Trading In Shares Profit-Making Activity, Falls Outside Consumer Act's Scope: NCDRC Dismisses Complaint Against M/S Unique Brokers

Brief Facts of the Case

The complainant invested ₹26,50,000 with a firm of brokers named M/S Unique Investments/opposite party. The brokers promised to manage his investments and assured a 1% monthly return and 90% of profits. He made the investment between 2005 and 2007 through cheques. The complainant asked for a Demat account and trading details, but the brokers avoided giving them. Later, they gave him a cheque of ₹49 lakhs, credited to his HUF account. It was returned under a settlement. Then they gave two cheques of ₹6.5 lakhs and ₹15 lakhs. Both bounced. The complainant sent a legal notice under Section 138 of the NI Act and filed a criminal case. He said the brokers failed to provide promised services and caused him financial loss and mental harassment. The complainant filed a complaint under the Consumer Protection Act before the State Commission of Chandigarh. The State Commission dismissed the complaint. It held that the complainant was not a 'consumer' as the transactions were for commercial trading. It also said the complaint was time-barred and should have been filed within two years of the last transaction in 2007. The Commission noted that the matter involved commercial transactions and should be taken to a civil court, not a consumer forum. Aggrieved, the complainant filed an appeal before the National Commission. There was a delay of 209 days in filing the appeal, which was condoned.

Contentions of the Opposite Party

The brokers said the complaint was not maintainable and should have gone for arbitration as the matter involves sale transactions conducted through the exchange. The brokers argued that the complainant opened a trading account in 2004 and did share trading until 2007. According to their records, the complainant actually owes them ₹88 lakhs. They alleged that the complainant took their signed cheques during a personal crisis in their office and misused them. Later, he returned the cheques and apologised. The brokers claimed he traded on his own, and no promise of fixed returns or portfolio services was made. They regularly gave him statements and made payments. They said the services were commercial in nature, so the complainant is not a consumer.

Observations by the National Commission

The National Commission observed that the brokers had a valid share broker license and were operating as sub-brokers of M/s Integrated Market Securities Ltd., making all transactions part of a commercial setup. The complainant knew this and admitted in his complaint that the investments were made for stock trading. The Commission found that the complainant deposited money between 2006 and 2007, with the last deposit on 19.01.2007, while the complaint was filed on 22.09.2009, making it time-barred. The complainant failed to explain the delay. Account statements submitted by the brokers showed that ₹88,27,281.64 was due from the complainant, contradicting his claim for a refund. The Commission said that any dispute about accounts must be taken to a civil court, as these were commercial transactions. It held that the complainant was not a consumer under Section 2(d) of the Consumer Protection Act, as trading in shares is a profit-making activity and falls outside the Act's scope. The Commission referred to B.K. Gyanchand Mittal v. Network Stock Booking, 2015(2) CPJ 535, Krishan Kumar Dubey v. Trustline Securities Ltd., 2015(2) CPJ 672, and Jaimala v. M/s. Reliance Portfolio Management, 2016(1) CPJ 658, which all held that share trading and portfolio services are commercial in nature and not consumer services.

Based on these findings, the National Commission dismissed the appeal and upheld the State Commission's order. However, it allowed the complainant to approach a civil court and clarified that he could claim benefits under Section 14 of the Limitation Act, 1963, for the time spent before the consumer forum. No costs were awarded, and all pending applications were disposed of.

Case Title: Tajinder Kumar Taneja Vs. M/S Unique Investments

Case Number: F.A. No. 1089 of 2014

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