w w w . L a w y e r S e r v i c e s . i n



Asit C. Mehta Investment Interrmediates Ltd., Mumbai v/s National Stock Exchange of India Ltd., Mumbai


Company & Directors' Information:- NATIONAL STOCK EXCHANGE OF INDIA LTD. [Active] CIN = U67120MH1992PLC069769

Company & Directors' Information:- ASIT C MEHTA INVESTMENT INTERRMEDIATES LTD [Active] CIN = U65990MH1993PLC075388

Company & Directors' Information:- P V T INVESTMENT LIMITED [Amalgamated] CIN = U74899DL1988PLC121600

Company & Directors' Information:- P V T INVESTMENT LTD [Not available for efiling] CIN = U67120PB1988PLC008068

Company & Directors' Information:- S T INVESTMENT PRIVATE LIMITED [Amalgamated] CIN = U65993WB1990PTC050032

Company & Directors' Information:- H. L. INVESTMENT COMPANY LIMITED [Amalgamated] CIN = U65990WB1975PLC128186

Company & Directors' Information:- M M INVESTMENT PRIVATE LIMITED [Converted to LLP] CIN = U65921CT2008PTC020533

Company & Directors' Information:- G. N. G. INVESTMENT LIMITED [Active] CIN = U65910GJ1981PLC004128

Company & Directors' Information:- A S G S INVESTMENT PRIVATE LIMITED [Active] CIN = U74120DL2008PTC173938

Company & Directors' Information:- G L INVESTMENT PVT LTD [Active] CIN = U65993WB1991PTC051072

Company & Directors' Information:- C & C INVESTMENT LTD [Active] CIN = U67120AS1976PLC001654

Company & Directors' Information:- S M S INVESTMENT CORPORATION PRIVATE LIMITED [Active] CIN = U74899DL1963PTC003988

Company & Directors' Information:- V R V INVESTMENT PRIVATE LIMITED [Active] CIN = U67120WB1985PTC039793

Company & Directors' Information:- S P INVESTMENT PVT LTD [Active] CIN = U70109WB1961PTC025099

Company & Directors' Information:- R H INVESTMENT PRIVATE LIMITED [Active] CIN = U99999MH1978PTC020633

Company & Directors' Information:- T N B INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1986PTC025590

Company & Directors' Information:- MEHTA PRIVATE LIMITED [Active] CIN = U74140MH1940PTC003063

Company & Directors' Information:- A R S INVESTMENT PVT LTD [Active] CIN = U65993WB1990PTC048513

Company & Directors' Information:- V P INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1983PTC015714

Company & Directors' Information:- H M MEHTA AND COMPANY PRIVATE LIMITED [Active] CIN = U17100MH1949PTC007647

Company & Directors' Information:- S M D INVESTMENT LIMITED [Strike Off] CIN = U65993TN1995PLC033139

Company & Directors' Information:- G R D INVESTMENT PVT LTD [Amalgamated] CIN = U67120WB1980PTC032727

Company & Directors' Information:- NATIONAL CO LTD [Strike Off] CIN = U51909WB1917PLC002781

Company & Directors' Information:- C AND N INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1983PTC015710

Company & Directors' Information:- R INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U65993TZ1988PTC002181

Company & Directors' Information:- H N G L INVESTMENT PRIVATE LIMITED [Active] CIN = U74899DL1995PTC066774

Company & Directors' Information:- K M S INVESTMENT PRIVATE LIMITED [Active] CIN = U67120UP1993PTC015287

Company & Directors' Information:- U M INVESTMENT PVT LTD [Active] CIN = U70101WB1979PTC032160

Company & Directors' Information:- A S T INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U67120DL1996PTC082812

Company & Directors' Information:- B N E INVESTMENT LTD [Not available for efiling] CIN = U67120WB1974PLC029360

