Regular sale and purchase of shares is a purely commercial activity and the only motive is to earn profits. Therefore, this activity is not covered under the provisions of the Consumer Act, the National Consumer Forum ruled
The National Consumer Dispute Redressal Commission (NCDRC), while dismissing a revision petition, has clarified that a person regularly trading in share market does not fall under the definition of 'consumer' as per the Consumer Protection Act, 1986.
In an order issued on 3rd January, the apex consumer forum said, "Since, respondents are trading regularly in the share business, which is commercial activity, under these circumstances, respondents would not fall under the definition of ‘consumer’ as per the Act. Moreover, regular trading in the sale and purchase of shares is a purely commercial activity and the only motive is to earn profits. Therefore, this activity being purely commercial one, is not covered under the provisions of the Act."
"Accordingly, we hold that since respondents are not the ‘consumers’ as per provisions of the Act, the State Commission committed grave error in allowing their complaint. Consequently, we allow the present revision petition and set aside the impugned order passed by the State Commission and restore the order of the District Forum. With the result, the complaint filed by the respondents before the District Forum shall stand dismissed," the NCDRC said.
The case relates with Hyderabad-based GP Ramesh and his wife Padma G who alleged that their broker Steel City Securities Ltd sold shares worth Rs11.76 lakh and Rs1.78 lakh despite their instructions about not to use their stolen depository participant slip (DPID) books.
Ramesh said, the depository participant slip books belonging to him and his wife were stolen from his scooter on 24 January 2008. He informed Steel City Securities about the theft and requested the broker not to allow any transactions on the said depository participant slips.
Steel City Securities advised Ramesh to lodge a police complaint and enclose the same along with his representation for their record purpose. The broker also assured him that they will not allow any transaction on the said depository participant slips which were lost.
Following the advice, Ramesh filed a complaint on the same day before the SR Nagar police station. On 30 January 2008, police issued an investigation certificate stating that efforts were made to trace the above slips but all are in vain.
Ramesh wrote a letter to Steel City Securities on 30 January 2008 along with the copy of the police complaint, and requested the broker to issue new DPID books.
However, there was no response. Later on, Ramesh came to know that the broker sold the shares worth Rs11,768 on 29 January 2008 and Rs1.78 lakh, respectively, belonging to his wife. In spite of the assurance that Steel City Securities will not transact till new books are issued, the broker sold the shares which was unfair and hence it is bound to reimburse the same, Ramesh said in his petition before the District Consumer Forum.
Since there was no response, he sought reimbursement of Rs1.78 lakh and Rs11,768 with an interest @18% per annum from 29 January 2008 till date of payment to his wife. Further he asked the broker to issue new DPID books in favour of both the husband and wife, besides Rs30,000 each towards compensation and Rs10,000 as costs of the complaint.
In its reply, Steel City Securities denied the allegations and also that it had advised Ramesh to lodge a police complaint. The District Forum, held that the complaint was not maintainable as there was agreement between them that in case of dispute, they shall approach the Arbitrator. "The respondents (Ramesh and his wife) have failed to show any deficiency of service/unfair trade practice. Lastly, the respondents are not ‘consumers’ since the transactions are commercial in nature," the Forum said. It then dismissed the petition.
Ramesh then filed an appeal before the State Commission, which while allowing it set aside the order passed by the District Forum. The State Commission also directed Steel City Securities to reimburse Rs1.78 lakh and Rs11,768 to Ramesh and his wife.
Steel City Securities then filed a revision petition before the NCDRC. During the hearing, the apex consumer forum said, "It is an admitted fact that respondents had been indulging in trading of the shares as respondents in their complaint have stated that they are regularly transacting the transactions through the petitioner. Thus, the short question which arise for consideration in the present case is as to whether respondents are ‘consumers’ or not as per Section 2(1)(d) of the Act."
Expression ‘consumer’ has been defined in 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 paid 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 or avails of any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires or avails of 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 but does not include a person who avails of such services for any commercial purpose;
Explanation------ For the purpose of this clause, “commercial purpose” does not include use by a person of goods bought and used by him and services availed by him exclusively for the purposes of earning his livelihood by means of self-employment”.
The NCDRC said, both the Rameshs have nowhere pleaded in their complaint that they are doing the share trading business for self-employment nor it has been pleaded that the services provided by Steel City Securities are being availed exclusively for the purpose of earning their livelihood by means of self-employment. "It is well settled that the dispute between the parties relating to commercial purposes are excluded under the Act," the Commission said.
It said NCDRC in Vijay Kumar Vs. Indusind Bank, II (2012) CPJ 181 (NC) has held;
“Since, petitioner has been trading regularly in the shares which is a commercial transaction and for which he has also availed the “over draft facility” from the respondent, as such he would not be a consumer as per Section 2 (1) (d) (ii) of the Act. Moreover, regular trading in the purchase and sale of the shares is a commercial transaction and the only motive is to earn profit. Thus, this activity is purely commercial one and is not covered under the Act”.
"Since, both the Rameshs are trading regularly in the share business which is commercial activity, under these circumstances, respondents would not fall under the definition of ‘consumer’ as per the Act. Accordingly, we hold that since respondents are not the ‘consumers’ as per provisions of the Act, the State Commission committed grave error in allowing their complaint. Consequently, we allow the present revision petition and set aside the impugned order passed by the State Commission and restore the order of the District Forum. With the result, the complaint filed by the respondents before the District Forum shall stand dismissed," the NCDRC said in its order.
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
REVISION PETITION NO.3060 OF 2011
(Against the order dated 25.5.2011 in Appeal No.603 of 2009 of the State Commission, Andhra Pradesh)
Steel City Securities Ltd.
VI Floor, Sanous Manohar Complex,
Opp Dinmy Pen Shop Sindhi Colony
PG Road, Secunderabad, AP
Rep. by its Manager …. Petitioner
1. Shri GP Ramesh
SR Nagar, Hyderabad
2. Smt Padma G
SR Nagar, Hyderabad
Nifty will now move sideways with an upwards bias that may take it to 6,100
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