R.N. Mittal, President:
1. This appeal has been filed by the opposite party (OP) against the order of the District Forum (D.F.) dated 9th March, 1994 by which they have been directed to refund Rs. 20,000/- with interest @15% p.a. from the date of receipt of the money till the date of payment.
2. Briefly, the facts are that the complainant was allotted 200, 14% fully convertible debentures of Rs. 100/- each on rights basis by the Opp. Party She paid the amount of Rs. 20,000/- as required by them. It is alleged that she has not been paid the interest on the debentures since its inception. It is further pleaded that she had also not been given the dividend on the shares received by her on conversion of the debentures. Consequently, she filed a complaint before the District Forum.
3. The opposite party was proceeded against ex-parte. The District Forum, after hearing the complaint, passed the order as mentioned above. The Opp. Party has come up in appeal against the said order to the Commission.
4. It is contended by the learned Counsel for the appellant that the complainant-respondent, while claiming interest on the debentures, did not fall within the definition of the word 'consumer' as no service was being rendered by the appellant to her. We have duly considered the argument but regret our inability to accept the same. There is no dispute about the fact that the complainant was issued 14%, fully convertible debentures of Rs. 100/- each. The phrase 'debenture' has not been defined in the Consumer Protection Act. In common parlance it means an instrument issued by a company acknowledging the debt of a specific amount and undertaking to pay interest thereon at fixed rate till the amount is repaid or converted into shares. Normally by debentures a charge is created by way of security on the assets of the company. Thus the amounts raised by way of debentures by a company are deposits by the debenture-holders with the company. The phrase 'service' has been defined in the Act and it inter-alia means service of any description which is made available to potential users and includes the provision of facilities in connection with banking, financing etc. etc. The payment of money to the company on the basis of debentures in our view, amounts to deposit of the money with the company. Thus when debentures are issued by a company and are subscribed by any member of the public the element of service is implied in the transaction. In case the interest is not paid to a subscriber of the debentures by the company as promised, it amounts to deficiency in service. Therefore, in our view, if the appellant has not paid the interest on the debentures subscribed by the respondent to her that amounts to deficiency in service.
5. The learned District Forum has directed the appellant to repay Rs. 20,000/- with interest to the complainant/respondent. The debentures have been converted into shares, and therefore, in our view, the respondent is not entitled to refund of the amount. Thus the order of the District Forum is bad to this extent.
6. The other question that arises for determination is, whether the complainant-respondent could file a complaint under the Consumer Protection Act, if the Opp. Party-appellant failed to pay the dividend of the shares to her. It is true that the capital of the company is provided by the shareholders with a view that they shall be paid dividend out of the profits earned by it. However, a shareholder cannot be said to be the depositor of the amount with the company if he purchases its shares and therefore, there is no element of service involved in the transaction. Consequently, we are of the opinion, that the complainant-respondent could not file the complaint under the Consumer Protection Act if the appellant failed to pay the dividend to her.
7. The learned Counsel for the appellant refers to the decision of the National Commission in Usha Rectifier Corporation (P) Ltd. v. Dr. G.P. Sastry, (Revision Petition No. 148 of 1993) decided on 6.10.93. In that case the complainant had applied for allotment of the additional shares which were not given to him. Therefore, it was held by the Commission that the complainant was not a 'consumer'. In our view, the ratio in that case is not applicable to the present case.
8. For the aforesaid reasons we partly accept the appeal, modify the order of the District Forum and direct the appellant/opposite party to pay the interest on the debentures to the complainant in accordance with the conditions of the issuance of the debentures if that has not been not paid, within three months. We trust that the stickers will be sent to the complainant-respondent by the appellant, if they have not been received by her till date. She may inform the company accordingly. In case they fail to comply with the order of the Commission within the period of three months action shall be taken against them u/Sec. 27 of the Consumer Protecton Act. If the complainant has not received the dividend of the shares, she may seek remedy in an appropriate Court.
9. In view of the partial success of the appellant in the appeal we leave the parties to bear their own costs throughout.
Appeal partly allowed.