Axis Bank Limited vs Sebi
- CitationAppeal No.277 of 2020
Ratio decidendi
The rule this decision rests on
Under Order II Rule 2 of the Code of Civil Procedure, a party who fails to claim a relief in an earlier round of litigation arising from the same cause of action cannot claim that relief in a subsequent proceeding, so a relief for PCM charges rejected in the earlier appeal is barred in the present appeal. A relief for recovery of overdraft against property and bank guarantee dues, granted to the appellant in its capacity as a bank under the Banking Regulation Act, 1949 rather than as a Professional Clearing Member, falls outside the purview of the Tribunal, which cannot adjudicate such a claim. A bank holding margin securities in its capacity as a Professional Clearing Member cannot assert a banker's lien over those securities for dues arising from separate credit facilities absent proof that the securities were part of the security for those facilities, and there cannot be intermingling of the bank's assets across its two capacities. Where an interim order of the Tribunal permits the appellant to recover a specified sum from securities and directs that the surplus be returned, the appellant's lien over margin securities extends only to its PCM losses, so retention of the balance securities after recovery of that sum is unlawful and the appellant is bound to return them.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
BEFORE THE SECURITIES APPELLATE TRIBUNALMUMBAIOrder Reserved on: 26.10.2020Date of Decision: 11.11.2020Misc. Application No. 287 of 2020(Stay Application)AndMisc. Application No. 307 of 2020(Intervener Application)AndAppeal No.277 of 2020Axis Bank LimitedTrishul, 3rd Floor, OppositeSamartheshwar Temple,Near Law Garden, Ellisbridge,Ahmedabad 380006. ... AppellantVersus1.National Stock Exchange of India Ltd.Exchange Plaza, Plot No. C/1, GBlock, Bandra Kurla Complex,Bandra (E), Mumbai - 400 051.2. Securities and Exchange Board of IndiaSEBI Bhavan, Plot No. C4-A,„G‟Block, Bandra Kurla Complex,Bandra (East), Mumbai - 400 051.3. Modex International Securities Ltd.507, Padma Tower-II, 22, RajendraPlace, New Delhi- 110 008.4. NSE Clearing Ltd.Exchange Plaza, Plot No. C/1, GBlock, Bandra Kurla Complex,2Bandra (E), Mumbai - 400 051.5. National Securities Depositaries Ltd.4th Floor, "A" Wing, Trade World,Kamala Mills Compound,Senapati Bapat Marg, Lower Parel,Mumbai - 400 013. ...RespondentsMr. Gaurav Joshi, Senior Advocate with Mr. NevilleLashkari, Mr. Chaitanya D. Mehta, Ms. Sonali Aggarwaland Mr. Bhanu Chopra, Advocates i/b. M/s. DhruveLiladhar & Co. for the Appellant.Mr. Ventakesh Dhond, Senior Advocate with Mr. SachinChandarana, Mr. Rashid Boatwalla, Mr. Rahul Jain andMr. Pruthvi Dhinoja, Advocates i/b. M/s. MKA & Co. forthe Respondent Nos. 1.Mr. Rafique Dada, Senior Advocate with Mr. AnubhavGhosh and Mr. Ravishekhar Pandey, Advocates i/b. TheLaw Point for the Respondent No.2.Mr. Nimay Dave, Advocate with Mr. Ankur Loona andMs. Aparna Wagle, Advocates i/b.Alliance Law for theRespondent No.3.Mr. P. N. Modi, Senior Advocate with Mr. TusharAjinkya and Mr. Abhiraj Arora, Advocates i/b.ELP forthe Respondent No.4.None for the Respondent No.5.Mr. J. J. Bhatt, Advocate with Mr. Pratham Masurekar,Advocate i/b. Mr. Majoj Mishra, Advocate for theIntervener in the Misc. Application No. 307 of 2020.CORAM: Justice Tarun Agarwala, Presiding OfficerDr. C.K.G. Nair, MemberJustice M.T. Joshi, Judicial MemberPer : Justice Tarun Agarwala, Presiding Officer31. The present appeal has been filed questioning thelegality and veracity of the communications dated 6thJuly, 2020, 7th August, 2020, 12th August, 2020 and19th August, 2020 passed by National Stock Exchangeof India Ltd. (hereinafter referred to as „NSE‟)directing the appellant to release the remainingsecurities mentioned in column E, column F andcolumn G pursuant to the Tribunal‟s order dated 3rdJuly, 2020 and to transfer the same to the depositoriesaccount of NSE. The appellant has also prayed that theappellant may be permitted to sell the securities whichare depicted in Exhibit Z for the recovery of the duesmentioned in exhibit „AA of the memo of appeal..2. The facts leading to the filing of the present appealis, that the appellant is wearing two hats, one as acommercial bank under the Banking Regulations Act,1949 and, the other as a Professional Clearing Member(hereinafter referred to as "PCM") appointed under theSEBI Act and its Regulations. The present disputerelates to the appellant as a PCM for the equitiesderivatives segment of Modex International Securities4Ltd. (hereinafter referred to as „Modex‟) pursuant tothe Clearing Member Trading Member Agreementexecuted under the Securities and Exchange Board ofIndia Act, 1992 (hereinafter referred to as „SEBI Act‟)and its Regulations. In order to avail trading limits,Modex transferred certain securities in the demataccount of the appellant.3. On 30th April, 2020, Securities and Exchange Boardof India (hereinafter referred to as „SEBI‟) passed anex-parte interim order against Modex as it prima-faciefound the Modex was misusing the clients securities.The relevant portion of the ex-parte order is as under:-"Under the above circumstances, I, in exercise ofpowers conferred upon me under Sections 11(1),11(4), 11B and 11D read with Section 19 of theSEBI Act, 1992 and Regulation 35 of SEBI(Intermediaries) Regulations, 2008, by way of thisexparte ad interim order, hereby issue the followingdirections:(i) All Noticees are restrained from accessing thesecurities market and are further prohibitedfrom buying, selling or otherwise dealing insecurities, either directly or indirectly, or beingassociated with the securities market in anymanner whatsoever, till further directions;(ii) The aforesaid Noticees shall cease and desistfrom undertaking any activity in the securities5market, directly or indirectly, in any mannerwhatsoever till further directions;(iii) The aforesaid Noticees are directed not todispose of or alienate any assets, whethermovable or immovable, or to create or invoke orrelease any interest or charge in any of suchassets except with the prior permission of NSEand BSE;(iv) The aforesaid Noticees are directed toprovide a full inventory of all their assets,whether movable or immovable, or any interestor investment or charge in any of such assets,including details of all their bank accounts,demat accounts and mutual fund investmentsimmediately to NSE and BSE but not later than 5working days from the date of receipt of thisorder;(v) Till further directions in this regard, theassets of the Noticees shall be utilized only forthe purpose of payment of money and/or deliveryof securities, as the case may be, to theclients/investors under the supervision of theconcerned exchanges/depositories;(vi) The depositories are directed to ensure thatno debits are made in the demat accounts, heldjointly or severally, of the aforesaid Noticeesexcept for the purpose mentioned in sub-para (v)above, after confirmation from NSE/BSE;(vii) The banks are directed to ensure that nodebits are made in the bank accounts held jointlyor severally by the Noticees except for thepurpose of payment of money to theclients/investors under the written confirmationof NSE/BSE;6(viii) The stock exchanges shall deal with thecomplaints/claims of the clients against themember and may return the amount of clientfund and securities to the clients and may alsouse assets of the Noticee no. 1 to meetclients‟/exchanges‟/clearing members‟/clearingcorporations‟, obligations; and(ix) The above directions are without prejudiceto the right of SEBI to take any other action thatmay be initiated in respect of aforesaidentities/persons."4. The appellant had an exposure of Rs.21.61 crores inthe form of unrecovered PCM losses. Securitiesdeposited by Modex toward margin was valuedapproximately at Rs.98.15 crores and, therefore, to thatextent, the appellant‟s dues was secured and could berecovered from the securities given towards margin.On 28th May, 2020, NSE directed the appellant torelease certain securities/mutual funds of Modex to theextent of Rs.1.47 crores, and again, by anothercommunication dated 8th June, 2020, NSE furtherdirected the appellant to release further securitiesamounting to Rs.34.73 crores.5. The appellant being aggrieved by thecommunications dated 28th May, 2020 and 8th June,72020 filed Appeal No.146 of 2020 before this Tribunalfor its quashing on the ground that thesecommunications were violative of the principles ofnatural justice; no opportunity of hearing was providedbefore issuing such communication; NSE had nojurisdiction over the appellant as the appellant was nota member of NSE; the order dated 30th April, 2020issued by SEBI did not direct NSE to take such stepsthat would affect the third party rights, namely, rightsof