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The Company Secretary, M/s.Satyam Computer Service Ltd. v/s A. Asaithambi & Others

    F.A.No. 275 of 2009 [Against order in C.C.No.63/2003 on the file of the DCDRF, Cuddalore]
    Decided On, 29 August 2011
    At, Tamil Nadu State Consumer Disputes Redressal Commission Chennai
    By, M.A.
    By, M.L.
    By, M.PHIL.
    By, B.SC.
    By, MEMBER
    For the Appellant : M/s. Gupta & Ravi, Advocates. For the Respondents : M/s.R.Subramani, M/s. N.R. Rajagopalan, Advocates.

Judgment Text
The appeal coming before us for hearing finally on 11.08.2011, upon hearing the arguments of Appellant’s side and perused the documents, written submissions as well as the order of the District Forum, this Commission made the following order :-


1. The 1st opposite party is the appellant.

2. The 1st respondent/complainant filed a complaint before the District Forum against the 1st opposite party and other 3 opposite parties claiming for effect of transfer of 180 shares to the name of complainant, issue of bonus shares and to pay Rs.14,40,000/- as loss and deficiency of service and Rs.5,00,000/- towards damages for mental agony and Rs.10,000/- towards travel and incidental expenses and for costs.

3. Complainant applied to the 1st opposite party to name transfer for the 180 shares purchased from 3rd and 4th opposite parties for which the 2nd opposite party is the dealer in stock exchange and doing brokerage business. The complainant sent the necessary documents by registered post on 22.6.98 which was delivered to the 1st opposite party on 27.6.98 and thereafter since the transfer was not effected complainant issued notice to stop transfer on 30.6.1999 and on that basis the opposite party asked the complainant to produce certain documents for name transfer which are not necessary at that stage and in spite of the letters sent on 2.8.2000, the 1st opposite party through the letter dated 10.10.2000. The complainant has lost his share prior to the lodgment. Hence a legal notice was issued on 23.10.2000 denying the allegation the opposite parties reply was received stating that there is a rival claim claiming for bonus shares and hence a legal notice was issued on 13.6.03 and a reply was received on 18.3.03 with untenable points. Hence the complainant has come forward with this complaint.

4. Before the District Forum, the 1st opposite party denying the allegations of the complainant and stated that without complying the mandatory provision of documents the shares cannot be transferred and since the original shareholders have made rival claim the complainant cannot have purchased any shares and the registered office is at Secunderabad and the District Forum at Cuddalore having no jurisdiction and the complaint is barred by pecuniary jurisdiction and limitation and the complaint. The District Forum has no jurisdiction relating to the matter which are to be dealt by companies’ law board and thereby complaint to be dismissed.

5. The 2nd opposite party stated that he has acted only as a helping person to lthe complainant in sending the share details and other matters to get the name transfer and in no way connected with the disputes relating to the complainant and the 1st opposite party. 3rd and 4th opposite parties have not filed any written version before the District Forum.

6. The District Forum after an enquiry allowed the complaint by directing the opposite party to effect name transfer in favour of complainant regarding 180 shares and to issue bonus shares on 1 : 1 basis and Rs.10,000/- towards compensation from mental agony and deficiency of service and Rs.2,000/- as costs.

7. Aggrieved by the order of the District Forum, the 1st opposite party has come forward with the appeal and the grounds of appeal reiterating and stated that the District Forum wrongly allowed the complaint.

8. While considering both sides arguments, averments and contentions it is not in dispute that the complainant alleged to have applied for name transfer on 180 shares to the 1st opposite partysaid to have been purchased from 3rd & 4th opposite parties the during the year through the 2nd opposite party and the complainant contended that those transfer documents sent by registered post on 22.6.1998 was delivered to the 1st opposite party on 27.6.98 for which the proof of Postal Authorities letter as Exhibit A3 and B10 were filed in which the Post Master has stated that the letter addressed to the 1st opposite party was delivered to the addressee on 27.6.1998. This letter was given on 25.2.2000, nearly after more than 1 years when the date of alleged dispatch requested. The complainants failed to state whether it was sent by acknowledgement due post or ordinary registered post and the letter sent whether originally contained the alleged documents relating to the transfer of share are all not proved by the complainant.

