Share Broker Found Guilty of Service Deficiency

The Consumer Protection Commission found the first opposite party, a share broker, guilty of gross deficiency of service for misplacing shares and failing to deliver purchased shares. The complainant was deemed a consumer and awarded refunds with interest for the shares and compensation for pain and agony. The second opposite party, Madras Stock Exchange, was not held liable. The Commission recommended action against the first opposite party to uphold public confidence.

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Issues Involved:
1. Whether the complainant is a consumer in respect of the opposite parties 1 & 2 or any of themRs.
2. Whether there has been any deficiency of service or negligence on the part of the opposite parties or any of themRs.
3. To what relief, if any, is the complainant entitled and against whomRs.

Issue-wise Detailed Analysis:

1. Whether the complainant is a consumer in respect of the opposite parties 1 & 2 or any of themRs.

The first opposite party is a share broker, and the second opposite party is the Madras Stock Exchange. The business of a share broker involves buying and selling shares for others, for which the broker receives a brokerage/commission, which qualifies as a service under section 2(1)(o) of the Consumer Protection Act, 1986. The complainant claimed to have direct dealings with the first opposite party, supported by communications (Exhs. A6 and A8) directly from the first opposite party to the complainant. Even if the complainant dealt through Mr. R. Govindaraj, the latter acted as the complainant's agent, making the complainant the principal who hired the services of the first opposite party. The first opposite party's contention that no commission or brokerage was received does not negate the implied promise to pay brokerage, making the complainant a consumer as per section 2(1)(d)(ii). Regarding the second opposite party, the Madras Stock Exchange, it did not render any service to the complainant for consideration, and thus, the complainant cannot be considered a consumer in relation to the second opposite party.

2. Whether there has been any deficiency of service or negligence on the part of the opposite parties or any of themRs.

The complainant delivered 100 shares of T.V.S. Electronics Ltd. and 100 shares of U.B. Petroproducts Ltd. to the first opposite party for sale. The first opposite party claimed the shares were misplaced or stolen and promised replacement shares, which were never received by the complainant. Evidence (Exhs. A3, A4, and A5) showed that the shares were transferred to third parties, indicating dishonesty and gross deficiency of service by the first opposite party. Additionally, the complainant paid Rs. 7,335 for 500 shares of Shyam Vinyl Ltd., which were transferred but not delivered to the complainant. The first opposite party's counter-statement about retaining shares due to another transaction involving Indo-Gulf Fertilizers shares was unsupported and irrelevant. The first opposite party failed to deliver the shares, demonstrating gross deficiency of service. The second opposite party, Madras Stock Exchange, was not guilty of deficiency of service as it attempted to mediate the dispute and suggested arbitration, which the complainant did not pursue.

3. To what relief, if any, is the complainant entitled and against whomRs.

The first opposite party is liable for gross deficiency of service and negligence. It must refund the price of the shares and the amount paid for the Shyam Vinyl Ltd. shares with interest. Specifically:
- Rs. 3,200 for 100 U.B. Petroproducts Ltd. shares with 24% interest from 19-12-1990.
- Rs. 3,200 for 100 T.V.S. Electronics Ltd. shares with 24% interest from 31-12-1990.
- Rs. 7,335 for 500 Shyam Vinyl Ltd. shares with 24% interest from 12-10-1991.
- Rs. 10,000 as compensation for pain and agony.
- Rs. 2,000 as costs to the complainant.
All payments are to be made within one month from the date of the order. The complaint against the second opposite party is dismissed without costs.

Conclusion:

The Commission found the first opposite party guilty of gross deficiency of service and ordered compensation and refunds with interest to the complainant. The second opposite party was not found liable. The Commission also suggested that the Madras Stock Exchange take appropriate action against the first opposite party to ensure proper functioning and public confidence.

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