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TMI Blog2021 (1) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent no. 1 dated 23rd April, 2020 where under the appellant was expelled from the membership of the respondent exchange and also declared as a defaulter the present appeal is filed. The consequential notices dated 29th April, 2020 and 1st May, 2020 calling for claim from the investors are also challenged. 2. The appellant was a registered trading member of respondent no. 1. National Stock Exchange of India Ltd. (hereinafter referred to as 'NSE') as well as respondent no. 2 BSE Ltd. (hereinafter referred to as 'BSE'). Respondent no. 1 had carried the inspection of the records and papers of the appellant from time to time and more particularly of the period 2017-18, 2018-19 and 2019-20. During the inspection, irregu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is: a. Unable to fulfill its obligations towards investors b. Has failed to demonstrate its ability to fulfil/discharge its financial obligations and liabilities c. Misused client assets d. Repeat Violator e. Continuation of the Noticee as a member of the Exchange would pose serious threat to the Exchange and would be detrimental to the market and the interest of investors." 5. In view of the same the order of expulsion with a declaration of the appellant as a defaulter was passed. Hence the present appeal. 6. We have heard Mr. Kunal Katariya, Advocate assisted by Mr. Ravi Ramaiya, CA and Mr. Sahebrao Buktare, Advocate for the Appellant, Mr. Vishal Kanade, Advocate assisted by Mr. Sachin Chandarana, Mr. Rashid Boatwalla and M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant submitted that no details of the same are given. The intention of the appellant is to resolve all the complaints and thereafter to surrender the license. In the circumstances he submitted that the appeal be allowed. 9. On the other hand, the learned counsel for the respondents took us through the details of the violations committed by the appellant for last three financial years as noted in the inspection as admitted by the appellant. Those would show that in the year 2017-18 the appellant has misused client funds and securities to the tune of Rs. 12.57 crores. In the year 2018-19 again the client funds and securities worth Rs. 63.03 lakhs were misused. Additionally, 15.72 crores of clients' funds was used for margin obli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age of client funds as noted in the order was found. 10. In the above circumstance, the learned counsel submitted the Committee of the respondent no. 1 concluded that the appellant is the repeat violator. It was recorded that monetary penalty on earlier three occasions for the years 2015-16, 2016-17 and 2017-18 respectively was levied against the appellant. Disciplinary Action Committee of the respondent no. 1 had also levied a monetary penalty of Rs. 10 lakhs. Besides, suspension of the trading membership for the period of 5 days was also directed for violation as recorded in the inspection conducted for the year 2015-16. Time and again the respondent no. 1 issued letters to the appellant requesting it that such event should not reoccur i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bership deposit of the appellant and 16 more complaints were received by the respondent no. 2. The respondent no. 2 had therefore issued show cause notice to the appellant however the response to the same is still awaited from the appellant. Further the respondent no. 2 had also received 21 claims afresh against the appellant. Out of those up to date only 12 claims are satisfied. Further claims would be received as per the rules upto 31st August, 2020 and in view of the pandemic the time is extended for a period of three years in this regard. In the circumstances, the respondent no. 2 also wanted that the appeal be dismissed. 13. Upon hearing both sides it is an admitted fact that since year 2015 till the date of the impugned order the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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