9. Regarding the question of jurisdiction it is contended by the 1st opposite party that their registered office is only at Secundrabad and they were not having any dealings relating to the issue of shares through 2nd opposite party at Cuddalore and Cuddalore District Forum has no jurisdiction as there is no cause of action arose at Cuddalore. Regarding this the opposite party relied upon the rulings reported in, 1997 volume 88 company cases 684 at page 687 in which, it is stated as follows :-

' The Supreme Court has also pointed out that the residence of a company in India is where its registered office is located and normally cases should be filed only where the registered office of the company is situate. In the present case, admittedly all the defendants in the suit are only in Coimbatore. The first defendant , is a company, which has its registered office at Coimbatore. Defendants Nos.2 to 6, who are the shareholders of the first defendant company, are also residing in Coimbatore. The plaintiffs are residing at Udumalaipet. In paragraph 13 of the plaint it is alleged that the cause of auction arose within the jurisdiction of the court at Udumalaipet, where the plaintiffs are residing and where they are entitled to receive the notices from the first defendant company. Admittedly, the plaintiffs did not receive any notice from the first defendant company on the date when they filed the suit or when they obtained an order of injunction. In those circumstances, the court at Udumalaipet had no jurisdiction whatever to entertain the suit of the plaintiffs. The court ought to have returned the suit for presentation in the proper court even on the allegations contained in the plaint. In spite of the averments in paragraph 13 of the plaint, the District Munsif, Udumalaipet, chose to receive the plaint and granted an interim order as prayed for by the plaintiffs.'

And another judgment reported in 2000 volume 99 Company Cases 341 in which it is stated as follows :- ' Offences and prosecution – Jurisdiction of court – Failure by company to deliver share certificates within prescribed time – Delivery by post – Deeming provision that delivery complete upon addressing, prepaying and posting document – Complaint to be filed in court having jurisdiction where registered office of company situate – Not where shareholder was to receive share certificates – Companies Act, 1956 ss. 53, 113.

Hence the cause of action for the default under Sec.113 of not sending the share certificates within the stipulated time would arise at the place where the registered office of the company is situated as from that place the share certificates can be posted and are usually posted. For such default as contemplated under section 113(1) there is no question of any cause of action arising at the place where the complainant was to receive postal delivery.

The cause of action for failure to deliver the share certificates or documents within the prescribed time would arise where the registered office of the company is situated.'

10. As per above rulings it is clear the complainant can claim transfer of shares from the company who issued the shares have got registered office only at Secunderabad and the 2nd opposite party as a broker of dealing with shares assisted the complainant in sending the papers to the 1st opposite party has no cause of action at Cuddalore and where the opposite party resides or having office in which place only as a cause of action arose as per the above rulings it is clear that the Cuddalore District Forum has no territorial jurisdiction to entertain the complaint. Regarding other contentions of the complainant stating that the District Forum has no jurisdiction to entertain matters relating to the transactions of shares and it should be dealt only before the Company Law Board for which they relied upon the ruling reported in (1994) 4 SCC 225 at page 238 para 25 and 26 it is held as follows :-

' 25. The definition of consumer is contained under Section 2(1)(d) of the Act which reads as under : '(d) ‘consumer’ means any person who –

(i) buys any goods for a consideration which has been pai or promised or partly paid and partly promised, or under any system of deferred payment and includes any user of such goods other than the person who buys such goods for consideration paid or promised or partly paid or partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose ; or

(ii) hires any services for a consideration which has been paid or promised or partly paid an partly promised, or under any system of deferred payment and includes any beneficiary or such services other than the person who hires the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person.'

