National Consumer Disputes Redressal Commission

National Consumer Disputes Redressal Commission (NCDRC): Justice V.K. Jain (Presiding Member) addressed the question of who can be considered a consumer under Section 2(1)(d) of Consumer Protection Act in light of trading of shares.

Complainant opened Demat Account with respondent 1 in India Infoline Ltd. Respondent 3 an employee of Respondent 1 carried out unauthorised trading of shares in his Demat Account without his consent and caused heavy losses to him.

The above-stated incident was brought to the notice of respondents 1 and 2, but they did not address the complaint.

After a loss of Rs 55,000, complainant tried to close the account but was not allowed to do so and further was carried out by respondent 3 from his Demat Account without his consent, causing him a loss of Rs 1,72,020.

In view of the above complainants approached the District Forum concerned by way of consumer complaint seeking the compensation of the above-referred amount.

Respondent 1 stated that complainant had entered into a mutual agreement with respondent 3 allowing him to trade into his account and on coming to know this, respondent 1 terminated the services of respondent 2 and 3.

Aggrieved with District Forum’s decision, an appeal was filed with State Commission wherein the appeal was allowed and the complaint was dismissed.

Analysis and Decision

Who can be said to be a consumer?

The above-stated question was considered in Springdale Core Consultants (P) Ltd. v. Pioneer Urban Land and Infrastructure Ltd., CC No. 349 of 2017, decided on 16-03-2020.

 “…Trust was not a consumer within the meaning of Section 2(1(d) of the Consumer Protection Action, which excludes a person who obtains goods and services for a commercial purpose. It was held by this Commission that providing hostel facilities to the nurses was directly connected to the commercial purposes of running the Hospital and was consideration for the work done by them in the hospital.”

Bench observed that there was no evidence of the complainants trading in the shares on a large scale. Complainants were stated to be in service though, in the account opening form, they had claimed to be in business.

No evidence or even allegation of the complainants was found carrying out large scale trading in stocks and shares.

If a person engaged in a business or profession other than regular trading in shares, open a Demat Account and occasionally carries out trading in shares, it cannot be said that the services of the broker were hired or availed by him for a commercial purpose, the scale of such trading by a casual investor being very low. Such a person cannot be said to be in the business of buying and selling shares on a regular basis.

In view of the above, the Commission held that the complainants were consumers within the meaning of Section 2(1)(d) of the Consumer Protection Act.

Whether the trading by respondent 3 in the Demat Account of the complainants was done with the consent of the complainants or it was done unauthorizedly without their consent and without instructions from them?

Commission on perusal of the letter dated 20-10-2009, stated that respondent 3 was trading without instructions from the complainants and that is why he promised to the complainant that he would be responsible in case his losses were to increase.

With regard to the alleged private agreement between respondent 3 and complainant, no evidence was found.

Hence, in view of the above-stated discussion, Commission held that respondent 3 has caused loss to the complainant by unauthorised trading in his Demat Account, therefore he is responsible to compensate the complainant.

Being the employer of respondent 3 and being the broker with whom the Demat Account was opened, respondent 1 was equally liable to compensate the complainants.[Vaman Nagesh Upaskar v. India Infoline Ltd., 2020 SCC OnLine NCDRC 469, decided on 28-10-2020]


Counsel for the Petitioner: Advocate Astha Tyagi

Counsel for the Respondent 1: Advocate Ajit Rajput

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