Brief Overview:

Stock broking and share trading services fall outside the purview of Consumer Protection Act, 1986 (“CPA”), as they constitute commercial activities.

Technical Details:

National Consumer Disputes Redressal Commission (“NCDRC”) ruled that share trading and portfolio services are commercial in nature and not consumer services.

What does this mean?

1)     Retail investors cannot resort to protection under CPA.

2)     Clarity that trading in shares is inherently a commercial activity and an investor does not qualify as a ‘consumer’ under CPA.

3)     Relationship between a share broker and an investor in securities trading is not that of a consumer–service provider but a commercial arrangement governed by securities laws and commercial principles.

JC takeaway:

Clear demarcation that disputes arising from commercial activities conducted for the purpose of earning profits are not maintainable before Consumer Forums.

For further details, please see:

Tajinder kumar Taneja v. Unique Investments.pdf, (F.A.) No. 1089 of 2014, NCDRC.

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