the appellant; and that the appellant had exclusiverights in respect of the pledged shares by Modex.6. This Tribunal entertained the appeal and acceptedthe contention of the appellant that without going intothe details as to whether NSE has jurisdiction over theappellant or not, the matter could be resolved and theappeal could be disposed of if the appellant is allowedto sell the securities to the extent of its PCM duesnamely, Rs.21.61 crores and that the remainingsecurities would thereafter be returned. Thiscontention of the appellant was recorded in the order ofthe Tribunal dated 19th June, 2020 and, on that basis,8directions were issued commanding the appellant,Modex and other relevant parties to appear before NSEin order to reconcile the securities. For facility, paranos.5, 6 and 7 of the order of this Tribunal dated 19thJune, 2020 passed in Appeal no.146 of 2020 isextracted hereunder:-"5. It was further contended by the learned seniorcounsel that the ex parte order dated April 30, 2020issued by SEBI against Respondent No.2, which isclaimed to be the authorizing order based on whichthe NSE has passed the impugned directions, doesnot even contain any such direction against theappellant, nor the appellant was a party to thoseproceedings before SEBI. Therefore, the impugneddirections by NSE (Respondent No. 5) do not haveany legal basis to arbitrarily transfer the securitiesrightfully belonging to the appellant to certain thirdparties. Therefore, the learned senior counsel soughtintervention of this Tribunal to stay such orders aswell as to allow the appellant to dispose of thesecurities worth Rs. 21.62 crores and thereafterreleasing the remaining securities given byRespondent No. 2 to the appellant. In this contextthe appellant sought permission to dispose of theshares of the company Omaxe since there is nodispute relating to the ownership of those shares asrightfully belonging to Respondent No. 2. Inaddition, it was also submitted that the appellant hadgiven a list of securities to NSE (Respondent No. 5)in the month of January, 2020 itself stating that thosesecurities are given by clients of Respondent No. 2and who have dues pending in favour of respondentNo. 2. Therefore the appellant sought to liquidatethe shares contained in that list to enable theappellant recover its entitled amount of Rs.21.629crores and thereafter the remaining securities canbe transferred.6. Learned senior counsel Shri Dada and ShriDhond, on the other hand stressed that the appellantis holding securities worth more than Rs.90 croresgiven by Respondent No. 2 and the impugneddirection is relating to only securities worth Rs. 34crores. Even assuming that the appellant‟sentitlement is about Rs. 22 crores still the appellantis holding excess securities which legitimately do notbelong to the appellant. Since the impugneddirections are not yet implemented the appellant isactually holding on to about Rs. 70 crores worthsecurities legitimately belonging to others.Therefore, the submission of the appellant that theimpugned directions have adversely affected theappellant has no merit. Shri. Dave, learned counselfor Respondent No. 2 also submitted on similar lines.7. Having heard the learned senior counsel/counselfor the parties and after perusing certain documentsplaced before us, without going into the detailedlegalities and merit of the matter, we pass thefollowing interim directions:-a) The parties shall appear before NSE, eitherphysically or through Video Conference, on June24, 2020. NSE shall give the contact details andarrangements for the said meeting to the parties atleast one day in advance.b) Based on the database of NSE and other partiesrights in respect of the securities in question shallbe reconciled/determined within one weekthereafter.c) This Tribunal will hear the matter further onFriday, July 03, 2020. In the interim status quoshall be maintained by the parties i.e. there shallbe no transfer of securities as directed in the10impugned orders nor the appellant shall alienateany of the securities in question.7. Based on the aforesaid order, the minutes weredrawn on 29th June, 2020 based on which the appealwas disposed of by an order dated 3rd July, 2020. Therelevant portion of the order is extracted hereunder:-"8. After hearing the learned senior counsel for theparties at some length, we dispose of the appeal atthe admission stage in the following