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Judgment
The complainant, Mrs. Pramila R. Gothi opened a trading and DEMAT Account with UTI Securities Ltd., which was later acquired by the opposite party, Standard Chartered HTCI Marketing. The husband of the complainant namely Sh. Ravi Hansraj Gothi opened two independent accounts, one in his individual name and the other in the name of his HUF. As per the client-stock broker agreement executed between the complainant and UTI Securities Ltd., the money/securities deposited by the complainant were to be kept in a separate account and could not have been used for any purposes other than the purposes mentioned in SEBI Rules and
Regulations, Circulars/Guidelines/Exchange Rules/Bye laws and circulars. On 23.02.2007, a sum of Rs. 32,37,143/- was transferred from the account of the complainant to the account of her husband Mr. Ravi Gothi. Another sum of Rs. 83,72,064/- was transferred to the account of Mr. Ravi Gothi, HUF on the same day. This is also the grievance of the complainant that a cheque of Rs. 20 lakhs was issued by her to the opposite party on 20.04.2006 for crediting to her account for the purpose of trading but the said amount was not credited to her account. Being aggrieved, the complainant is before this Commission, seeking a direction to the opposite party to refund an amount of Rs.1,20,33,374/- to her, alongwith interest at the rate of 24% per annum. The complainant is also seeking refund of the amount of Rs. 20 lakhs, which the opposite party failed to credit to her account, alongwith interest. A sum of Rs. 50 lakhs has been claimed as compensation alongwith the cost of litigation.
In its reply, the opposite party has taken a preliminary objection that the complaint is bad for non-joinder for the husband of the complainant, Mr. Ravi Gothi and his HUF. On merits, it is alleged that as many as nine members of the Gothi family used to trade through the franchise of UTI Securities Ltd. and the complainant, her husband Mr. Ravi Gothi and his HUF, while committing to clear out the debit, had requested UTI Securities Ltd. to treat Account Nos. 34G014, 34G015, 34G017 as a group Account. 34G014 was the account of Mr. Ravi Gothi, whereas 34G017 was the account of his HUF. It is further alleged that based upon the aforesaid letter, the opposite party used to transfer money from one account to the other account, in case there was any balance recoverable in the other accounts. Similarly, if there was balance in one of the three accounts, the opposite party did not insist on the payment of margin money before carrying out transactions in the other two accounts. This, according to the opposite party, was being done on account of the instructions received from the account holders for treating the said three accounts as group account.
It is not in dispute that under the client/stock broker agreement executed between the parties, the account of the complainant was required to be treated and maintained as an account distinct from the account of her husband and his HUF. However, in view of the request made by the complainant and her husband to the opposite party requesting it to treat their respective accounts as group account, the opposite party in our view was entitled to transfer money from one of the these accounts to other accounts, for discharge of the amount outstanding in the said other accounts.
The case of the complainant is that the letter requesting the opposite party to treat the accounts of the complainant, her husband and his HUF as group account was written pursuant to the letter dated 11.09.2006 from the opposite party requesting them to give a letter treating the aforesaid three accounts as group account with an assurance that the said account will not be clubbed or grouped together, the letter being meant only for their internal purpose. The opposite party has denied having issued the aforesaid letter dated 11.09.2006 to the complainant. In the letter written by the complainant, her husband and his HUF to the opposite party requesting them to treat the three accounts as a group account, there is absolutely no reference to the letter dated 11.09.2006. Had the aforesaid letter been written pursuant to the letter dated 11.09.2006, there would have been a reference to the said letter in the letter sent to the opposite party. Moreover, the complainant has not produced Mr. Manish Jain, Branch Manager, Ahmedabad of UTI Securities Ltd., who purports to have written the letter dated 11.09.2006 to her. Considering that the opposite party had denied issuing the aforesaid letter to the complainant, she ought to have filed the affidavit of Mr. Manish Jain or produced him as a witness to prove the authenticity of the aforesaid letter dated 11.09.2006. There is no explanation from the complainant, for neither producing Mr. Manish Jain as a witness nor filing his affidavit by way of evidence. Therefore an
adverse inference needs to be drawn that had she produced Mr. Manish Jain in the witness box, he would not have supported her case. The absence of any reference to the letter dated 11.09.2006 for communication sent to UTI Securities Ltd. coupled with the failure of the complainant to produce Mr. Manish Jain in the witness box leads to an irresistible conclusion that in fact the aforesaid letter dated 11.09.2006 was not written by the opposite party to the complainant. Consequently, we have no hesitation in holding that the complainant, her husband and his HUF had of their own requested the opposite party to treat their accounts as group account.
Clause 28 of the Agreement of the complainant with UTI Securities reads as under: "The Client Authorities the Stock Broker to set off a part or whole of the Margin i.e. by way of appropriation of the relevant amount of cash or by sale or transfer of all or some of the securities which form part of the margin, against any dues of the client or of a Stock Broker of the "Family" of the client (for the purpose of this agreement "Family" shall hereinafter mean all the individuals, group companies, firms, entities and other persons as specified by the Client (as per Schedule "A Annexed hereto) in the event of the failure of the client or a Stock Broker of the family of the client to meet any of their respective obligations under these terms".
In view of the above-referred clause, the opposite party was entitled to transfer the money lying in the account of the complainant to the account of her husband or his HUF, in order to liquidate the liabilities of her husband of his HUF as the case would be. If two or more accounts are treated as group accounts, it is beneficial to both the parties since the client can use the money available in one account for the purpose of trading in other accounts, which may not have enough margin money. Similarly, the broker becomes entitled to liquidate the liabilities in one account by transferring the money to that account from another group account where money may be available. The opposite party therefore, was within its right in transferring money from the account of the complainant to the account of her husband and his HUF. This would also include the proceeds of the cheque of Rs.20.00 lacs, which the complainant had issued for trading in her own account.
It was pointed out by the learned counsel for the complainant that the claims of the opposite party were rejected by the Arbitrator vide his Award dated 13.07.2009, which clearly shows that there was no recoverable outstanding in the account of the husband of the complainant and his HUF and therefore, there could be no justification for transferring money from the account of the complainant for liquidating the liabilities of her husband and his HUF. The aforesaid contention, in our view, is misconceived. As rightly pointed out by the learned counsel for the opposite party, the claim before the Arbitrator having been lodged after transferring money from the account of the complainant to the account of her husband and his HUF, the Award did not relate to the aforesaid dues which had already been liquidated before filing claim before the Arbitrator. The claim before the Arbitrator therefore, was only in respect of those amounts which the opposite party had claimed after adjusting the amount transferred form the account of the complainant to the account of her husband and his HUF. There is no material on record to show that the claim before the Arbitrator included the dues which were liquidated after adjusting the amount transferred from the account of the complainant and the amount of the cheque of Rs.20.00 lacs which the complainant had issued on 20.04.2006. A perusal of the Award would show that the arbitration proceeds were initiated on 29.10.2007. Since the amounts in question were transferred form the account of the complainant to the account of her husband and his HUF much earlier, it
would be difficult to say that the claim before the Arbitrator included the alleged liabilities which the opposite party had liquidated by adjusting the amounts transferred form the account of the complainant to the account of her husband and his HUF.
For the reasons stated hereinabove, we are of the considered view that since the amounts in question were transferred form the account of the complainant to the account of her husband and his HUF pursuant to a letter written jointly by the complainant and her husband and his HUF, requesting the opposite party to treat their account as group account, there was no deficiency on the part of the opposite party in rendering services to the complainant. The complaint being devoid of any merit is hereby, dismissed with no order as to costs.