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2015 (7) TMI 299 - SECURITIES APPELLATE TRIBUNAL MUMBAIDeclaration as a defaulter - Whether the Committee on declaration of Default of National Securities Clearing Corporation Limited (NSCCL) is justified in declaring the appellant to be a defaulter under Bye Laws 1(1), 1(2) & 1(4) of Chapter XI of the Bye Laws of NSCCL (F&O) Segment - Defaulter in the capital market segment - Held that:- Admittedly, the appellant has not discharged that settlement shortfall obligation till date even though NSCCL has discharged that obligation by making payment to counter parties out of its own profits and its accumulated reserves in accordance the Bye-Laws, Rules and Regulations of NSCCL. Thus, the appellant who became defaulter on January 1, 2013 due to failure to make good the margin shortfall, further defaulted in making good the settlement shortage that occurred during March and June 2013 settlement, and the appellant continues to be defaulter as the appellant has failed and neglected to reimburse the settlement shortfall of ₹ 91,49,72,804.51 which is paid by NSCCL to third parties for and on behalf of the appellant. Argument of the appellant that the securities once accepted under the prevailing norms cannot be made ineligible by revising the norms is without any substance, because it is the duty of NSE/NSCCL to constantly monitor the dealings on the Exchange and take suitable steps to preserve the market integrity, if necessary, by amending the prescribed norms. In the present case, even after revising the norms, considerable time was given to the concerned parties to get acclimatized with the revised norms and in fact several meetings were also held in that behalf between the appellant and NSE/NSCCL. Although the said settlement shortfall was brought down to ₹ 3,77,79,826.89 by adjusting the cash collaterals/ adjustment of FDR’s etc, it is an admitted fact that on expiry of rolled over contracts in June 2013, there was once again settlement shortfall to the tune of ₹ 91,01,08,825/-. Thus, the cumulative settlement shortfall rose to ₹ 94,78,88,651.89. As a result of further adjustments made by NSCCL the outstanding settlement shortfall stood reduced to ₹ 91,49,72,804.51. As the appellant failed to discharge that liability, NSCCL was obliged to discharge that liability by paying ₹ 91,49,72,804.51 to third parties from its own profits and the accumulated reserves and settle the trades of the appellant. Admittedly, the appellant has failed to reimburse that amount to NSCCL till date. In these circumstances, no fault can be found with the decision of the Committee in declaring the appellant to be a defaulter under the Bye Laws framed by NSCCL in the F&O Segment. - Decided against the appellant.
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