manner,without calling for a reply, leaving all groundsraised by the appellant open to be questioned ifrequired at an appropriate stage :-1. Securities mentioned in column E and G in theminutes dated June 29, 2020 („Exhibit D‟) to thelimited affidavit may be sold by the appellant forthe purpose of recovery of their dues amountingto Rs. 21.61 crores within one month from today.2. After recovery of Rs. 21.61 crores, the surplus,if any, would be returned to the clientsimmediately thereafter.3. Securities shown in column D to the minutes ofthe meeting dated June 29, 2020 (Exhibit D) tothe limited affidavit shall be released by theappellant within a week from today."8. A perusal of the aforesaid directions indicate that thesecurities mentioned in column E and G in the minutesof 29th June, 2020 could be sold off by the appellant for11the purposes of recovery of their dues amounting toRs.21.61 crores and the surplus, if any, was required tobe to the returned to the clients immediately thereafter.Further, securities shown in column D was to bereleased within a week.9. Thereafter, the appellant filed an application seekingclarification/modification/review of the order dated 3rdJuly, 2020 contending that apart from recoveringRs.21.61 crores the appellant was also entitled torecover PCM charges and interest which as on the dateof moving the application was Rs.1,00,48,624.96. Theappellant thus prayed that this Tribunal may passsuitable order on the application of the appellant.. Thesaid application was found to be misconceived and wasrejected by an order dated 17th August, 2020. TheTribunal held that no such relief of interest and PCMcharges was claimed in the appeal and, therefore, suchrelief in the Misc. Application cannot be claimed.10. Thereafter, it transpires that NSE issued theimpugned communications dated 6th July, 2020, 7thAugust, 2020, 12th August, 2020 and 19th August, 202012directing the appellant to release the remainingsecurities mentioned in column E, F and G as depictedin the minutes of 29th June, 2020 pursuant to the orderof the Tribunal dated 3rd July, 2020. The appellantbeing aggrieved by these communications has filed thepresent appeal for various reliefs which has beenmentioned earlier.11. The contention of the appellant in the presentappeal is, that as a commercial bank the appellant hadgranted working capital loan to Modex in an agreementexecuted on 4th December, 2019 in which Modex hadagreed to pay interest and, in the event of default in therepayment, the appellant was entitled to recover theamount by enforcing the securities given by Modex. Itwas alleged that Rs.32 crores under working capitalwas disbursed to Modex. It was also stated that aclaim has been filed before the Debt RecoveryTribunal, New Delhi on 13th March, 2020. The learnedcounsel contented that in addition to the aforesaid, anoverdraft of Rs.24 crores towards PCM facility wasgiven to Modex on 26th December, 2019 as well as13bank guarantee facilities. It was contended that theappellant is entitled to recover interest for the periodApril 2020 to August, 2020 amounting toRs.91,64,741.21 and PCM charges amounting toRs.9,16,482. It was also stated that Modex issued anemail dated 13th July, 2020 contending that afteradjustment of Rs.21.61 crores the stocks lying in theproprietary account may be adjusted against the loanoverdraft facility. The appellant thus contended thatthey are invoking Banker‟s lien in the securitiesmentioned in column E and F of the minutes dated 29thJune, 2020 towards credit facilities, namely, overdraftand bank guarantee facility taken by Modex.12. We have heard Mr. Gaurav Joshi, Senior Advocateassisted by Mr. Neville Lashkari, Mr. Chaitanya D.Mehta, Ms. Sonali Aggarwal and Mr. Bhanu Chopra,Advocates for the Appellant and Mr. VentakeshDhond, Senior Advocate assisted by Mr. SachinChandarana, Mr. Rashid Boatwalla, Mr. Rahul Jainand Mr. Pruthvi Dhinoja, Advocates for theRespondent No.1, Mr. Rafique Dada, Senior Advocate14assisted by Mr. Anubhav Ghosh and Mr. RavishekharPandey, Advocates for the Respondent No.2, Mr.Nimay Dave, Advocate with Mr. Ankur Loona andMs. Aparna Wagle, Advocates for the RespondentNo.3, Mr. P. N. Modi, Senior Advocate assisted by Mr.Tushar Ajinkya and Mr. Abhiraj Arora, Advocates forthe Respondent No.4 and Mr. J. J. Bhatt, Advocateassisted by Mr. Pratham Masurekar, Advocate for theIntervener in the Misc. Application No. 307 of 