Sh. Subhash Chand Bithal vs Sebi

Date of Decision : 04/01/2018

Appeal No.357 of 2017

Sh. Subhash Chand Bithal A-8, 4th Floor, Crosswinds Luxury Homes, Lodhi Club Road, Ludhiana - 14 012. ... Appellant

Versus

National Stock Exchange of India Limited NSE, Exchange Plaza, C-1, Block G, Bandra Kurla Complex, Bandra (E), Mumbai - 400 051. ... Respondent

Mr. Gaayan Sethi, Advocate for Appellants.

Mr. Sachin Chandarana a/w Ms. Lipsa Unadkat, Advocates i/b MKA & Co. for the Respondent.

CORAM : Justice J. P. Devadhar, Presiding Officer Dr. C. K. G. Nair, Member

Per : Justice J. P. Devadhar (Oral)

1.

This appeal is filed to challenge the communication of National

Stock Exchange Ltd. ("NSE" for short) dated 30th June, 2017. By the said

communication it is held that the claim of the appellant against

expelled member Kassa Finvest Private Limited is admissible to the

extent of Rs.1,70,69,707.50/-, however, it is held that the maximum 2

amount payable out of the Investor Protection Fund (IPF) is only Rs.15

lakh.

2. Counsel for the appellant submitted that once it is held that the

claim admissible to the appellant is Rs.1,70,69,707.50/-, NSE is not

justified in restricting the claim to Rs.15 lakh only. By referring to para

6.1 and 6.2 of the order passed by the Whole Time Member ("WTM" for

short) of Securities and Exchange Board of India ("SEBI" for short) on

30th August, 2017 in the case of Kassa Finvest Private Limited, counsel

for the appellants submitted that SEBI itself has found NSE guilty of not

taking appropriate measures and, in such a case, it is submitted that

since NSE failed to monitor the activities of its registered broker, NSE

must be directed to pay entire claim admissible to the appellants.

3. We see no merit in the above contentions.

4. Fact that the claim held liable to be paid (admissible) by the

erring broker to the appellants comes to Rs.1,70,69,707.50/- does not

mean that NSE is liable to pay the said admissible amount to the

appellants. Since the guidelines framed by NSE provide for maximum

payment of Rs.15 lakh from IPF, the appellant is not justified in seeking

amount in excess of Rs.15 lakh from IPF.

5. Reliance placed by counsel for the appellants on the order passed

by the WTM of SEBI on 30th August, 2017 in case of Kassa Finvest Pvt.

Ltd. , is misconceived. By that order, the WTM of SEBI has accepted the 3

explanation given by NSE and accordingly discharged the show-cause

notice issued to the NSE. In such a case, question of making NSE liable

to pay the amounts admissible to the appellants does not arise at all.

6. In these circumstances, we see no merit in the appeal and the

same is hereby dismissed with no order as to costs.

Sd/-

Justice J. P. Devadhar Presiding Officer

Sd/-

Dr. C. K. G. Nair Member

04/01/2018 prepared & compared by-dg