Back
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
Mrs. Rekha Gupta, Presiding Member
KOSHY VARGHESE - Appellant
Versus
HDFC BANK LTD. - Respondent
First Appeal No. 337 of 2017 against Order dated 31.10.2016 in CC No. 28 of 2009 of Kerala State Consumer Disputes Redressal Commission, Thiruvananthapuram with IA No. 2439 of 2017 (Condonation of delay)
Decided on : 11-05-2017
Mr. Jogy Scaria, Advocate, for the Appellant; None, for the Respondent
The main legal point established is that the definition of a 'consumer' under the Consumer Protection Act requires the transaction to be for the purpose of earning livelihood through self-employment.
Headnote:
Consumer Protection Act - Sale of Shares - Section 172 of the Indian Contract Act - Unfair Trade Practice - Deficiency in Service
Fact of the Case:
The appellant purchased 3,000 equity shares and availed a loan against the security of the shares. The bank sold the shares without proper notice, leading to a significant loss in value. The appellant sought compensation for the value of the shares and mental distress caused by the sale.
Finding of the Court:
The court found that the appellant failed to regularize the loan account despite notices from the bank. The court dismissed the complaint, stating that the bank was within its rights to sell the shares as per the agreement.
Issues: The main issue was whether the appellant qualified as a 'consumer' under the Consumer Protection Act and whether the bank's actions constituted unfair trade practice or deficiency in service.
Ratio Decidendi: The court held that the appellant did not qualify as a 'consumer' under the Consumer Protection Act as the loan was not taken for the purpose of earning livelihood through self-employment. The court also found that the bank had the right to sell the shares as per the agreement.
Final Decision: The appeal and the complaint were dismissed as the appellant did not qualify as a 'consumer' and the bank's actions were found to be within the terms of the agreement.
ORDER
Rekha Gupta, Presiding Member.—The present First Appeal have been filed against the Order dated 31st October, 2016 passed by Kerala State Consumer Disputes Redressal Commission at Thiruvananthapuram (for short, the State Commission') in First Appeal No. 28 of 2009.
2. The brief facts of the case as per the Appellant/Complainant are that Appellant purchased 3,000 equity shares of an Offshore Ltd, Originally 500 shares and thereafter 2,500 shares were allotted to him. From the said shares appellant sold 105 shares on 31.12.2007 and retained the remaining 2,895 shares. In the account maintained in the name of the appellant under the depository services of the bank, the value of the said shares was Rs. 1,48,43,070.25. The Respondent/Opposite party bank had allowed the Appellant to avail loan on the security deposit of the shares. The bank was prepared to provide 50% of the share value amount as existed on the date of such pledge. The bank was not given authorization or power or authority to sell the shares. Only if the appellant gave written permission to do so, the Bank could sell the same. The appellant was always ready to pay the liability due to the bank by diverting funds from other sources if they made demand after giving sufficient time. Though the appellant was entitled to avail loan of Rs. 75,00,000 he had only drawn an amount of Rs. 20,00,000. When the bank demanded payment of loan amounts the appellant paid an amount of Rs. 10,00,000 and he was ready to pay the balance amount. The bank under no circumstance could resort to the sale of shares held by the appellant since in future there would have been spurt in the share value.
3. But without giving proper and valid notice or demanding payment of amounts due in respect of the loan and without giving sufficient time to pay off the loan and without the consent and knowledge of the appellant, the respondent bank sold the shares held by the appellant for a price of Rs. 454 per share and later for a price of Rs. 270 per share. After retaining about 100 shares all the remaining shares were sold for pittance. The bank which was carrying out depository services knew very well that the shares of Aban Offshore Ltd. would be reaching a rate exceeding Rs. 1,500 per share within few days. The shares were sold on 29.1.2009 and the present value of the shares was Rs. 1,600 per share. The said price was reached within a couple of days and the appellant was not even informed of the name of the person to whom the shares were sold. The appellant a, customer, was deceived by the bank and taken undue advantage of which amounts to unfair trade practise. Considering the present value of the shares sold it would have fetched a value of Rs. 45,00,000. But the sale price obtained was Rs. 11,41,559. The difference in value is Rs. 35,00,000. The appellant was ready to hold the said shares and to pay off the liability of the bank without difficulty. By the illegal sale of shares severe mental pressure and agony were caused to the appellant. Hence the complaint. The appellant sought a direction to the respondent to pay an amount of Rs. 45,00,000 towards the value of 2789 shares of Aban Offshore Ltd. and claimed a compensation of Rs. 10,00,000 towards the mental agony and distress caused to the appellant by the alleged illegal sale of shares.
4. The Respondent/Opposite Party filed a joint version and after amendment of the complaint, an additional version. The contentions raised were that the appellant was not a consumer as defined under Section 2(1)(d) of the Consumer Protection Act. The loan against shares was an overdraft account opened by the appellant with the respondent bank against the security of equity shares pledged with them. Further investment in equity shares was in the nature of speculative investment made for commercial purpose. The investment carried an inherent risk of capital erosion which can be caused by dips in the stock market. Such investments cannot be said to be made for e