Company & Directors' Information:- K S J INVESTMENT COMPANY PRIVATE LIMITED [Strike Off] CIN = U74899DL1994PTC061335

Company & Directors' Information:- P T INVESTMENT PVT LTD [Strike Off] CIN = U65999WB1995PTC067065

Company & Directors' Information:- K. S. R. INVESTMENT LIMITED [Strike Off] CIN = U65992UP1988PLC010253

Company & Directors' Information:- C V MEHTA PVT LTD [Active] CIN = U65910GJ1941PTC000367

Company & Directors' Information:- H G MEHTA AND COMPANY P LTD [Active] CIN = U63040MH1993PTC073575

Company & Directors' Information:- J T INVESTMENT PVT LTD [Strike Off] CIN = U65923WB1979PTC032344

Company & Directors' Information:- MEHTA CORPORATION PRIVATE LIMITED [Strike Off] CIN = U17100MH1948PTC006191

Company & Directors' Information:- R K INVESTMENT LTD [Strike Off] CIN = U65993WB1969PLC027398

Company & Directors' Information:- N M G C INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U74899DL1982PTC014603

Company & Directors' Information:- NATIONAL INVESTMENT CO LTD [Strike Off] CIN = U65993WB1933PLC007808

Company & Directors' Information:- T M INVESTMENT CO PVT LTD [Active] CIN = U67120WB1971PTC028172

Company & Directors' Information:- S. A. F. INVESTMENT LIMITED [Active] CIN = U67120DL1997PLC088611

Company & Directors' Information:- A. S. MEHTA AND PRIVATE LIMITED [Active] CIN = U74994GJ2018PTC101733

Company & Directors' Information:- H K (INVESTMENT) COMPANY PRIVATE LIMITED [Active] CIN = U65990GJ1950PTC000511

Company & Directors' Information:- P N INVESTMENT PRIVATE LIMITED [Under Liquidation] CIN = U65910GJ1988PTC010715

Company & Directors' Information:- INVESTMENT CORPORATION LIMITED [Under Liquidation] CIN = U65993KL1942PLC000449

Company & Directors' Information:- S R M INVESTMENT PVT LTD [Strike Off] CIN = U67120WB1979PTC031888

Company & Directors' Information:- A TO Z INVESTMENT PVT LTD [Dissolved] CIN = U67120WB1988PTC044464

Company & Directors' Information:- R J INVESTMENT PRIVATE LIMITED [Active] CIN = U67120MH1976PTC018954

Company & Directors' Information:- J M MEHTA AND COMPANY PRIVATE LIMITED [Active] CIN = U65990MH1943PTC004082

Company & Directors' Information:- S M MEHTA AND COMPANY PVT LTD [Active] CIN = U51900MH1947PTC005879

Company & Directors' Information:- B N K INVESTMENT CO PVT LTD [Active] CIN = U65993WB1971PTC028169

Company & Directors' Information:- A D INVESTMENT CO PVT LTD [Active] CIN = U67120WB1971PTC028170

Company & Directors' Information:- T D INVESTMENT CO PVT LTD [Strike Off] CIN = U65921CH1987PTC007637

Company & Directors' Information:- A STOCK & CO LTD [Under Liquidation] CIN = U51503WB1961PLC025135

Company & Directors' Information:- C G K INVESTMENT P LTD [Strike Off] CIN = U65910AP1986PTC006088

Company & Directors' Information:- L D INVESTMENT COMPANY PVT LTD [Strike Off] CIN = U65921HP1988PTC008425

Company & Directors' Information:- NATIONAL CORPORATION PVT LTD [Not available for efiling] CIN = U51909PB1942PTC000480

Company & Directors' Information:- K L MEHTA AND COMPANY PRIVATE LIMITED [Active] CIN = U74999MH1934PTC002212

Company & Directors' Information:- G K INVESTMENT PRIVATE LIMITED [Active] CIN = U65993TZ1987PTC001919