26. The consumer as the term implies is one who consumes. As per the definition, consumer is the one who purchases goods for private use or consumption. The meaning of the word ‘consumer’ is broadly stated in the above definition so as to include anyone who consumes goods or services at the end of the chain of production. The comprehensive definition aims at covering every man who pays money as the price or cost of goods and services. The consumer deserves to get what he pays for in real quantity and true quality. In every society, consumer remains the centre of gravity of all business and industrial activity. He needs protection from the manufacturer, producer, supplier, wholesaler and retailer.'

11. As per the ruling as the shares are not saleable goods and till the allotment of shares take place the shares did not exists and therefore they can never be called as ‘goods’ and in view of the above ruling it is clear the complainant is not a consumer and the Consumer Disputes Redressal Forum has no jurisdiction whatsoever to entertain such claims. Further the opposite parties have contended under Sec.108 of the Companies’ Act 1956 transfer not to be registered except on production of instrument of transfer. In this case even though the complainant alleged to have sent to be transfer documents by registered post which was alleged to have been received by the 1st opposite party as per the Postal Authorities letter Exhibit A3 and B10 the opposite parties contended that they have not received any such letter and documents and for the letter addressed by the complainant they have called for documents as per Exhibit A11 and B5 in which they asked for production of mandatory documents for issuance of duplicate shares against the share numbers given and without in accordance with the provisions of applicable law issue of shares cannot be possible and it is also mentioned since there is a rival claim company would be effectively taking of the matter with the registered holders upon receipt of the above stated mandatory documents from complaint and proceed further in accordance with law and further it is also contended by the opposite parties the original share holders opposite parties 3 and 4 from whom the complainant’s alleged share purchase for which they sent application for claiming bonus shares and in those circumstances unless the complainant produced the original share certificates along with necessary transfer documents the 1st opposite party cannot be in a position to transfer the shares in favour of the complainant and when the rival claim is made by the alleged owner of the original share holders claiming bonus shares as per Exhibit B4 in which they have claimed non receipt of bonus shares for the 180 shares with their possession, on 5.6.2000 and in those circumstances it is clear the 1st opposite party cannot entertain any claim of the complainant without any proper documents relating to the transfer of share and without having any enquiry with the original shareholders which cannot be deficiency in service on the part of the 1st opposite party.

12. Further it was contended by the appellant that there was no loss or damages caused to the complainant because of alleged non transfer of shares which was not established and for which they relied upon the ruling reported in (1993) 1 CPR 106 at page 107 as follows :-

'In any event, the Consumer Forums can consider his claim for compensation under Section 14(1)(d) for any liquidated damages only in case it is established that he has suffered loss due to deficiency in service and negligence on the part of the respondent. This, he has failed to establish. The order of the State Commission is confirmed. The appeal is dismissed. The appellant shall pay a sum of Rs.2,000/- as cos

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ts to the respondent.' Since in the earlier judgments it is pointed out that the Consumer Forum has no jurisdiction to entertain the complaint relating to the shares as they are not saleable goods this question of payment of compensation or deficiency of service not all arose in this case. 13. Further the opposite parties contended that the complaint was barred by limitation since the claim of transfer was made in the year 1998 and stop transfer letter was sent by the complainant in the year on 30.6.99 as per Exhibit A4. The complaint should have been filed within two years from the date of claim in 1998 or from the date of stop letter as per Exhibit A4 in 1999 within two years. But the complaint was filed only in the year 2003 and this plea cannot be brushed aside hence having no scope in this regard also, the complainant failed to prove that this complaint is well within time. In those circumstances in view of the above discussions made and reasons pointed out we are of the considered view that the District Forum erroneously allowed the complaint which is liable to be said aside by allowing this appeal. 14. In the result, the appeal is allowed, setting aside the order of the District Forum, Cuddalore in C.O.P.No.63/2003 dated 26.3.2008 and the complaint is dismissed. No order as to costs in this appeal. 15. The Registry is directed to hand over the Fixed Deposit Receipt, made by way of mandatory deposit, to the appellant, duly discharged.