TAMIL NADU STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, MADRAS
Hon’ble Thiru Justice S.A. Kader, President; Thiru R.N. Manickam, Member
& Dr. Tmt. Ramani Mathuranayagam, Member
P.J. JOSEPH—Complainant
versus
SHREE LAKSHMI & CO. AND ANR.—Opp. Parties
O.P. No. 342 of 1992—Decided on 15.2.1994

Headnote:Consumer Protection Act, 1986 - Section 17 read with Section 12 and Sections 2(1)(g) and 2(1)(0) - Complainant delivered share certificates for 200 shares to first opposite party for sale - When contacted first opposite party told complainant the share certificate misplaced/stolen from his office - Complainant wrote to concerned companies but informed that shares already stand transferred - First opposite party to cover up its misdeed agreed to replace the shares and issued contract delivery letter in favour of complainant - Share certificate not replaced - Complainant paid Rs. 7,335 for purchase of 500 shares to first opposite party who failed to deliver share certificates Complainant intimated by the company that share certificates sent to first opposite party Complainant wrote to first opposite party but there was no response. - Requested second opposite party for settlement of matter who expressed helplessness/inability to convince first opposite party - Complaint filed alleging deficiency of service on the part of both opposite parties - First opposite party contended that complainant not known to him and he never rendered any service or collected service charges from him - Transactions effected through third person and complainant not a consumer - Second opposite party denied knowledge of allegations and averments made and averred that when dispute brought to its notice it tried to bring about a mutually satisfactory agreement but without success - second opposite party not erred in discharging its duties -No deficiency in service on the part of second opposite party - First opposite party a share broker who receives brokerage/commission on the price - Complainant though having dealing with first opposite party through third person but he was acting as agent of complainant - Complainant as the principal in law availed or hired services of first opposite party on an applied promise to pay brokerage - First opposite party guilty of gross deficiency in service and negligence in respect of the transactions and bound to repay the price of shares and refund amount received for purchase of shares.

       Held: The case of the first opposite party is that he never knew the complainant and it was Mr. Govindaraj who was dealing with the first opposite party in the sale and purchase of shares for the complainant and his wife and hence the complainant is not his client and is not a consumer. Exh. A6 and A8 communications are from the first opposite party directly to the complainant and there are several letters written by the complainant directly to the first opposite party. There is therefore no doubt that the complainant was having direct dealings with the first opposite party. Even assuming that the complainant was having dealings with the first opposite party through Mr. R. Govindaraj, the said Govindaraj was acting only as the agent of the complainant. The complainant as the principal is in law, the person who was hired or availed of the services of the first opposite party. There is therefore little doubt that the complainant is the client of the first opposite party and has been having dealings with the first opposite party directly or through Mr. R. Govindaraj.

       (Para 9)

       The share broker is, as a matter of right, entitled to claim brokerage from the party for whom he sells or buys shares. Under Section 2(1)(d)(ii) of the Consumer Protection Act, the consideration for hiring or availing of the services, need not actually be paid, it may be promised or partly paid and partly promised or under any system of deferred payment. When a person hires or avails of the services of a share broker for the purchase or sale of shares, there is an implied promise to pay the brokerage. It is not the case of the first opposite party that it rendered services in these transaction to the complainant free of charge, so as to take it away from the scope of service as defined in Section 2(1)(o) of the Act. This is a case where the services of the first opposite party have been availed of by the complainant on promise of payment of the required consideration i.e. brokerage or commission. Further in respect of the second transaction, the complainant has paid a sum of Rs. 7,335/- by cheque to the 1st opposite party on 10.10.91 and the same has been realised by the 1st opposite party on 12.10.91 and there is no dispute on this aspect. The 1st opposite party has purchased 500 shares of Shyam Vinyl Ltd., at Rs. 14.25 per share and the total price comes to Rs. 7,125/-. The stamp duty Rs. 5/- is for Rs. 1,000/. It will come to less than Rs. 36/-, even allowing Rs: 20/-· for postal charges, the balance in the hands of the 1st opposite party is Rs. 117/- which has to be adjusted towards hiscommissio1. We hold therefore that the complainant is a consumer as regards the 1st opposite party and has availed of the services of 1st opposite party for the sale of 100 shares of TVS Electronics Ltd., and 100 shares of UB Petroproducts Ltd., and for the purchase of 500 shares of Shyam Vinyl Ltd., for consideration. (Para 10)

       The second opposite party has not rendered any service to the complainant for any consideration and hence the complainant cannot claim to be a consumer qua the second opposite party. The point No.1 is answered accordingly.

       (Para 11)

       We have no hesitation in holding that the first opposite party has purchased 500 shares of Shyam Vinyl Ltd., and has failed to deliver the same to the complainant and has thus committed gross deficiency of service. It is therefore bound to refund the sum of Rs. 7,335/- received from the complainant with interest thereon from 12.10.91 when the amount has been realised by encashment of the cheque. (Para 12)

       We have already found the first opposite party guilty of gross deficiency of service and negligence in respect of both these transactions. It is bound to refund to the complainant the price of 100 TVS Electronics shares and 100 UB Petro Products shares sold by it. Exh. A4 shows that 100 DB Petro Products shares have been sold for Rs. 3,200/- to Mr. Sankaranarayana Bhattacharya on 19.12.90 for Rs. 3,200/-. The first opposite party is bound to repay the sum of Rs. 3,200/- to the complainant with interest thereon at 24% p.a. from 19.12.90 till payment. . (Para 14)

       The first opposite party has to refund the sum of Rs. 7,335/- received from the complainant for purchase of 500 Shyam Vynil Ltd., shares with interest thereon at 24% p.a. from 12.10.91 on which date the cheque has been encashed. The complainant has claimed damages on various heads but there is no evidence to substantiate the same. But the complainant must certainly have suffered much mental pain and agony and we are awarding compensation in the sum of Rs. 10,000/- for the damages. (Para 16)

       IMPORTANT POINT

       When a person hires or avail of the services of a share broker for the purchase or sale of shares, there is an implied promise of payment of the required consideration, i.e. brokerage or commission.