Pranav B Prem

The National Consumer Disputes Redressal Commission (NCDRC), presided by AVM J. Rajendra (Retd.) and Justice Saroj Yadav, dismissed appeals filed by a share investor, reiterating that transactions involving stock trading services are commercial in nature and fall outside the ambit of the Consumer Protection Act, 1986. The Commission upheld the findings of the State Commission, Punjab at Chandigarh, which had held that the complainant was not a ‘consumer’ under the Act and that the complaint was barred by limitation. However, the NCDRC granted liberty to the complainant to approach a civil court and claim exclusion of time under Section 14 of the Limitation Act, 1963.

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Background

The appellant, Tajinder Kumar Taneja, had filed two complaints before the State Commission alleging deficiency of service by M/s Unique Investments and its partners, Manouti Dhawan and Ashu Randhev. According to the complainant, the opposite parties induced him to invest a total sum of ₹26.5 lakhs between 2005 and 2007, with promises of comprehensive portfolio management services (PMS), monthly returns of 1%, and 90% of the profits earned through share trading.

Despite several requests, the complainant alleged that he was neither provided a Demat account nor regular account statements. Although a cheque of ₹49 lakhs was issued in April 2007 as a purported full and final settlement, it was credited to his HUF account and later returned. Subsequently, two more cheques for ₹6.5 lakhs and ₹15 lakhs were also issued, both of which were dishonoured. Legal notice under Section 138 of the NI Act was issued, and a criminal complaint was filed. Thereafter, the complainant filed consumer complaints seeking refund and compensation.

The State Commission dismissed the complaints on the grounds that the complainant was not a ‘consumer’ and that the complaint was filed beyond the limitation period. The complainant then approached the NCDRC through first appeals.

Contentions

The appellant argued that the opposite parties had promised to open a Demat account, which was a preliminary service distinct from commercial trading and thus fell within the ambit of consumer services. It was submitted that the failure to open the account and the non-return of the investment amounted to clear deficiency in service.

The respondents contended that the complainant had opened a trading account in 2004 and actively traded in shares through their sub-brokerage, which was a commercial activity. They also submitted that ₹88,27,281.64 was outstanding against the complainant based on their account statements. It was argued that the complainant misused signed cheques taken during a personal crisis and later returned them after apologizing, only to later revive the dispute.

Relying on precedents such as B.K. Gyanchand Mittal v. Network Stock Booking [2015(2) C.P.J 535], Krishan Kumar Dubey v. Trustline Securities Ltd [2015(2) C.P.J 672], and Jaimala v. Reliance Portfolio Management [2016(1) CPJ 658], the respondents submitted that services related to share trading are commercial in nature and do not fall within the purview of the Consumer Protection Act.

Observations

The NCDRC found no error in the findings of the State Commission. It held that the complainant was fully aware that he was investing in a commercial share trading arrangement with a licensed sub-broker. The Commission observed that the complainant had made the last payment in January 2007, and the complaint was filed in September 2009—more than two years later—with no explanation for the delay.

It was also noted that the complainant’s own pleadings and conduct confirmed the commercial nature of the transaction. The Commission held that trading in shares is undertaken for profit and thus falls within the scope of "commercial purpose," excluding the complainant from the definition of "consumer" under Section 2(d) of the Act.

While dismissing the appeals, the Commission clarified that the complainant was free to pursue civil remedies, and that he could claim the benefit of Section 14 of the Limitation Act for the time spent in proceedings before the consumer fora.

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Verdict

The NCDRC reaffirmed that stock trading and related portfolio management services are commercial activities, and persons engaging in them are not ‘consumers’ under the Consumer Protection Act, 1986. The Commission dismissed the complaints for being non-maintainable and barred by limitation, but granted the complainant liberty to seek redress before the appropriate civil forum.

Appearance

For the Appellant: Mr. Arjun Jain and Mr. Ankit Kumar, Advocates Mr. Dilip Chowdhry, AR

For the Respondents: R-1 & R-2 already ex-parte Mr. Atul Malhotra, Advocate for R-3

Cause Title: Tajinder Kumar Taneja V. M/S Unique Investments

Case No: F.A. No. 1089 of 2014

Coram: Hon’ble AVM J Rajendra AVSM VSM (Retd.) [Presiding Member], Hon’ble Justice Mrs. Saroj Yadav [Member]