2001 (1) TMI 909 - Commission - Companies Law

Appeal dismissed with modified order: Opposite parties to pay compensation, interest, and costs.

The appeal was dismissed with a modification to the Forum's order. The opposite parties were directed to pay Rs. 24,750 with interest at 18% per annum ... Consumer within the meaning of the Consumer Protection Act - deficiency in service by share brokers - limitation and retrospective application of amendment introducing two-year period - locus standi of transferee/holder of blank endorsed share certificates - scope of reliefs under section 14 - return of goods versus monetary compensationConsumer within the meaning of the Consumer Protection Act - deficiency in service by share brokers - Complainant is a consumer and there was deficiency in service by the share brokers. - HELD THAT: - The Court held that the complainant, who was entrusted with share certificates and blank transfer deeds by the registered holder for the purpose of sale, had availed the services of the opposite parties (share brokers) for consideration and therefore fell within the definition of consumer under the Act. The factual findings that a memo of confirmation and subsequent voucher/affidavit supported the sale at the specified reduced rate, together with the normal market practice of entrusting signed transfer deeds to brokers, established that services had been rendered and were deficient when the agreed payment was not made. Consequently, the Forum's findings that the complainant was a consumer and that there was deficiency in service were sustained. [Paras 14, 15, 16, 17, 18]Forum's findings that the complainant is a consumer and that there was deficiency in service are upheld.Limitation and retrospective application of amendment introducing two-year period - Complaint was not barred by limitation and was maintainable under the pre-amendment limitation period. - HELD THAT: - The Court observed that section 24A (fixing a two-year limitation) came into force after the cause of action arose; the cause of action arose on 25-1-1993 and the amendment took effect later. Relying on prior Commission authority treating claims arising before the amendment as governed by the original limitation period (three years), the Court concluded that the complaint filed on 24-5-1995 was within the pre-amendment limitation period and therefore not time-barred. [Paras 19, 20]The plea of limitation is rejected; the complaint is within the original limitation period and maintainable.Locus standi of transferee/holder of blank endorsed share certificates - Complainant had locus to sue as holder of the entrusted share certificates. - HELD THAT: - The Court held that share certificates (movable goods) delivered with signed blank transfer deeds confer upon the holder the practical power to effect transfer and to deal with brokers for sale. As the complainant was entrusted with the share certificates by the registered holder for the purpose of sale and acted on those instructions, he had the requisite locus standi to institute proceedings before the Forum. [Paras 21, 22]Complainant has locus standi to file the complaint.Scope of reliefs under section 14 - return of goods versus monetary compensation - Forum's power to order return of shares exists but on the facts return was infeasible; monetary compensation representing the value of shares is the appropriate remedy. - HELD THAT: - While recognising that the Act and section 14 empower the Forum to grant various reliefs (including replacement, refund or other orders in relation to goods), the Court examined the factual matrix and found that the shares had been sold to third parties, making an order for physical return impracticable. Therefore, although the Forum could in principle direct return, on these facts the correct relief is a direction for payment of the quantified value of the shares with interest. The appellate court modified the Forum's order accordingly so that the remedy is payment of the value determined by the Forum rather than return of the shares. [Paras 23, 24]Order modified: instead of directing return of shares (infeasible), the appropriate relief is payment of the value of the shares with interest as awarded by the Forum.Final disposition of appeal and modification of relief - Appeal dismissed except for modification removing the infeasible direction for return of shares; no order as to costs. - HELD THAT: - Having upheld the Forum on consumer status, deficiency and limitation, but finding the direction to return shares impractical, the Court dismissed the appeal while modifying the operative relief to require payment of the quantified value (with interest) rather than physical return. The Court made no order as to costs. [Paras 24, 25]Appeal dismissed subject to modification of the Forum's order; no order as to costs.Final Conclusion: The appellate court upheld the Forum's findings that the complainant was a consumer and that the share brokers were guilty of deficiency in service; the complaint was held not to be time-barred and the complainant had locus standi. The court modified the Forum's relief by rejecting an order for return of shares as infeasible and directing monetary compensation equivalent to the value of the shares with interest; the appeal was otherwise dismissed and no costs were ordered. Issues Involved:1. Whether the complainant is a consumer under the Consumer Protection Act, 1986.2. Whether there was a deficiency in service by the opposite parties.3. Whether the complaint was filed within the period of limitation.4. Whether the complainant had the locus standi to file the complaint.5. Whether the Forum had the power to order the return of the shares.Issue-wise Detailed Analysis:1. Whether the complainant is a consumer under the Consumer Protection Act, 1986:The opposite parties contended that the complainant was not a consumer under the Act. However, the court noted that the shares were entrusted to the opposite parties for sale at a specified rate, and the complainant utilized the services of the share brokers for consideration. The court held that the complainant was indeed a consumer within the purview of the Act, as defined under section 2(1)(d)(ii).2. Whether there was a deficiency in service by the opposite parties:The complainant alleged that the opposite parties agreed to sell the shares at Rs. 195 per share but later sold them at Rs. 123.75 per share and failed to pay the amount due. The court found that the opposite parties had indeed sold the shares at the lower rate and agreed to pay Rs. 24,750, which they did not. This act was deemed as a deficiency in service by the opposite parties.3. Whether the complaint was filed within the period of limitation:The opposite parties argued that the complaint was barred by limitation as it was filed more than two years after the cause of action arose. The court noted that section 24A of the Act, which prescribes a two-year limitation period, came into force on 18-6-1996, whereas the cause of action in this case arose on 25-1-1993. Referring to a precedent, the court held that the complaint was filed within the original three-year limitation period applicable before the amendment, and thus, was not barred by limitation.4. Whether the complainant had the locus standi to file the complaint:The opposite parties contended that the complainant had no locus standi as the shares were in the name of the complainant's mother. The court held that the complainant, having been entrusted with the shares by his mother and having utilized the services of the opposite parties for selling the shares, had the locus standi to file the complaint.5. Whether the Forum had the power to order the return of the shares:The opposite parties argued that the Forum did not have the power to order the return of the shares and that such relief should be sought through specific performance. The court clarified that while the Forum has the power to order the replacement of defective goods or refund the price under section 14 of the Act, the specific relief of returning the shares was not feasible in this case as the shares had already been sold to a third party. Therefore, the court modified the Forum's order, directing the opposite parties to pay the value of the shares with interest, rather than returning the shares.Conclusion:The appeal was dismissed with a modification to the Forum's order. The opposite parties were directed to pay Rs. 24,750 with interest at 18% per annum from 25-1-1993 till the date of payment, along with Rs. 2,500 as compensation for mental agony, harassment, and inconvenience, and costs of Rs. 1,000. The direction to return the shares was removed as it was not feasible.