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2013 DIGILAW 38 (UTT)

UNICON SECURITIES PVT. LTD. v. SHYAM LAL SINGH

2013-02-04

B.C.KANDPAL, C.C.PANT

body2013
ORDER (Per: C.C. Pant, Member): This is an appeal under Section 15 of the Consumer Protection Act, 1986 against the order dated 20.07.2012 passed by the District Forum, Dehradun in consumer complaint No. 155 of 2009. By the order impugned, the District Forum has allowed the consumer complaint and directed the appellant – opposite party to pay compensation of Rs. 30,000/- to the respondent – complainant; Rs. 15,000/- towards mental pain and agony and Rs. 10,000/- towards litigation expenses. The above amount was directed to be paid within a period of 30 days, failing which the above amount was payable together with interest @9% p.a. from the date of filing of the consumer complaint till payment. 2. Briefly stated, the facts of the case, are that the opposite party is engaged in share business. The complainant opened a share account No. DD828 with the opposite party on 29.10.2008. The complainant deposited a sum of Rs. 20,000/- in the said account on 29.10.2008 for investment in shares and further deposited a sum of Rs. 10,000/- on 26.11.2008. It is alleged that on 07.05.2009, when the complainant inquired from the opposite party regarding investment of his amount, the opposite party supplied him the statement and told that there is no balance left in his account and all his money had plunged. It is further alleged that the statement supplied by the opposite party revealed that the amount of the complainant was invested in share market 13 times in a day. It is also alleged that the transactions of purchase and sale of shares were made by the opposite party without the consent of the complainant. Therefore, alleging deficiency in service on the part of the opposite party, the complainant filed a consumer complaint before the District Forum, Dehradun. 3. The appellant filed written statement before the District Forum and pleaded that the complainant has entered into Member Client Agreement with the appellant on 22.10.2008 and as per the said agreement, the dispute is to be decided by way of arbitration. It is further alleged that all the transactions were done with the consent of the complainant and contract notes were regularly sent to the complainant and the complainant never made any complaint. 4. The District Forum, on an appreciation of the material on record, allowed the consumer complaint vide impugned order dated 20.07.2012 in the above terms. It is further alleged that all the transactions were done with the consent of the complainant and contract notes were regularly sent to the complainant and the complainant never made any complaint. 4. The District Forum, on an appreciation of the material on record, allowed the consumer complaint vide impugned order dated 20.07.2012 in the above terms. Aggrieved by the said order, the appellant has filed this appeal. 5. We have heard the learned counsel for the appellant and respondent – complainant in person and have also perused the record. We have also considered the written arguments filed by the respondent – complainant. 6. The main argument advanced by the learned counsel for the appellant is that an arbitration mechanism is provided under Section 9 (Power of recognised stock exchanges to make bye-laws) of the Securities Contracts (Regulation) Act, 1956 and, therefore, the Consumer Fora does not have the jurisdiction to adjudicate the dispute. In support of his arguments, the learned counsel referred to the following judgments: (i) General Manager, Telecom vs M. Krishnan and another; (2009) 8 Supreme Court Cases 481. (ii) Hindustan Petroleum Corporation Limited vs. Pinkcity Midway Petroleums; 2003 AIR (SC) 2881 = (2003) 6 Supreme Court Cases 503. 7. Continuing his arguments, learned counsel for the appellant submitted that agreement executed between the appellant and the respondent has an arbitration clause which is as under: “AGREEMENT BETWEEN STOCK BROKER AND CLIENT (NSE) …………………… 13. The client and the stock broker agree to refer any claims and/or disputes to arbitration as per the Rules, Byelaws and Regulations of the Exchange and circulars issued thereunder as may be in force from time to time.” 8. Thus, the learned counsel for the appellant argued that, as held by the Hon’ble Supreme Court in the case of Hindustan Petroleum Corporation Limited (supra), the Civil Court has no jurisdiction to continue with the suit once an application under Section 8 has been filed. Similarly, the learned counsel submitted that the Hon’ble Supreme Court in the case of General Manager, Telecom (supra), has held that: “5. In our opinion when there is a special remedy provided in Section 7-B of the Telegraph Act regarding disputes in respect of telephone bills, then the remedy under the Consumer Protection Act is by implication barred. 6. Similarly, the learned counsel submitted that the Hon’ble Supreme Court in the case of General Manager, Telecom (supra), has held that: “5. In our opinion when there is a special remedy provided in Section 7-B of the Telegraph Act regarding disputes in respect of telephone bills, then the remedy under the Consumer Protection Act is by implication barred. 6. Section 7-B of the Telegraph Act reads as under: “7-B. Arbitration of disputes – (1) Except as otherwise expressly provided in this Act, if any dispute concerning any telegraph line, appliance or apparatus arises between the telegraph authority and the person for whose benefit the line, appliance or apparatus is, or has been, provided, the dispute shall be determined by arbitration and shall, for the purposes of such determination, be referred to an arbitration appointed by the Central Government either specifically for the determination of that dispute or generally for the determination of disputes under this Section. (2) The award of the arbitration appointed under sub-section (1) shall be conclusive between the parties to the dispute and shall not be questioned in any court.” 9. The learned counsel for the appellant further submitted that the Hon’ble Apex Court in above case has also observed that it is a well settled law that special law overrides the general law. 10. The respondent – complainant reiterated the facts of the case and argued in support of the impugned order. 