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Judgment
MR. Justice S.S. Sandhawalia, President- M/s. Ambalal Sarabhai Enterprises Ltd. Appeal against the order of the District Forum, Ambala allowing the respondent''s complaint and directing the refund of Rs. 4,000/- being the value of 40 debentures of Rs. 100 / each with interest at 20% from the 1st of February, 1988 onwards.
IN view of the threshold question strenuously urged on behalf of the appellant that the respondent does not come within the definition of a consumer under the Act at all it is unnecessary to enter into the thicket of facts too deeply. It suffices to mention that the respondent''s case was that he had purchased 40 non-convertible debentures of Rs. 100/-each from the appellant-Company way back on the 1st of February, 1988. Apparently the said debentures were to be redeemed after a period of four years on the 1st of February, 1992. The respondent held the debentures till the date of redemption and apparently applied for the repayment of the amount on the due date. However, the Company converted the said debentures into 250 equity shares of Rs. 20/- each at a premium of Rs. 7/-, which the respondent refused to accept. The primal grievance was that the redemption clause in the debentures had been violated and a refund of the amount along with penal compensation of Rs. 25,000/-was claimed. On notice being issued, the appellants took up the firm preliminary threshold objection that the complainant did not come within the definition of a consumer under the Act and the dispute raised was not a consumer dispute at all and the District Forum had consequently no jurisdiction. On merits the appellant-Company admitted the factum of the allotment of debentures and the respondent holding the same for the requisite period. It was however, the plea that a formal meeting of the all debenture holders of the Company was first held on the 11th of May, 1992 and at the adjourned meeting held on 13th of June, 1992, it was decided to allow six fully equity shares of the face value of Rs. 10/- each towards redemption in full of each debenture of the face value of Rs. 100/-. An option was given to the debenture holders to keep their debentures alive instead of availing of the composite scheme for redemption of debentures and the payment of interest thereon provided that such option is exercised before 25th of July, 1992. The decision of the said meeting was conveyed to all the debenture holders including the complainant and he did not choose to exercise the option before the stipulated date of the 25th of July, 1992 and consequently 420 equity shares were duly allotted to him in accord with the decision taken in the debenture holder''s meeting. The stand on merits was that no cause of action thereby arose to the respondent.
The respondent appeared as his own witness in support of the complainant and in rebuttal RW-1 Sh. P.K. Sethi, Branch Manager of the appellant-concern at Ambald gave his sworn testimony.
THE District Forum somewhat summarily concluded that the action of the appellants in converting the debentures into the shares was not justified because no express consent of the complainant-respondent was obtained by them to that effect. On that premise alone, the relief was granted in the terms noticed at the very out-set. Mr. H.S. Awasthi, the learned Counsel for the appellant had pinned himself on the spear-head contention that the respondent by no stretch of imagination could come within the ambit of the definition of a consumer under the Act. The alternative submission was that no cause of action for a consumer dispute arise sat all because neither any defect in the goods was even alleged or established nor any deficiency in services suggested or proved. The submission was that at the highest the lis was one either within the Company Law jurisdiction or a matter for decision by the Civil Courts, if the respondents were, so advised. Reliance was placed on a host of decisions including 1993 CPC 302 ''Ram Narayan First Appeal No. 23 of 1994. Parmeshwariyar and Anr. v. Larsen & Toubro Ltd & Others 1993 CPC 425 ''Kamla Devi of Ambala Cantt. v. The Udayan Credit and General Investment Company Ltd.; 1993 CPC 794 ''Sq. Ldr. Gurdial Singh and Others v. United Land & Housing Ltd & Others'' and III (1993) CPJ 1721=1993 CPC 815 ''Pfizer Limited of Bombay v. Hansraj Singh Barak of Gurgaon''.
