9 COMPLAINT FILED ON 2212005 DECIDED ON 2582006 BEFORE

COMPETITIVE NEUTRALITY COMPLAINT AGAINST STATE FLORA UNDER
1 DEFINITIONS COMPLAINT FOR THE PURPOSES OF THIS POLICY
2 PRIVACY ACT COMPLAINT FORM DATE 1 YOUR

3 COMPLAINT INFORMATION A WHAT IS THE ALLEGED VIOLATION?
3 UNLAWFUL DISCRIMINATION COMPLAINT FORM UNLAWFUL DISCRIMINATION COMPLAINT FORM
4 CASE SUMMARY COMPLAINT AGAINST THE HOUSING DEPARTMENT FOR

Appeal filed on 15

9


Complaint filed on 22.1.2005

Decided on 25.8.2006


BEFORE THE KARNATAKA STATE CONSUMER DISPUTES REDRESSAL COMMISSION, BANGALORE


Dated the 25th day of August, 2006


PRESENT


HON’BLE MR.JUSTICE CHANDRASHEKARAIAH, PRESIDENT,

SMT. RAMA ANANTH, MEMBER,

SRI M.SHAMA BHAT, MEMBER

COMPLAINT NO.6/2005


Sri L.MOHAMMED HANIF,

Son of Sri L.Abdul Jabbar,

Chartered Accountant,

No.20/12, I Floor,

M.R.R. Road

Bangalore – 560 002 COMPLAINANT


(By Sri S.Shivanand, Advocate)


VERSUS


1. M/s. STANDARD CHARTERED BANK,

Customer Service Centre,

H.M.Geneva House,

No.14, Cunningham Road,

Bangalore – 560 052,

Represented by the Manager,

(Finance Against Shares Department)


2. M/s. STANDARD CHARTERED BANK,

Customer Banking Credit Phoenix Centre,

Phoenix Mills Compound,

Senapathi Bapat Marg,

Lower Parel,

Mumbai – 400 013,

Represented by its Manager OPPOSITE PARTIES


(By M/s. M.V.Kini & Co., Advocates)


-----







O R D E R



Hon’ble Mr. Justice Chandrashekaraiah:



The Complainant is a Credit Card Holder of the Opposite Parties (for short, “OPs”) since 1997. He requested the OPs to sanction Over Draft Facility under their product called “Finance Against Shares” and on that request the OPs have sanctioned the Over Draft Facility fixing the limit to an extent of Rs.2,00,000/- vide their letter dated 17.10.2002. As a security to avail the said Facility, the Complainant has pledged (1) 4960 shares of IDBI of the value of Rs.110-37 per share, (2) 700 shares of Tata Chemicals Limited of the value of Rs.189-00 per share and (3) 3400 shares of Videocon International of the value of Rs.181-48 per share. The case of the Complainant is that the OPs by their letter dated 15.5.2004 written to the Complainant, which was posted on 18.5.2004, stated that the limit in the Account has been cancelled and called upon the Complainant to pay the outstanding amount of Rs.3,15,545-01 within three days from the date of the letter, failing which the OPs threatened that the shares would be sold and the Over Draft would be adjusted from the sale proceeds. According to the Complainant the said letter was received by him on 20.5.2004 in the afternoon. But the OPs without waiting for any reply from the Complainant sold the shares pledged by him on 18.5.2004 without his consent and thereby the OPs have made the Complainant to suffer the loss to the extent of Rs.13,96,445/- and, therefore, he has prayed for a direction to the OPs to pay the said amount.


2. The OPs have filed their Version denying their liability to pay any compensation. According to the OPs, due to fall in market price the value of the shares pledged was reduced suddenly which was well within the knowledge of the Complainant and, consequently, the operating limit also has been raised periodically. The further case of the OPs is that the Complainant while pledging the shares was fully aware of the vagaries of fluctuations of the rates of the stocks from day-to-day as available from stock exchange prices. As on 17.5.2004, the stock prices crashed for more than 50%. Since the OPs had been insisting since April, 2004 to deposit the balance or face liquidation of shares, the Complainant failed to respond, as a result of which, in order to extract the maximum price that could be had, the shares were sold on 18.5.2004, that too with prior intimation to the Complainant on 17.5.2004 by way of a Telegram. Therefore, according to the OPs, there is no “Deficiency in Service” on their part.


3. Both the parties have filed Affidavits by way of evidence and also produced documents, which are marked as Exhibits.


4. On the rival pleadings of the parties, the following points arise for consideration:

  1. Whether the Complainant proves and establishes the “Deficiency in Service” on the part of the OPs as pleaded in the Complaint ?