Company & Directors' Information:- G V INVESTMENT PRIVATE LIMITED [Active] CIN = U65993TZ1987PTC001920

Company & Directors' Information:- B C K H INVESTMENT CO PVT LTD [Active] CIN = U67120MH1982PTC026819

Company & Directors' Information:- H V INVESTMENT PRIVATE LIMITED [Active] CIN = U67120MH1997PTC107686

Company & Directors' Information:- MEHTA AND COMPANY PRIVATE LIMITED [Active] CIN = U51990MH1990PTC056818

Company & Directors' Information:- R S MEHTA AND COMPANY PRIVATE LIMITED [Active] CIN = U51397MH1943PTC003891

Company & Directors' Information:- M L INVESTMENT PVT LTD [Strike Off] CIN = U67120WB1979PTC032180

Company & Directors' Information:- S & G INVESTMENT COMPANY PRIVATE LIMITED [Active] CIN = U65100DL2012PTC244271

Company & Directors' Information:- ASIT INVESTMENT PVT LTD [Active] CIN = U65990GJ1982PTC005195

Company & Directors' Information:- S B INVESTMENT PVT LTD [Liquidated] CIN = U99999RJ1959PTC001090

Company & Directors' Information:- R AND P INVESTMENT PVT LTD [Strike Off] CIN = U67120PB1995PTC016124

Company & Directors' Information:- M M B INVESTMENT PRIVATE LIMITED [Active] CIN = U65993RJ1996PTC012698

Company & Directors' Information:- M G A INVESTMENT COMPANY PRIVATE LIMITED [Strike Off] CIN = U99999MH1980PTC022406

Company & Directors' Information:- R J MEHTA PRIVATE LIMITED [Strike Off] CIN = U51900MH1990PTC058901

Company & Directors' Information:- D S N INVESTMENT PVT LTD [Strike Off] CIN = U65993TG1988PTC008554

Company & Directors' Information:- V. I INVESTMENT PVT LTD [Strike Off] CIN = U67120HR1988PTC030206

Company & Directors' Information:- STOCK EXCHANGE COMPANY LIMITED [Strike Off] CIN = U99999KA1924PLC000128

Company & Directors' Information:- R J P INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U65993GJ1981PTC004678

Company & Directors' Information:- D D P INVESTMENT PRIVATE LIMITED [Strike Off] CIN = U65910GJ1981PTC004695

Company & Directors' Information:- C J P INVESTMENT PVT LTD [Strike Off] CIN = U99999GJ1981PTC004662

Company & Directors' Information:- M P INVESTMENT CO PRIVATE LIMITED [Under Process of Striking Off] CIN = U65993KA1974PTC002646

Company & Directors' Information:- INVESTMENT COMPANY PRIVATE LIMITED [Dissolved] CIN = U65990KL1946PTC000461

Company & Directors' Information:- G MEHTA AND COMPANY LIMITED [Dissolved] CIN = U99999MH1930PTC001648

Company & Directors' Information:- INVESTMENT CORPORATION LIMITED [Not available for efiling] CIN = U99999MH1943PLC007730

Company & Directors' Information:- MEHTA AND CO. LIMITED [Not available for efiling] CIN = U99999MH1947PLC007552

Company & Directors' Information:- MEHTA CORPORATION LIMITED [Active] CIN = U99999MH1948PLC006192

Company & Directors' Information:- NATIONAL CORPORATION PRIVATE LIMITED [Not available for efiling] CIN = U99999MH1950PLC009913

    Appeal No. 382 of 2019

    Decided On, 17 November 2021

    At, SEBI Securities amp Exchange Board of India Securities Appellate Tribunal

    By, THE HONOURABLE MR. JUSTICE TARUN AGARWALA
    By, PRESIDING OFFICER & THE HONOURABLE MR. JUSTICE M.T. JOSHI
    By, JUDICIAL MEMBER

    For the Appellant: Abhishek Venkatraman, KRCV Seshachalam, Sabeena Mahadik, Pankaj Uttaradhi, Aayush Kothari, i/b. Visesha Law Services, Advocates. For the Respondent: Pradeep Sancheti, Senior Advocate, Rashid Boatwalla, Dhruv Jadhav, i/b. MKA & Co., Advocates.