ON the other hand Mr. Ajay Singal had primarily relied on precedent for his stand that the respondent in purchasing the debentures from the appellant-Company would come within the ambit of the definition of a consumer under the Act. Reference was made to the decision of the National Commission in III (1993) CPJ 261 (NC)= 1994 CPC 149, Neela Vasant Raje v. Amogh Industries and Another, and in particular to the view expressed by the Tamil Nadu State Commission in II (1992) CPJ 756, N. Maduram Financial Services (P) Ltd. v. Modern Woollens Ltd. Since we are firmly of the view that herein the question is concluded in favour of the appellants by the recent precedent of the National Commission in II (1993) CPJ 216 (NC), SQN. LDR. Gurdial Singh & Ors. v. United Land & Housing Ltd. & Ors. and equally of this Commission, it would be unnecessary and indeed wasteful to examine the matter afresh on principle. It would suffice to mention that a similar, if not identical question had first come up before this Commission in III (1993) CPJ 1721, M/s. Pfizer Ltd. v. Hanssaf Singh. Therein after an indepth consideration of the core issue involved, it was concluded as follows:-- "In the light of the somewhat exhaustive discussion, of principle, the language of the Statute and precedent, the answer to the question posed at the outset has to be rendered in the negative. It is held that the unsuccessful applicants seeking allotment of shares in the public issues floated by incorporated companies are not consumers within the meaning of the definition under the Act". The aforesaid ratio directly or by way of analogy goes deeply in favour of the stand taken by the appellants. However what further conclude the matter is the fact that a virtually identical question came up for consideration before this Commission in First Appeal No. 486 to 507 of 1993, Braham Dutt Agarwal v. M/s. San Tubes Ltd. Bhiwani & Others, decided on the 4th of April, 1994. In the said case also the issue was considered in some depth and after relying on SQN. LDR Gurdial Singh v. United Land & Housing Ltd. & Ors. it was held as follows:- "To finally conclude the answer to the question posed at the outset has to be rendered in the negative. It is held that private placement or purchase of shares of a Public Limited Company and their non-delivery does not come within the ambit of a consumer dispute." Within this jurisdiction the aforesaid two cases would set the matter at rest in favour of the appellants. However, in all fairness, we must refer to the respondent''s reliance on Neela Vasant Raje v. Amogh Industries and Another (supra). A perusal of the order however would indicate that the same has little or no relevance to the question that falls for consideration here. In our view the said case is wide of the mark and in any case plainly distinguishable. However, there is no gain saying the fact that the view expressed by the Tamil Nadu State Commission in N. Maduram Financial Services (P) Ltd.. v. Modern Woollnes Ltd. (supra) would seem to go in favour of the respondent''s stand. However, with the deepest deference if appears to us that the said view is contrary to the recent binding precedent of the National Commission in SQN. LDR Gurdial Singh''s Case (supra). It calls for notice that this case was rendered subsequently to the Tamil Nadu State Commission''s case. Therein the National Commission had unhesitatingly held as follows:- "After having heard both sides, we have come to the conclusion that First Appeal No. 124/92 filed by the Company has to be allowed and its contention that the complaint did not raise a "consumer dispute'' has to be accepted. The transaction between the parties was plainly one of sale of shares by the Company to the complainant with a stipulation for re-purchase of the shares within a period of three years. This was purely a transaction of sale of goods with a condition for re-purchase and not an agreement of hiring of any service. There being no defect in the goods sold, there was no cause of action for the complainants to initiate proceedings under the Act in respect of the said transaction of sale of shares. Inasmuch as we have already held that there was no transaction of hiring of service involved in this case, the dispute raised by the complainants can not be regarded as a consumer dispute that which can be legitimately brought before the Consumer Forum for adjudication under the Act. The resultant situation is that the complainants should not have been granted any relief at all by the State Commission and the complaint petition should have been only dismissed." A bare reading of the aforesaid observations would show that transactions of the sales of shares by a Company to a purchaser would plainly not come within the ambit of a consumer dispute and in our view the position would be identical as regards debenture certificates as well. With respect therefore the ratio in N. Maduram Financial Services (P) Ltd. v. Modern Woollen Ltd. (supra) is directly contrary to that laid out by the National Commission quoted above and the same is no longer good law. In any case we would in all humility wish to record our dissent therefrom in view of the two previous decisions of this Commission referred to above. In case I (1992) CPJ 127, S.D.O., A.E.E. City Division, Hissar, v. M/s. Hotel Palkil Hissar this Commission has taken the view that redresssal agencies are bound by their own decisions on a point of law. That being so for an added reasons we are obliged to take a view consistent with our previous ones.
IN view of the aforesaid discussion it has necessarily to be held in favour of the appellants that the respondent was not a consumer for the purposes of the Act and inevitably the complaint was not maintainable within the consumer jurisdiction. The appeal is consequently allowed on the threshold ground and we are constrained to set aside the order of the District Forum and dismiss the complaint preferred by the respondent.
HOWEVER in view of the some what ticklish question of law and conflict of precedents thereon, we leave the parties to bear their own costs. Pronounced in open Court. Appeal allowed. _______________