11. We considered the submissions raised by the learned counsel for the appellant and respondent – complainant. It is true that the special law overrides the general law and hence in the case of General Manager, Telecom (supra), the Hon’ble Supreme Court has held that the remedy under the Consumer Protection Act is barred because Section 7-B of the Telegraph Act has a provision of referring the dispute to arbitration. But in the instant case, the learned counsel for the appellant could not show us any such provision in Securities Contracts (Regulation) Act, 1956. What the learned counsel has referred in this regard is Section 9 of the Securities Contracts (Regulation) Act, 1956. The relevant provisions under this Section are as follows: “Power of recognised stock exchanges to make bye-laws. 9. (1) Any recognised stock exchange may, subject to the previous approval of the Securities and Exchange Board of India, make bye-laws for the regulation and control of contracts. The relevant provisions under this Section are as follows: “Power of recognised stock exchanges to make bye-laws. 9. (1) Any recognised stock exchange may, subject to the previous approval of the Securities and Exchange Board of India, make bye-laws for the regulation and control of contracts. (2) In particular, and without prejudice to the generality of the foregoing power, such bye-laws may provide for: (a) ……………….. (b) ……………….. (c) ……………….. (d) ……………….. (e) ……………….. (f) ……………….. (g) ……………….. (h) ……………….. (i) ……………….. (j) ……………….. (k) ……………….. (l) ……………….. (m) ……………….. (n) the method and procedure for the settlement of claims or disputes, including settlement by arbitration; (o) ……………….. (p) ……………….. (q) ……………….. (r) ……………….. (s) ……………….. (t) ……………….. (u) ……………….. (v) ……………….. (w) ………………..” 12. But the learned counsel for the appellant failed to produce any such bye-laws framed by the Stock Exchange. Thus, Clause No. 13 of the said agreement has no legal sanctity because it is necessary that such clause must be derived from the relevant Act or the Bye-laws, Rules or Regulations framed thereunder. 13. So far as the law laid down by the Hon’ble Supreme Court in the case of Hindustan Petroleum Corporation Limited (supra), is concerned, in para 24 of the said decision, the Hon’ble Supreme Court has observed that: “…………………………………………….. We have come to the conclusion that the civil court had no jurisdiction to entertain a suit after an application under Section 8 of the Act is made for arbitration ……………” 14. In the instant case, before filing the consumer complaint, no application was made under Section 8 of the Arbitration and Conciliation Act, 1996 and, therefore, in view of Section 3 of the Consumer Protection Act, 1986, that the provisions of the Act shall be in addition to and not in derogation of the provisions of any other law for the time being in force, the District Forum has not erred in entertaining the consumer complaint. 15. The dispute in this case between the parties is on the point whether the appellant has made deficiency in service or not. The respondent’s contention is that the appellant had invested his hard-earned money in share market without his consent and with an ill motive and, thus, his capital had plunged. The appellant’s contention is that it had invested the money with respondent’s consent. The appellant has submitted transcriptions of the telephonic conversations with the respondent. The respondent’s contention is that the appellant had invested his hard-earned money in share market without his consent and with an ill motive and, thus, his capital had plunged. The appellant’s contention is that it had invested the money with respondent’s consent. The appellant has submitted transcriptions of the telephonic conversations with the respondent. The District Forum did not rely on this evidence on the ground that no electronic record to confirm the conversations was produced by the appellant. In one of the grounds in the appeal, the appellant has stated in this regard that the District Forum never asked the appellant to produce the electronic record. This ground appears to be baseless because the learned counsel for the appellant neither emphasized it before us, nor produced the said electronic record. If the appellant possesses the electronic record of the conversation with the respondent, then it is for him to produce the same in support of his contention. Otherwise also, we fail to understand as to why an investor would give his consent to sell his shares and allow his money to plunge when the share prices were falling continuously. No sensible person would cut the branch on which he is sitting. 16. Another ground taken in its appeal by the appellant is that the matter is out of the ambit of the Consumer Protection Act, 1986 because purchasing and selling of shares is a commercial activity. This ground is quite illogical because it is the personal money of the respondent and he is free to manage his money either by investing it in the share market or in bonds, debentures or fixed deposit schemes. Rather the activity of the appellant, who is dealing with a number of customers and earning profit from their money by providing service, is commercial. Therefore, the grounds taken by the appellant in its appeal have no footing and this appeal has no force. The District Forum’s order is well discussed and well reasoned. However, the cost of litigation, as awarded by the District Forum, appears to be on a higher side. It would be proper and just to reduce it to Rs. 5,000/-. Further, instead of awarding Rs. 15,000/- for mental agony, it would be more just if the appellant is directed to pay the award amount of Rs. However, the cost of litigation, as awarded by the District Forum, appears to be on a higher side. It would be proper and just to reduce it to Rs. 5,000/-. Further, instead of awarding Rs. 15,000/- for mental agony, it would be more just if the appellant is directed to pay the award amount of Rs. 30,000/- together with interest @9% p.a. from the date of filing of the consumer complaint till actual payment. To this extent, the impugned order is modifiable. 17. In the result, the appeal is partly allowed. The impugned order dated 20.07.2012 passed by the District Forum, Dehradun is modified by setting aside the order in respect of payment of Rs. 15,000/- for mental agony and by reducing the cost of litigation to Rs. 5,000/-. Instead, the appellant is directed to pay the award sum of Rs. 30,000/- to the respondent together with interest @9% p.a. from the date of filing of the consumer complaint till the date of actual payment and Rs. 5,000/- towards litigation cost. Costs of the appeal made easy.