Share broker and Stock Exchange render ‘services’ to the investors and investor would be ‘consumer’ : Consumer Protection Act S. 2(1)(d) and S. (2)(1)(o).

The respondent share broker who was a member of the DSE
committed default in making payment or delivery of shares for which demand had
to be made by the complainant investor.

U/s.19 of Securities Contracts (Regulation) Act, 1956, no
person can organise or assist in organising or be a member of any stock exchange
other than a recognised stock exchange for the purpose of assisting in, entering
into or performing any contracts in securities. In view of aforesaid bar on
doing business as a share broker, a person has to become a member of a
recognised stock exchange. Without
becoming member of a stock exchange, share brokers are not permitted to have any
transaction in purchase and sale of shares. Therefore, the stock exchange is
apparently a service provider for purchase and sale of shares and not only does
the broker render ‘service’ in the purchase and sale of listed securities but
the stock exchange is also required to render service to the investors.

Further, the Delhi Stock exchange (DSE) is also a service
provider as stated in the memorandum and articles of Association because it
controls the mode, manner, time and place of performance of contract between the
broker member and the investors. DSE is required to establish and had
established Delhi Stock Exchange Customer Protection Fund. Every Member of the
DSE is required to become a member of the fund and contribute annually to the
Fund. If a member of DSE is declared as defaulter, the trustee of the fund step
into the shoes a defaulter member. This fund is established to protect and
safeguard interests of investors, particularly small investors from losses other
than that of speculative nature arising out of default of member brokers of the
stock exchange.

It was held that the complainant investor would be a consumer
who is affected by the services provided by the share broker and therefore he
would be eligible to be paid from the fund of the Stock Exchange.

[Senior Manager, Delhi Stock Exchange & etc. v. Ravindar Pal Singh & Anr.,
AIR 2008 (NOC) 962 (NCC); 2008 (1) ALJ 560]