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2019 (9) TMI 593

..... ferred from the applicant’s account to broker account, which the broker did not return. It is further pointed out that there was no trade executed on the exchange. The transaction is therefore, construed as a loan transaction and therefore, not recommended for payment. This recommendation of the Committee was accepted by Respondent No.3 and the claim of the petitioner was accordingly rejected. We do not find that the Respondent No.3 has committed any error. It may be that the previous Circulars issued by the SEBI from time to time, do not specifcally include a clause that in case of transaction not executed through the platform of BSE, the claim would not be entertained by the Respondent No.3. Nevertheless, there is no instance cited .....

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..... hange Board of India Limited ( SEBI for short), Respondent No.2 is the Bombay Stock Exchange Limited ( BSE for short), Respondent No.3 is the Stock Exchange Investors Protection Fund, a registered trust and Respondent No.4 is a private limited company, who was at relevant time a registered broker with the BSE. 2. The petitioner had opened an account with the Respondent No.4 Company on 26th September, 2015 and was assigned a Unique Client Code Number. The petitioner paid certain amounts to the Respondent No.4 for purchasing specified shares on her behalf. However, such shares were not delivered to the Petitioner by the broker. It appeaars that the Respondent No.4 Company had likewise defaulted in its commitments for purchase and delivery of .....

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..... s not recommended for any payment from the Fund. At that stage, the Petitioner has fled the present petition. The facts in Writ Petition No.1734 of 2018 are substantially similar and are therefore, not separately recorded. 4. In background of such facts, learned Counsel for the petitioner submitted that the petitioner s claim was duly verifed by the arbitral tribunal and found to be genuine. Arbitration awards were passed. The Fund has been created by the SEBI to mitigate the hardship of small investors who are unable to recover the amounts from the defaulting brokers without protracted proceedings. Subject to the limit prescribed, the petitioner s claim should have been sanctioned by the Fund. She submitted that the circulars issued by the .....

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..... 3. We are also not inclined to dismiss the petitions as being not maintainable. The Respondent No.3 may be a registered trust, nevertheless is constituted and functions under the directives and guidelines of the SEBI. It appears the Fund is constituted to obviate the hardships of small investors, whose investments may be blocked on account of defaulting brokers and who would find it extremely difficult to recover even part of such investment after protracted litigation. We also notice that contribution to the fund is from various sources which trace their origin to public funds. As per the paragraph 5 of the comprehensive guidelines for Investors Protection Fund, the contribution to the Fund is made from the following sources : a. 1% of the .....

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..... on the policy of Respondent No.3 formulated and declared through Circulars issued from time to time by the SEBI. In this context, we may refer to the Circular dated 23rd February, 2017. This Circular amends the previous Circulars in order to comprehensively review investors grievance redressal mechanism. This Circular lays down different guidelines for the purpose of examining the grievances of the investors. Paragraph 2 of the Circular pertains to Investors Protection Fund and other similar Funds and lays down guidelines for utilization of the Fund. Clause (b) of Paragraph 2 pertains to admissibility of claims for making payment out of the Fund and provides that in the event of default by the member, all transactions executed on exchange .....

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..... paid to broker. The cheque paid by broker for ₹ 7,00,000/- was returned undelivered. Further some shares were transferred from applicant s account to brokers account which the broker did not return. These shares have been transferred on 8th May, 2015, which was much prior to creation of UCC. The arbitrators have awarded the applicant on above claims of the applicant. However, it is observed that there is no trades executed on the Exchange. Since there is no transaction on the Exchange the transaction is construed as a loan transaction. Hence claim is not recommended for any payment from IPF. In view of the above the Committee decided that not to recommend to the trustees of IPF for compensating from BSE-IPF against your claim on the .....

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