2020.13. Before we proceed to decide the controversy, thereis an intervention application seeking to intervene andto be impleaded as a necessary party. After hearing thematter, we are of the opinion that the intervener cannotbe impleaded as a necessary party since no relief hasbeen claimed against him. However, we are of theopinion that the intervener is an interested party and,accordingly, we are of the opinion that he should beheard. We accordingly allow the interventionapplication and also heard Shri J.J. Bhatt, the learnedsenior counsel on behalf of the intervener. Thecontention of the intervener was that his shares were15illegally misused by Modex and given to the appellantas margin and that the appellant through this appeal isillegally trying to sell the shares for realising theoverdraft and bank guarantee facility dues of Modexwhich is not permissible in law. The intervener hasprayed that the securities which are lying with theappellant should be returned to him.14. Shri Gaurav Joshi, the learned senior counsel forthe appellant submitted that NSE has misunderstoodthe order dated 3rd July, 2020 passed by this Tribunal.It was submitted that there is no direction of thisTribunal to release the securities mentioned in columnE and F to NSE and that the direction was only torelease the surplus to the clients of Modex and not toNSE. It was also submitted that the appellant has alien over the securities mentioned in column E and Fand is entitled to recover the monies from the saidsecurities towards overdraft and bank guaranteefacilities given to Modex.. It was also urged that NSEhas no jurisdiction to pass such order nor SEBI hasallowed NSE to issue such directions pursuant to the16ex-parte order dated 30th April, 2020 issued againstModex. It was further contended that direction of thisTribunal dated 3rd July, 2020 to release the securities incolumn G could not be carried out in full as some ofthe shares of Yes Bank have been blocked for whichsuitable directions were sought from NSE pursuant toan email dated 4th August, 2020 which till date has notbeen replied by them. It was also contended by Mr.Joshi that securities mentioned in column F was not thesubject matter of any dispute in the first round oflitigation, ie, Appeal No.146 of 2020 and, therefore,the direction of NSE requiring the appellant to releasethe securities mentioned in column F was whollyillegal and without jurisdiction.15. Mr. Ventakesh Dhond, the learned senior advocatefor NSE submitted that the appellant is wearing twohats, one as a clearing member and the other as abanker. It was urged that the appellant as a clearingmember held securities of Modex and its associates asmargin money and that the banker‟s lien cannot beextended to the securities given by Modex to the17appellant as a Professional Clearing Member. It wasfurther contented that dues of the appellant as aProfessional Clearing Member has been recovered bythe appellant pursuant to the direction of the Tribunaldated 3rd July, 2020 and, therefore, the remainingsecurities has to be returned pursuant to the directionof the Tribunal and cannot be retained for recoveringthe interest from overdraft facility/bank guaranteefacilities. It was also contended that NSE was onlycomplying with the directions of SEBI‟s order dated30th April, 2020 and to that extent was issuingdirections to the appellant to release the securities. Theimpugned communication to the appellant was issuedonly to comply with the directions of the Tribunal.16. On a query raised by the Tribunal, Mr. NimayDave, the learned counsel for Modex submitted thatthe securities mentioned in column E, F and G does notcover the securities to the loan agreement or tooverdraft and bank guarantee facilities.17. Mr Rafique Dada, the learned senior counsel forSEBI contended that PCM dues of the appellant has18been recovered by the appellant pursuant to the ordersof the Tribunal dated 3rd July, 2020 and the retention ofthe remaining securities given by Modex towardsmargin cannot be retained any further and are thusliable to be returned at the earliest so that the claim ofthe other investors could be settled.18. In the light of the rival stand taken by the parties,we are of the opinion that the reliefs claimed arepatently erroneous and to an extent an abuse of theprocess of the court. The appellant is trying to wriggleout of its stand taken in its earlier appeal and has