Judgment Text

Tarun Agarwala, Presiding Officer

Oral

1. The present appeal has been filed against the order dated 2nd March, 2021 passed by the Member and Core Settlement Guarantee Fund Committee of the National Stock Exchange of India Ltd. (hereinafter referred to as “NSE?) imposing a penalty of Rs.7,05,600 for violation of shortfall of client funds and false reporting of margin collected from clients of NSE in F&O Segment.

2. The appellant is a stock broker and is in the business of stock broking for 35 years. A show cause notice dated 11th August, 2020 was issued alleging that there was a shortfall of funds to pay off its creditors as on 10th July, 2020 to the tune of Rs.6.57 crores and that there was false reporting of margin collection to the Exchange in the F&O Segment. Other violations were also indicated which we are not concerned in the present appeal.

3. The committee after considering the replies and after considering the material evidence on record found that there was shortfall of funds to pay off its creditors and that there was a false reporting of margin and, consequently, levied a penalty of Rs.6,57,000 and Rs.48,600 respectively.

4. We have heard Mr. Abhishek Venkatraman, Advocate assisted by Mr. KRCV Seshachalam, Ms. Sabeena Mahadik and Mr. Pankaj Uttaradhi and Mr. Aayush Kothari, Advocates for the appellant and Mr. Pradeep Sancheti, Senior Advocate assisted by Mr. Rashid Boatwalla and Mr. Dhruv Jadhav, Advocates for the Respondent.

5. The learned counsel for the appellant has confined his argument only on the issue of shortfall of client funds and submitted that admittedly there was a shortfall of clients? funds but submitted that the said shortfall happened on account of exigencies which was beyond its control. It was submitted that the shortfall occurred on July, 2020 during the peak of Covid 19 pandemic and the lockdown declared by the Government of India. It was contended that as a result of this pandemic the credit facility which was granted by the ICICI Bank was not extended and this resulted in the shortfall of the client funds. It was also contended that the shortfall was recouped within six months by January, 2021 by mortgaging certain properties. It was, thus, contended that a lenient view should have been taken by the committee.

6. On the other hand, the learned senior counsel appearing for the respondent drew our attention to the appellant’s letter dated 25th August, 2020 and submitted that as per the said letter the shortfall had started in January, 2020 when there was no pandemic.

7. We are unable to appreciate the submissions of the respondent’s counsel. The respondent cannot take advantage of a letter written by the appellant in response to the show cause notice. The show cause notice clearly alleges that there was a shortfall of clients? funds on 10th July, 2020 to the tune of Rs.6.57 crores. The explanation given by the appellant that credit facilities was not extended by ICICI Bank has not been disputed. The fact that this credit facility crunch occurred during the peak of the pandemic has also not been disputed. We take judicial notice of the fact that during the pandemic period the appellants made efforts to recoup the clients? securities and the shortfall was removed in January, 2021 by mortgaging its properties. Needless to say that it is not easy to mortgage properties during the pandemic period.

8. The Supreme Court in Hindustan Steel vs. State of Orissa [(1969) 2 SCC 627] held-

“whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statute.”

9. Considering the aforesaid, we are of the opinion that in the given circumstances which shall not be treated as a precedent, a liberal approach should have been adopted by the respondent instead of applying the circulars mechanically. Consequently, while affirming the violation we reduce the penalty in the given circumstances from Rs.7,05,600 to Rs.3,50,000.

10. For the reasons stated aforesaid the appeal is partly allowed. The penalty of Rs.7,05,600 to Rs.3,

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50,000. 11. 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.
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