Indianivesh Shares And Securities Pvt. Ltd vs National Stock Exchange Of India Limited

We have heard the learned senior counsel for the parties. The present appeal has been filed against the order dated February 11, 2022 passed by the Member and Core Settlement Guarantee Fund Committee (‘Committee’ for short) of the National Stock Exchange of India Limited (‘NSE’ for short) whereby the appellant’s trading membership has been suspended for a period of six months and a penalty of Rs. 1 crore has been imposed for shortfall of the misuse of the clients’ funds / securities. We find that there is a dispute with the clearing member Edelweiss Custodial Services Ltd. (‘ECSL’ for short) purported loan transaction and locking of fixed deposit amounting to Rs. 100.75 crores of clients funds. We also find that during the same period the market collapse because of lockdown pursuant to covid pandemic in March 2020 on account of which there was a temporary fund flow problem resulting in a very larch number of clients’ complaints. It has been stated that all the clients complaints have now been resolved which is also admitted in the impugned order.

Considering the aforesaid, we find that if the dispute with the clearing member is ignored then there is no shortfall of clients’ securities / funds.

In the light of the aforesaid, we direct the respondent to file a reply within three weeks. Rejoinder may be filed within three weeks thereafter. The matter would be listed for admission on May 6, 2022.

Considering the aforesaid, we direct that the suspension of the trading membership of the appellant shall remain stayed provided the appellant deposits a sum of Rs. 50 lakh before the respondent. The stay application and urgency application are disposed of.

Parties are directed to take instructions from the Registrar 48 hours before the date fixed in order to find out as to whether the matter would be taken up for hearing through video conference or through physical hearing.

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 Private Secretary 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.