triedvery hard in confusing the issue, namely, that theappellant is required to recover more dues that isspecified in Exhibit AA At the outset, the principlesof Order II Rule 2 of the Code of Civil Procedure willsquarely apply which stipulates that all reliefs shouldbe claimed in one suit. The said principle is squarelyapplicable. When Appeal no.146 of 2020 was filed,the relief moulded during the course of the argumentwas that the appellant may be allowed to recover thedues of Rs.21.61 crores and the remaining securities19would be returned thereafter. The relief to recoverRs.21.61 crores was granted by this Tribunal in itsorder on 3rd July, 2020 which the appellant hasrecovered. Subsequently, after the disposal of theappeal, misc. application which was in the nature ofclarification/modification/review, was filed in whichthe appellant prayed for further reliefs, namely, thatapart from recovery of Rs.21.61 crores the appellant isalso entitled to recover PCM charges and interestamounting to Rs.10048624.96. This application wasrejected on the ground that such relief was neverclaimed in the appeal and, therefore, cannot be claimedin the misc. application.19. In the present Appeal no.277 of 2020 one of therelief claimed is, that the appellant may be allowed tosell the securities which are mentioned in exhibit Z fordues mentioned in exhibit AA. For facility, dues thatis sought to be recovered and appropriate directionwhich is sought from this Tribunal in exhibit AA isextracted hereunder:-20Particulars of Amounts Due as on 29.08.2020Table 1: Total OutstandingSr. Account type Amount (Rs.)No.1 PCM 1,00,96,188.342 OD against property 10,49,80,825.233 BG 12,00,00,409.48Total 23,50,77,423.0520. A perusal of the aforesaid indicates that theappellant is again praying for recovery of PCM chargesamounting to Rs.1,00,96,188.34. This is the samerelief which was sought in the misc. application filed inthe earlier appeal. Such relief which was rejected inthe earlier appeal cannot be granted in the presentappeal in as much as the same is barred on theprinciple of Order II Rule 2 of the Code of CivilProcedure. If the appellant failed to claim such reliefin the first round of litigation, the appellant cannotclaim further relief in the second round of litigation forthe same cause of action. The relief claimed for PCMcharges are thus totally misconceived and cannot begranted.2121. The relief of dues towards overdraft against propertyand bank guarantee also cannot be granted by thisTribunal. These overdraft and bank guarantee facilitywas granted to Modex by the appellant functioning as abank under the Banking Regulation Act, 1949. Thesefacilities were not granted by the appellant functioningas a Professional Clearing Member. Such relief isoutside the purview of this Tribunal and, in any case,we find that the appellant has already filed aclaim/petition before the DRT, New Delhi which ispending.22. No proof has been filed by the appellant to showthat the securities mentioned in column E, F and G ofthe minutes of 29th June, 2020 were also part of thesecurities taken by the appellant towards theloan/overdraft/bank guarantee facilities. In the absenceof any proof to this effect the appellant as a bank underthe Banking Regulation Act, 1949 cannot hold a lienover the securities given to the appellant as margin byModex. There cannot be any intermingling of theassets of the appellant by the appellant functioning as a22Professional Clearing Member or as a bank under theBanking Regulations Act, 1949. In this regard, Mr.Dhave appearing for Modex has clearly stated that thesecurities mentioned in column E, F and G are notsecurities to the loan agreement, overdraft or bankguarantee facilities. Thus, the contention of thelearned senior counsel for the appellant that theappellant has a lien over such securities which arementioned in column E, F and G is patently erroneousand cannot be accepted.23. We find that the appellant has not come to theTribunal with clean hands and are taking a differentstand at different times for ulterior purposes. Thestand of the appellant in the present appeal has beenexposed on account of their stand being recorded inthe order of the Tribunal dated 19th June, 20202 passedin Appeal no.146 of 2020. In para 5 of the order dated19th June, 20202, this Tribunal recorded thesubmissions of the learned senior counsel for theappellant seeking intervention of the appellant23"so as to allow the appellant to dispose of thesecurities worth Rs. 21.62 crores and thereafterreleasing the remaining securities given by RespondentNo. 