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2018 (3) TMI 1830 - AT - SEBIClaims of the appellants against their broker rejected by the DC - NSE liability to compensate the appellants - Claim of the appellant provided as margin money to Kassa Finvest Private Ltd. a defaulter stock broker of the NSE, was not admitted for payment from the Investor Protection Fund ('IPF') of the NSE - claim was rejected on the ground that the said amount purportedly provided as margin money for trading in securities was in fact a transaction in the nature of loans. HELD THAT:- Securities and Exchange Board of India ('SEBI') had issued an interim order against Kassa on March 19, 2015 and the final order was passed on September 5, 2017 whereby, inter alia, Kassa was directed to refund / return client's money / securities with 15% interest thereon. It was also stated in the order that Kassa admitted to taking loans from clients by offering fixed returns. The appellant before us is unable to produce any evidence relating to her trading in securities. The appellant is neither able to provide any convincing reason why no trading was done for about a year of having the trading account except a vague statement that her instructions to the broker was never implemented. Record produced before us clearly indicate that interest was paid to the appellant by Kassa. The statement on dividend itself is not very convincing as there are entries to the effect that the same company has paid dividend twice during a period of three months. All these clearly show that the amount deposited by the appellant with Kassa was in the form of loans. Since the By-laws of the NSE clearly prohibit compensating claims in the nature of loans given to defaulting brokers, we find no fault in the Defaulters' Committee's decision that the appellant's claim cannot be entertained from the IPF which is meant for safeguarding the interests of genuine investors. Appellant is at liberty to approach the appropriate forum to settle her claim against Kassa in case Kassa is not honouring her claim of the deposited amount. No merit in the argument of the appellant that NSE is liable to compensate the appellant for having failed in their duty as a regulator of brokers.
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