ANANDAPPA Vs. REGIONAL MANAGER GEOJIT FINANCIAL SERVICES LIMITED

JUDGEMENT

(1.) THE petitioner here was the complainant before the District Consumer Disputes Redressal Forum, Dharwad (in short, "the District Forum"). THE allegation was that he was a customer/ client of OP 1, which in turn was a Depository Participant and a Stockbroker/ Member of the National Stock Exchange of India Limited (NSE). THE petitioner had opened a Demat Account with the OP 1 for trading in shares and the OP would charge him the agreed amount of fees for rendering services in accordance with the Client-Stockbroker/ Member Agreement. THE petitioner had purchased 600 shares of Satyam Computers Ltd.; 2250 shares of ITC; and 4125 of Gujarat Ambuja Cement through OP 1. THE petitioner"s further claim was that he had credited a sum of Rs.2,40,000/- as margin money with the OP on 22.05.2006. According to him there were usual fluctuations in the share market on 22.05.2006 and, therefore, he had sold the three above-mentioned lots of shares through OP 1 at about 11a.m. on that day by way of "short sale" under F & O (Futures and Options) facilities with the option to cover the sale when the prices of the shares went further down. THE market was closed for one hour from 12.00 noon to 01.00 p. m. on 22.05.2006. When the market re-opened, the petitioner wanted to repurchase the above-mentioned shares through OP 1. However, the trader/ operator concerned of OP 1 did not allow the petitioner to carry out the trade and asked him to contact the officer concerned of OP 1. When contacted, the latter official of OP 1 demanded 100% margin money to cover the re-purchase. By that time it was already 1.30 p. m. THErefore, the petitioner was unable to procure the demand draft towards 100% margin money requirement. According to the petitioner, this demand of 100% margin money for the re-purchase of short-sold shares by him was illegal and against the guidelines of the NSE regarding margin money requirement of F & O segment of the market. Further, the market price of the above-mentioned three shares went further down at about 1.00 p m on 22.05.2006 (Satyam Computers " Rs.541/-; ITC " Rs.146/-; and Gujarat Ambuja Cement - Rs.76/-). Had the petitioner been able to re-purchase the above shares on 22.05.2006, he would have gained considerably as was evident from the prices of these shares on 26.10.2006 (Satyam Computers " Rs.810/-; ITC " Rs.196/-; and Gujarat Ambuja Cement " Rs.130/-). Thus, according to the petitioner, there was deficiency in service on the part of the OPs in demanding 100% margin money on 22.05.2006 for re-purchase of his short-sold shares and causing him loss by preventing him from gaining nearly Rs.6.96 lakh on the sale of the above-mentioned three lots of shares.

(2.) ON consideration of the pleadings, evidence and documents brought on record, the District Forum dismissed the complaint and passed the following order: "Therefore, from the factual side of the matter, it is crystal clear that, the complainant had sold three lots of shares on 22.05.2006 at 11.00 a m. ONce the sale is completed the negotiation in respect of that particular repurchase of the shares is another stage, which is totally independent from that of the previous sale. In other words the intention of the complainant to repurchase the shares from the opponent " 1 is altogether a separate and distinct act. The offer made by the complainant to repurchase the shares was not accepted by the opponent " 1 on account of the fact that he wanted 100% margin money to cover the above said shares and he wanted DD for the same. Admittedly, the complainant did not produce as requested by the opponent " 1. When the DD in question was not handed over to the opponent " 1 there was no concluded contract between the parties to enforce any liability against the opponents. In other words, when there was no concluded contract between the parties as regards repurchases of the sale of the shares, the opponents cannot be hauled up for deficiency in service. It is not as though opponents have arbitrarily acted in demanding 100% security through DD. The message flashed to the opponent " 1 branch from its head office clearly goes to show that they should insist for 100% security. The gist of the message received from their head office read as thus:

(3.) AT the request of the petitioner/ complainant, the Commission appointed Ms. Surekha Raman, Advocate (Amicus Curiae) to assist it with the case of the petitioner/ complainant.