The onus of action in case of share price drops rested on the employee, not the Bank, and the Bank was within its remit to sell shares to secure its loan.

ORDER :

Anup K. Thakur, Presiding Member

These Revision Petitions under Section 21(b) of the Consumer Protection Act, 1986 challenge the order dated 24.8.2016 passed by Karnataka State Consumer Disputes Redressal Commission, Bangalore (State Commission) in First Appeal Nos. 1095 and 1096 of 2012 filed by the petitioner/opposite party - State Bank of India.

2. Brief facts for the disposal of both RP No. 435 of 2017 and RP No. 571 of 2017 are as follows.

3. The respondent/complainant was an employee of M/s. Wipro which floated a scheme titled WESOP (Employee Stock Option) on 9.3.2007. Under this, an employee was enabled to buy WIPRO shares at a pre-determined price of around Rs. 332 per share, also called the exercise price of the share. This enablement was an arrangement with the State Bank of India under which an employee could avail of a loan called WESOP loan, maximum Rs. 20 lakh, to buy shares at the exercise price, and pledge these shares against the loan. If an employee wanted to buy even more shares, there was a provision enabling him to obtain a personal loan above Rs. 20 lakh The loans in both the accounts were to be repaid in two years. The arrangement was that while the employee would be responsible for payment of principal amount, M/s. WIPRO would pay the interest on the loans. In this way, the scheme was positioned as an employee benefit scheme.

Certain procedures were provided under the scheme for operating the loan accounts. Thus, partial sale of shares was permitted, at the instance of the account holding employee, to be deployed first towards retiring personal loan and the balance if any, the WESOP loan. As for the Bank, it had a certain leeway to sell shares in order to protect the margin of security required for the outstanding loan amount, after informing and seeking instructions from the account holder and after a gap in case no instructions were forthcoming.

4. In this backdrop, the case of the respondent complainant in RP No. 435 is that the Bank was deficient in providing service in respect of the WESOP loan account as it failed to sell shares at the right time, thereby failing to minimize losses for the respondent complainant. In RP No. 571, the consumer grievance is different. In this case, the complaint is that the Bank sold 1000 shares without authorization, and thus provided deficient service, again resulting into a loss.

5. The District Forum, in RP 435 arising out of CC 2927, vide its order dated 9.5.2012 partly allowed the complaint and directed the Petitioner opposite party Bank to pay Rs. 11,45,267.93 with interest @ 12% per annum with effect from 13.11.2009, and also cost of litigation Rs. 2,000. In CC No. 2928 of 2010, it partly accepted the charge of deficiency in service on the part of the petitioner Bank in selling 1,000 shares without a specific authorization and directed payment of Rs 2,00,000 with interest @ 12% per annum with effect from 20.3.2009, along with litigation cost of Rs. 2,000. The State Commission vide its order dated 24.8.2016 dismissed both the appeals filed by the petitioner Bank against these two orders. Hence these Revision Petitions before the National Commission.

6. I have heard learned Counsel on behalf of both the parties and gone through the relevant documents including the guidelines of the WESOP scheme and the arrangement letter dated 26.3.2007 between the Bank and the respondent complainant.

7. It is clear that WESOP was a scheme that provided for WIPRO employees an arrangement with the petitioner Bank for availing a loan of upto Rs. 20 lakh to purchase WIPRO shares at the then price of around Rs. 332. For purchasing shares beyond this, there was provision of taking a loan on personal account. While principal had to be paid back within two years by the employee, interest due to the Bank was to be paid by M/s. WIPRO. In this way, the idea of the scheme was to enable and facilitate WIPRO share purchase and thus provide the benefit of stock option to the employees on very