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The Director Advent Computer Services Ltd. v/s V.R. Kannan & Others

    Decided On, 22 March 2010
    At, National Consumer Disputes Redressal Commission NCDRC
    By, MEMBER
    For the Petitioner : Abdesh Chaudhary, Advocate. For the Respondents: Achintya Dvivedi, Advocate.

Judgment Text
S.K. Naik, Member

Respondents were complainants before the District Consumer Disputes Redressal Forum, Chennai (South), herein after referred to as the ?District Forum? for short. Their grievance against the petitioner/opposite party before the District Forum was that they had purchased 500 shares of the opposite party at the value of Rs.5.70 per share on 15th of May, 1997 through a consultant. Transfer forms, duly filled in, were submitted to the petitioner/opposite party for effecting the transfer. As against the mandatory period of three months provided for transfer, the petitioner/opposite party failed to take any action in the matter for years despite repeated requests. The complainants, therefore, could not take advantage of the boom in the share market. One of the complainants in fact had written to the petitioner/opposite party for immediate transfer of the shares, clearly stating that the opposite party/company would be liable to make good the loss if the share price fell bellow Rs.340/-. Despite its acknowledgment, the petitioner/opposite party failed to take any action and the complainants suffered huge loss as the share price tumbled down to Rs.39/- on 15th of May, 2000. Alleging a direct loss of Rs.1,49,125/- and charging the opposite party of deliberately stopping the free flow of shares in the market, which amounted to unfair trade practice, they filed a complaint before the District Forum and sought a direction for the immediate transfer of the shares and compensation of Rs.2.00 Lakhs and payment of Rs.1,49,125/- towards the loss suffered by them.

The defence of the petitioner/opposite party before the District Forum was that the delay in effecting the transfer was because of Income Tax raids on the company, in which the shares in question were seized by the Income Tax Authorities and, therefore, it was beyond their control. The District Forum on consideration of the evidence before it held the petitioner/opposite party to be deficient in service because the opposite party had failed to file any evidence to show that there was any such raid and even otherwise assuming that there was a raid during February, 1999, there was no explanation as to why no action was taken from September, 1997 when the transfer application had been acknowledged until February, 1999. The District Forum, therefore, directed the petitioner/opposite party to make good the loss of Rs.1,49,125/- on account of the delay in transfer of the shares and pay a compensation of Rs.25,000/- and awarded a cost of Rs.1000/- as well.

Aggrieved thereupon, the petitioner/opposite party filed an appeal before the Chennai State Consumer Dispures Redressal Commission (?State Commission? for short). The State Commission, relying on the order of this Commission in Consumer & Human Rights Forum Vs. Kotak Mahindra Finance Ltd. [2004 (1) CPR 92], in which it has been held that ?unreasonable and unexplained delay on the part of the company in putting endorsement of transfer in share certificates purchased by a consumer amounts to deficiency in service?, dismissed the appeal of the petitioner/opposite party.

Aggrieved once again that the petitioner/opposite party has filed this revision petition.

We have heard the learned counsel for the parties and perused the records of the case.

Learned counsel for the petitioner/opposite party has raised the same grounds of maintainability, limitation and the alleged loss being speculative. These aspects have been dealt at length by the fora below. Since the shares belong to the petitioner-company, even if they be floating in the open market, the right of a purchaser would accrue only after the endorsement of its transfer to the purchaser by the company by deleting the name of the erstwhile buyer. This would definitely amount to service and the contention that a complaint was not maintainable since the purchaser has paid no consideration to the opposite party-company has to be rejected.

On the point of limitation, the State Commission has rightly held that the several letters written by the respondents/complainants clearly make it that the grievance was continuing. Even otherwise, the last of the letters was written on 4th of March, 2000 and the complaint was filed in the year 2000 itself, so there was no question of the complaint being barred by limitation. The plea that because of the Income Tax raid, in which the share certificates in question were seized, it was beyond the control of the petitioner/opposite party to effect the transfer also has to be rejected since the request for transfer of shares was made during September, 1997 and the alleged raid took place on 17th of February, 1999 and there is absolutely no explanation as to why no action was taken during the intervening period of two years to effect the transfer. This certainly amounts to deficiency in service. Therefore, the revision petition has no merit.

However, we find that the District Forum has directed the petitioner/opposite party to transfer the 500 shares to the complainants as well as pay a sum of Rs.1,49,125/- towards the loss, as also a compensation of Rs.25,000/- in addition to a cost of Rs.1000/-. This award has been affirmed by the State Commission. This award, in our view, is not fully justified. The figure of Rs.1,49,125/- has been arrived at as the loss on the assumption that the complainants would have sold the shares when it was valued at Rs.340/- per share, which subsequently came down to only Rs.39/- on the 15th of May, 2000. Irrespective of this being a supposition even if it were to be agreed as supposed, the fact remains that the shares should have gone out of the hands of the complainants on receipt of the sale proceeds. Thus, the award of making good the presumed loss as well as the return of the shares cannot be justified. It is not clear from the records whether the shares subsequently were returned to the complainants duly endorsed but even if they are returned now they will carry some value in the market. The award of return of the share certificates as well as the full presumed value of loss, therefore, cannot be sustained. We further find that the fora below have awarded a compensation of Rs.25,000/- over and above the assessed loss. This, in our, was not warranted since the award of Rs.1,49,125/- has been made giving the best advantage to the complaina

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nts. Since the records do not indicate as to whether the share certificates are still in the custody of the opposite party/company and their value in the market as of today, we are of the view that the ends of justice will be fully met if the order passed by the fora below is modified to the extent that the opposite party/company should return the share certificates duly indorsed within a period of one month from the date of issue of this order, if the share certificates have not yet been returned to the complainants, and in addition pay a lump sum compensation of Rs.50,000/-. The award of Rs.1000/- towards the cost of litigation is maintained. The revision petition is disposed of in above terms.