Rs 1.7 lakh payout to consumer for demat account misuse

Vaman Upaskar and his wife Roshan had a

demat account

with India Infoline. The couple noticed that Siddesh Prabhudesai, an

employee

of

India Infoline

, had used their account for trading without their knowledge, leading to heavy losses. They complained, but the company did not respond. Meanwhile, the account continued to be misused. The company even refused to close the account to prevent further misuse.

The couple approached the

district forum

claiming Rs1,72,000 compensation for the loss. India Infoline accused Upaskar of having entered into an arrangement with its employees to use the account for trading. The company argued it could not be held liable as it had terminated the services of the errant employees when this unauthorized use was brought to its notice. The forum overruled this defence, and allowed the complaint.

India Infoline appealed to the Goa State Commission, which dismissed Upaskar's complaint. Upaskar challenged the order in revision. The National Commission considered several judgements in which even the SC had laid down that a person could not be a

consumer

only when there was largescale trading activity. In Upaskar's case, though the account opening form mentioned it was for business purpose, in reality there was no significant trading activity. So the commission concluded the Upaskars were consumers.

The commission observed that trading in a demat account could be done either by the account holder or by the broker on the basis of instructions given by account holder. Since Upaskar had not given any instructions, the transactions were held to be unauthorized.

By its order of October 28, the National Commission held Siddesh Prabhudesai as well as India Infoline liable, and ordered them to pay Rs1,72,000 as compensation along with 9% interest.

India Infoline was granted liberty to recover the amount from the guilty employee.

(The author is a consumer activist and has won the Government of India's National Youth Award for Consumer Protection. His email is jehangir.gai.columnist@outlook.in)