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Share traders not consumers, rules consumer panel

The state consumer disputes redressal commission has held that compensation cannot be given under the Consumer Protection Act to those involved in sale and purchase of shares, which are commercial transactions.

Relying on several judgments that reiterate the above view, the Goa state consumer disputes redressal commission has reversed the order of the North Goa district consumer forum which awarded damages to a couple, who lost money in share trading through a stock broker.

In its recent order, commission president N A Britto and member Jagdish Prabhudesai observed that, "The Consumer Protection Act is not for entertaining or compensating speculative transactions or losses".

The order follows an appeal by Mumbai-based stock broker India Infoline Limited against an order of the North Goa district consumer forum, which awarded damages to Panaji-resident Vaman Nagesh Usapkar and his wife.

They had claimed that they suffered a loss of 1,72,020 which they sought to recover from the stockbroker after filing a complaint on December 30, 2009.

In fact, the Usapkars held the Goa representatives of India Infoline - the branch manager and the relationship manager - who traded on their behalf, responsible for their loss.

In its order dated October 18, 2012, two members of the district forum held the complainants to be consumers and awarded to them a sum of 1,72,020 towards the loss with interest at the rate of 18% from December 30, 2009, till payment and also compensation of 50,000 besides awarding costs of 15,000. But the third member of the forum dissented and held that the complainants were not consumers and that their case was liable to be dismissed.

During the hearing, the counsel for the Usapkars argued that the stockbroker's representatives did the transactions without his clients' consent.

He also argued that Vaman Usapkar is 'in service' and therefore any investment by him could not be commercial.

But the stockbroker's advocate submitted that the Usapkars had given their occupation as "business" and that they had entered into an agreement with the stockbroker for trading in shares which is a commercial activity.

But the Goa consumer commission ruled that the Usapkars did not fall within the purview of consumers under section 2(d)(ii) of the Consumer Protection Act, 1986.

Comment:

There still remains some ambiguity in the definition. A person buys a property intending to stay. But later sells that. Is that a commercial transaction ? Actually, there are many facets to this. It would have to be seen why did he sell and did he buy another again ? So each case has to be treated individually which is why though judgment on share trading have been given several times in the past, they are admitted by the court and heard.

 Article referred: http://timesofindia.indiatimes.com/City/Goa/Share-traders-not-consumers-rules-consumer-panel/articleshow/34016076.cms

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