Chandigarh:- The Chandigarh State Consumer Disputes Redressal Commission has made it clear in a landmark judgment that the SEBI Act does not bar consumer courts from awarding compensation for losses incurred due to mismanagement of investment funds. The court has ordered Kotak Mahindra Bank and Peninsula Brookfield India Real Estate Fund to refund the remaining principal amount of Rs 19,78,743 to 93-year-old Harmohan Singh Sethi, a resident of Mohali. In addition, the bank has been directed to pay Rs 1,00,000 as compensation for mental anguish and Rs 35,000 as legal expenses.
According to the complainant, he was induced to invest Rs 1 crore by Kotak Bank by promising 21% annual returns. But even after the maturity of the fund, he did not get the full amount back. The bank had argued that the investment was subject to market risks and the consumer court cannot hear the matter under Section 15Y of the SEBI Act. However, the Commission rejected this objection, saying that the SEBI Act only bars civil courts, while the Consumer Protection Act, 2019 is a special law that gives full power to investors to get compensation for deficiency in services.