Upholding an order passed by state consumer disputes redressal commission in Delhi, the national consumer disputes redressal commission (NCDRC) directed Karvy Computershare Pvt Ltd and JSW Steel Ltd to jointly pay Rs5 lakh in lump sum to make good the financial loss suffered by the complainant. Sarla Prasad had filed a complaint for deficiency in service against the two companies after failing to receive new share certificates or dividend warrants.
In an order issued earlier this month, the bench of Deepa Sharma (presiding member) says, "...the grant of compensation of Rs5 lakh is not based on surmises and conjectures but based on the facts and evidence on record. I found no illegality, perversity or infirmity in the impugned order (of the state commission). The present appeal has no merit and the same is dismissed with no order as to costs."
The bench noted that, in the written version filed by the companies before the state commission, there is no denial that Ms Prasad, based on new warrants of JSW Steel, was entitled to buy 393 new shares. "It, therefore, is clear that had the shares of JSW Steel been issued to her, she could have applied for the right shares, which she could not do due to the deficiency on the part of the appellants. She, therefore, has established that she had suffered a loss of Rs5 lakh."
The case is related to the non-receipt of new share certificates and dividend warrants by Ms Prasad and her family. The new share certificates and dividend warrants were issued by the Jindal group company through Karvy Computershare, its registrar and transfer agent (RTA).
Ms Prasad held 45,500 shares in Jindal Vijay Nagar Steel Ltd (JVSL). JVSL was merged in Jindal Iron and Steel Co Ltd and further integrated into JSW Steel. After the merger, JSW Steel issued 1,890 shares per the merger scheme and issued a dividend warrant for Rs5,670 to Ms Prasad.
However, Ms Prasad contented that, despite depositing her own shares with Karvy Computershare, she did not receive new share certificates or dividend warrants from the company. After writing letters in March and April of 2005, she was told by Karvy Computershare that her share certificates and dividend warrants had been dispatched by registered post on 19 March 2005.
When Ms Prasad checked with the post office, she was told that no registered parcel was ever received by them for her from Karvy Computershare. She again wrote a letter to the RTA. However, there was no response from Karvy Computershare. Ms Prasad then sent a legal notice on 7 July 2005. Karvy Computershare reiterated its stand and told her that since they did not receive back the registered post, they had presumed that it had been delivered to her. Ms Prasad again sent a legal notice on 19 May 2006 and then filed a complaint before the Delhi state commission. Initially, the complaint was dismissed for misjoinder of parties vide order dated 21 November 2007.
Ms Prasad then filed a revised complaint on 4 January 2008 in her individual capacity, praying for directions to all the opposite parties jointly and severally to deliver her share certificates for 1,890 shares along with dividend warrant or to pay her market value of those shares as on 13 December 2007 amounting to Rs25.11 lakh. She also requested for the amount of dividend warrant amounting to Rs5,670 and Rs28,538 on account of the dividend declared by JSW Steel on 12 March 2007 and also to pay her compensation of Rs5.22 lakh for financial loss suffered due to non-delivery of shares and warrants along with interest at 24% with Rs1 lakh as compensation for mental harassment and agony.
Rejecting all the preliminary objections raised by Karvy Computershare and JSW Steel, the state commission asked the company to issue 1,776 new shares in JSW Steel within 30 days. It also asked them to jointly and severally pay Rs5 lakh for the financial loss suffered by Ms Prasad due to the non-delivery of shares since 2006 and non-payment of dividends declared till date and also for causing her mental harassment and agony. The RTA and the company were also asked to pay Rs10,000 as the cost of litigation to Ms Prasad.
Karvy Computershare and JSW Steel then approached NCDRC. Both, the RTA and the company, contended that there was no deficiency in service on their part since Ms Prasad had never deposited the share certificates. Therefore, the new share certificates could not be issued by them and, as soon as the needful was done, they issued new share certificates in 2009.
After hearing the argument by the counsel for the company, the bench of Ms Sharma observed that JSW Steel could decide that Ms Prasad was entitled to 1,776 shares only in 2008. "Therefore, apparently, there is a deficiency in service on the part of the appellants in issuing the share certificates to the complainant to which she was entitled immediately on the merger in the year 2005. Therefore, the argument of counsel clearly shows deficiency on the part of the appellants."
Ms Sharma also pointed out different stands taken by the counsel for the companies. The counsel had told the state commission that on the merger, the company had issued 1,776 shares of JSW Steel in 2005 itself and sent it by post. However, the counsel told NCDRC that the company could decide only in 2008 that Ms Prasad was entitled to 1,776 shares.
"...the argument of the counsel for the appellants that the appellants could decide that the complainant was entitled to 1,776 shares only in the year 2008 is in direct conflict with the earlier stand of the appellants," the bench noted.
The company also argued that the grant of Rs5 lakh as compensation is not based on any facts or evidence in this case. NCDRC perused the complaint filed by Ms Prasad and found that she had given details of financial loss suffered by her by not receiving new shares and dividend warrants.
In her complaint, Ms Prasad submitted that she came to know about warrants issued by JSW Steel against existing shareholdings for the purchase of new shares and, based on her existing shareholding of 1,890 shares, 393 warrants were issued in her favour.
She contended in terms of these new warrants, she could have purchased 393 additional shares in JSW Steel. However, she did not receive even these new warrants. However, as the last date for applying for the purchase of the said 393 additional shares was 1 April 2006, Ms Prasad missed the option and suffered a loss on account of the values of these shares as well as the dividend that she would have earned on the same.
"The purchase amount of these 393 shares at Rs160 per share would have been Rs62,880. The market value of 393 shares as of 13 December 2007 at Rs1,329 per share was Rs5,22,297. Therefore, the total loss suffered by the complainants on the additional 393 shares amounts to Rs4,59,417. Loss on account of the amount of dividend declared/receivable on the additional 393 shares amounts to Rs4,912.50," Ms Prasad stated in her complaint.
NCDRC accepted Ms Prasad’s submission about the loss suffered by her and directed Karvy Computershare and JSW Steel to comply with the order passed by the Delhi state commission.
(First Appeal No78 of 2013 Date: 4 January 2023)
in Jan 2023, causing immense agony and anxiety to the complainant.
Karvy Computershare & JSW Steel deserved to be heavily penalized for preferring
an infructuous appeal and taking different stands.
The compensation awarded is measly.