T APPA RAO Vs. MERFIN INDIA LIMITED

JUDGEMENT

(1.) IT is the case of the Petitioner (Complainant), T. Appa Rao, that he had purchased 200 scrips of Satyam Computers Ltd. on 19.3.1998 through Opposite Party No.2, T. Sridhar, sub-broker of Opposite Party No.1, M/s. Merfin India Ltd. An amount of Rs.62,000/- was paid through Opposite Party No.2 for which receipt dated 26.3.1998 was issued by Sri Guru Datta Share Consultants, the firm of Opposite Party No.2. The Complainant waited for 15 days for receipt of the share certificates, but the Respondent No.2 did not deliver the shares to Respondent No.1. Hence, the Complainant approached the District Forum, Khammam, by filing CD No. 158 of 1998. The District Forum, after appreciating the evidence which was brought on record, arrived at the conclusion that there was deficiency in service on the part of the Opposite Parties, hence directed them to pay Rs.1,17,360/- representing the price of 200 scrips of Satyam Computers Ltd. at the rate of Rs.586.80 per scrip, which was prevailing at the relevant time, with interest at the rate of 12% p.a., together with damages of Rs.5,000/- and costs of Rs.500/-. Opposite Party No.2 has not filed any appeal and has accepted the judgment and order passed by the District Forum.

(2.) AGAINST that order, Opposite Party No.1, M/s. Merfin India Ltd., preferred First Appeal No.243 of 1999 before the State Consumer Disputes Redressal Commission, Andhra Pradesh. The State Commission by its judgment and order dated 29.1.2003 arrived at the conclusion that Opposite Party No.2 was not the sub-broker of the Opposite Party No.1, but was only a constituent/client of Opposite Party No.1. Hence, there was no privity of contract between the Complainant and the Opposite Party No.1. Therefore, Opposite Party No.1 was not liable and answerable for the transaction carried out by the Complainant through Opposite Party No.2. The State Commission also held that the Complainant was having remedy only against the Opposite Party No.2, and hence, the order passed by the District Forum was modified accordingly by holding that Opposite Party No.1 was not liable to pay any compensation to the Complainant. Against that judgment, this Revision Petition has been filed by the Complainant. Submissions:

(3.) THEREFORE , the sole question is whether the Opposite Party No.2 was a sub-broker/agent of the Opposite Party No.1 and whether Opposite Party No.1 was entitled to retain the 200 shares purchased at the instance of Opposite Party No.2 for and on behalf of the Complainant. There is no dispute that there was an agreement dated 29.5.1997 between the Opposite Parties No. 1 and 2. Question is of its interpretation. Learned Counsel for the Respondent No.1 relied upon the rules framed by the SEBI and contended that the judgment and order passed by the State Commission is justified, as Respondent No.2 was a 'Constituent' Member. He was not the registered sub-broker nor he was authorized to deal on behalf of the Respondent No.1 - M/s Merfin (India) Limited.