2 to the appellant"In the same paragraph this tribunal further recorded:"Therefore, the appellant sought to liquidate theshares contained in that list to enable the appellantrecover its entitled amount of 21.62 crores and,thereafter, the remaining securities can betransferred."24. The aforesaid submission of the learned seniorcounsel was based on the limited affidavit filed by theappellant dated 2nd July, 2020 filed in Appeal no.146 of2020. The relevant portion of para 4 of the limitedaffidavit is quoted hereunder:-".......and it was inter-alia agreed that theAppellant could appropriate the securities listed inthe columns E and G, i.e. Respondent No. 2‟s ownsecurities, and the securities related to debit clientsto the extent of their debit balance, to be able torecover their full undisputed dues of Rs.21.61Crores...... ."25. In view of the order of this Tribunal dated 19thJune, 2020, the direction of the Tribunal dated 3rd July,2020 has to be read in that light. The direction of theTribunal in para 8(2) of the order dated 3rd July, 2020directing that after recovery of Rs.21.61 crores, the24surplus, if any, would be returned to the clients werethe remaining securities mentioned in column E, F andG. It may be stated here that the appellant‟s lien overthe margin money is only to the extent of itscharges/losses as a Professional Clearing Member andwhich according to the appellant‟s own case was to thetune of Rs.21.61 crores. Once the amount has beenrecovered the appellant had no business to retain thebalance securities.26. In the light of the aforesaid, we are of the view thatthe retention of the securities mentioned in column E,F and G after recovering the dues of Rs.21.61 croreswas wholly illegal and the appellant is violating thedirections of this Tribunal and are in gross contempt ofthe orders passed by this Tribunal. Thus, thecommunications sent by NSE which are impugned inthe present appeal was perfectly justified and legal.The contention that NSE had no jurisdiction is patentlyerroneous. NSE was only reminding the appellant ofthe direction given by this Tribunal and requiring theappellant to comply with it. In any case, NSE was25only implementing the orders of SEBI dated 30th April,2020 and, to that extent, issuing communication to theappellant was perfectly valid.27. In view of the aforesaid, the appeal of the appellantis patently misconceived and is dismissed with costswhich we compute at Rs. One lakh on account ofseeking the same relief which was rejected earlier,including claims as a banker which is not permissibleand not returning the securities as per the earlier orderof this Tribunal. Such cost shall be deposited beforethis Tribunal within four weeks from today. We alsodirect the intervener to move an appropriateapplication before NSE for return of its shares. If suchan application is filed the same would be decided byNSE in accordance with law. Certain shares of YesBank are blocked and are not being released which arefound in column G. In this regard, the appellant hadsought direction from NSE but no reply has beengiven. We accordingly direct SEBI to look into thisaspect and pass appropriate orders at the earliest.26
Misc. application no. 287 of 2020 is also disposed of
accordingly.
28. The present matter was heard through video
conference due to Covid-19 pandemic. At this stage it
is not possible to sign a copy of this order nor a
certified copy of this order could be issued by the
registry. In these circumstances, this order will be
digitally signed by the Presiding Officer on behalf of
the bench and all concerned parties are directed to act
on the digitally signed copy of this order. Parties will
act on production of a digitally signed copy sent by fax
and/or email.
Justice Tarun Agarwala Presiding Officer
TARUN Digitally signed by TARUN AGARWAL DN: c=IN, o=PUBLIC WORKS DEPARTMENT UTTAR PRADESH, postalCode=221505, st=Uttar Pradesh, 2.5.4.20=30fcf68685192bbc53e6ff1608a83fb3881de7ac2ab7
AGARWAL 954d509c85ed6e0f7c41, serialNumber=095f8b286bb0b1cd07ff676611f4f5e7999727d 404aa38ca422f9d3529bdb8a3, cn=TARUN AGARWAL Date: 2020.11.12 19:15:18 +05'30'
Dr. C. K. G. Nair Member
Justice M.T. Joshi 11.11.2020 Judicial Member RHN
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