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2015 (8) TMI 335 - AT - Companies LawCancellation/Annulment of trade – NSE held appellant guilty of gross negligence by not installing requisite checks and balances as there was punching of erroneous selling order – Whether mistake of punching erroneous sell order constituted ‘material mistake in trade’ and was annullable under Bye law 5(a) framed by NSE – Held that :- despite issuance of circular dated July 15, 2005 requiring members to incorporate suitable validation mechanism, dealer’s terminal did not contain suitable validation mechanism, as result of which his computer crashed and erroneous order for sale took place – Bye-law 5(a) does not permit annulment of trades executed by mistake, but permits annulment of only those trades having material mistake –Punching erroneous sell order was coupled with breach of duty/negligence – Admittedly there was fall in NIFTY Index by 15.5% on account of erroneous sell orders placed by appellant therefore appellant was not justified in seeking annulment of trades – Appeal disposed of – Decided against Appellant. Violation of Margin money norms - Whether respondent nos:2 to 9 placing buy orders far away from market price and violating margin money norms laid down by NSE vitiated trade – Held that:- NSE vide circular dated January 20, 2004 warns that disciplinary action may be initiated against those members who place orders far away from normal market price – Violating margin money norms was liable for expulsion or suspension or withdrawal of all or any of membership rights and/or to pay fine and/or censure, reprimand or warning – Trades executed due to erroneous sell orders and buy orders placed by respondent nos:2 and 3 in violation of norms, affected adversely NIFTY index, causing loss of appellant and huge profits to respondent nos:2 and 3 – Violations committed by respondent nos. 2 and 3 were serious violations and NSE ought to have appreciated imposing penalty against profits running into several crores wrongfully earned by respondent nos: 2 and 3 – Matter remanded back for fresh consideration in accordance with law.
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