broker. Resultantly, the complainants were relegated to get the dispute decided through civil court.

12. Hon’ble West Bengal State Consumer Disputes Redressal Commission, Kolkata in case Ramendra Nath Basu Vs. Sanjeev Kapoor & Anr. reported in 1 (2009) CPJ 316 qua share trading has held that transactions between parties do not come under purview of Consumer Protection Act, 1986.

13. Similar view was taken by the Hon’ble Delhi State Consumer Disputes Redressal Commission, New Delhi in case Anand Prakash Vs. A.M. Johri & Ors. reported in III (2000) CPJ 291 by holding that sale purchase of shares are commercial transactions, so, complainant is not a ‘consumer’ in such cases.

14. Whereas on behalf of the complainant, it was argued that sale purchase of shares is a consumer dispute and if there is any deficiency in service, complaint is maintainable. He made reliance on a case reported as IV (2004) CPJ 298 titled as V.P. Sharma Vs. Sikander Lal & Co. & ors. of Hon’ble Delhi State Consumer Disputes Redressal Commission, New Delhi . But in that case, shares of the complainant were sold, but proceeds were not handed over to him, nor the shares were returned. Hence, it was held to be deficiency in service. Whereas in the instant case, facts are different. So, with due respect, we venture to say that this authority would have no bearing to the case in hand.

15. In view of the aforesaid aspects, we purposely have not discussed in detail material brought on record by the opposite party. Because we are also of the view that the matter so raised is of such a complex nature, that can not be decided in a summary enquiry like this. Because elaborate evidence need to be recorded, whether the shares were purchased and sold on instructions or directions of the complainant. Also appears that qua such dispute some case under section 138 of the Negotiable Instrument Act may be pending or contemplated by the opposite party against the complainant. These matters deserve to be thrashed by detailed evidence. Therefore, we refrain to decide the dispute and relegate it to be decided by the court of competent civil jurisdiction.