  2. To what relief the Complainant is entitled ?


5. POINT NO.1 : It is not in dispute that the Complainant was permitted to avail the Over Draft Facility by the OPs to the limit of Rs.2,00,000/- by pledging the shares as stated in the Complaint by way of security. The Complainant has produced the Valuation Report of the shares issued by he OPs, which is marked s Exhibit ‘C-2’. From the said document it is seen that the value of the shares pledged by the Complainant with the OPs was Rs.1,63,508/-. The OPs have sold the said shares for Rs.3,50,831/- on 18.5.2004. The amount due by the Complainant as on 17.5.2004 as seen from Exhibit ‘C-8’ to the OPs is Rs.2,90,545/-. The Complainant has produced a copy of the letter dated 15.5.2004 written by the OPs to the Complainant, which is marked as Exhibit ‘C-4’. Para 3 of the said letter reads thus:


“We hereby call upon you to pay the said amount with interest within three days from the date of this letter failing which we will be constrained to dispose of the shares lodged by you, at your risk and responsibility, and appropriate the sale proceeds to the liability mentioned above. After appropriating the sale proceeds, if there is any deficit, we shall take further steps to recover the same entirely at your risk. Please note that in case the shares pledged by you are in physical form but are tradable in Compulsory Demit Form as prescribed by SEBI, we may have to sell them at a price considerably lower than the prevailing market price.”


From a reading of the said letter, it is seen that the Complainant was called upon to pay the amount due with interest within three days from the date of that letter. No doubt the said letter is dated 15.5.2004. According to the Complainant, the said letter was posted by the OPs on 18.5.2004. The cover sent by the OPs by post is marked as Exhibit ‘C-5’. On this cover there is a postal seal which discloses that the cover was posted on 18.5.2004. According to the Complainant, the said letter was received by him on 20.4.2004. The learned Counsel appearing for the Complainant submits that the OPs having written the letter dated 15.5.2004, which was received by the Complainant on 20.5.2004, and having given three days time to the Complainant to pay the amount due to the OPs, the OPs ought not to have sold the shares on 18.5.2004 itself without an opportunity to the Complainant to pay the amount demanded. Even though the said letter speaks of three days from the date of the letter, it could be construed as three days from the date of receipt of the letter. In the instant case, the Complainant received the letter on 20.5.2004. But by that time the OPs had sold the shares on 18.5.2004 itself. According to the OPs, the Complainant was intimated about the sale of shares through a Telegram on 17.5.2004. In support of this contention, the OPs have produced a chit said to have been issued by the Department of Telecommunications India, which is marked as Exhibit ‘R-1’. The said chit does not indicate that any intimation has been sent to the Complainant regarding the sale of the shares. The chit also does not indicate any address to which the Telegram has been sent. Therefore, no reliance can be placed on the said chit. No doubt the OPs had written a letter calling upon the Complainant to clear the dues on 15.5.2004 granting three days time to pay the dues. If 15.5.2004 is excluded for the purpose of calculating three days time, then the period of three days comes to an end on the might night of 18.5.2004. In the instant case, the OPs have sold the shares during the day time on 18.5.2004 itself. The Complainant has produced a postal cover to show that the said letter was posted on 18.5.2004. If that were to be the case, the Complainant had no knowledge about the fact that he was required to pay the amount due to the OPs. If the Complainant had the knowledge that the OPs were taking steps to sell the shares, as the price of the shares was going down in the market, he would have discharged the loan and kept the shares for himself. Therefore, the OPs being the brokers of the Complainant ought not to have sold the shares without proper intimation to the Complainant. Therefore, we are of the view that there is a “Deficiency in Service” on the part of the OPs. Hence, we are of the view that the OPs are liable to pay compensation for the Deficiency in Service to the Complainant.


6. POINT NO.2 : Admittedly, as per the Shares Valuation Report, the value of the shares pledged by the Complainant is Rs.1,63,508/-. The shares were sold for Rs.3,50,831-28 ps. Therefore, it is seen that the Complainant has not incurred any loss by sale of shares. But, at the same time, if the Complainant had retained the shares, he would have earned much more. As the OPs have not issued any notice to the Complainant and have sold the shares without the consent of the Complainant and without the knowledge of the Complainant, we are of the view that awarding a sum of Rs.1,00,000/- as compensation in favour of the Complainant would meet the ends of justice.


7. In the result, we pass the following Order:

  1. The Complaint is allowed in part.

  2. The OPs are directed to pay Rs.1,00,000/- (Rupees one lakh only) as compensation to the Complainant within two months from today. In the event if the OPs fail to pay the said amount to the Complainant within the period of two months as stated above, the OPs shall be liable to pay interest at 12% per annum on the said sum of Rs.1,00,000/- from the date of the Complaint till realization;

  3. The OPs are also directed to pay Rs.2,000/- (Rupees two thousand only) to the Complainant towards the costs of these proceedings.






MEMBER MEMBER PRESIDENT
















RMK-


6 BEFORE THE HON’BLE LOKAYUKTA JUSTICE MANMOHAN SARIN COMPLAINT
9 COMPLAINT FILED ON 2212005 DECIDED ON 2582006 BEFORE
A BRIEF GUIDE TO THE COMPLAINTS PROCESS 1 WHEN


Tags: before, complaint, filed, 2212005, decided, 2582006