AWARD

BEFORE THE SOLE ARBITRATOR JUSTICE A.S.AGUIAR (RETD.) IN THE MATIER OF ARBITRATION UNDER THE BYE-LAWS, RULES AND REGULATIONS OF THE NATIONAL STOCK EXCHANGE OF INDIA LIMITED

ARBITRATION MATTER NO. F&O/M-0064/2010

BETWEEN

Ashokkumar Jivanlal Patel (Constituent) Village Post: DAVAD, Ta Idar, Dist: Sabarkantha, PIN 383225 (PAN No. ABXPP4762C)

) ) ) ) ) )

APPLICANT

AND Sharekhan Ltd. (Trading Member) A-206, Phoneix House 2nd Floor, S B Marg Lowerparel, Mumbai- 400 013 ) ) ) ) ) RESPONDENT

AWARD

1. NSEIL vide its letter dated 6-8-2010 has referred the above Arbitration matter for adjudication by me under the Bye Laws, Rules and Regulstions of NSEIL.

2. The initial hearing in the above matter held on 1-9-2010 and all subsequent hearings on 29-9-2010, 22-10-2010, 10-11-2010 and 24-11-2010 were held at the office of NSEIL, Exchange Plaza, Bandra Kurla Complex, Mumbai.

3. On the first date of hearing i.e. 1-9-2010, the Applicant alongwith his son Mr. Nikunj Patel were present. Respondent was absent. Since there was no statement of claim on record, the Applicant was directed to file a proper statement of claim setting out details of claim alongwith supporting documents. On the next date i.e. 29-9-2010, the Respondents filed their reply dated 28-9-2010 albeit in the absence of any proper statement of claim of the Applicant. On the following date i.e. 22-10-2010, the Applicant filed his rejoinder dated 14-10-2010 while the Respondent filed their sur-rejoinder dated 20-10-2010. On 10-11-2010, the Applicant was represented by his Advocate Mr. Vipual Shukla, while the Respondents were represented by their authorised representative Ms. Kinjal Shah and Mr. Vinod Kadam. Both parties were heard in detail on that date. However, on the application of Advocate for the Applicant, the matter was adjourned to 24-11-2010 to enable the Applicant to file his written submission and was directed to file the same and serve it on the Respondents on or before 18-11-2010. The Applicant has accordingly filed his written submission dated 18-11-2010.

4. It is the case of the Applicant that the Respondents have carried out unauthorised trades in his account in the NSE F&O Segment without his instructions or knowledge. It is contended that there is no valid agreement between the Applicant and the Respondents to enable the Respondents to carry out trades in his account as the Respondent had not signed the agreement and no date of the agreement mentioned. Further, it is the Applicants contention that his signature was obtained on all blank documents and details filled up later on by the Respondents. It is further pointed out that the Applicant had never given his acceptance to contract notes in digital form as he had not mentioned his E-mail ID to which the contract notes could be sent and therefore, the Applicant was not aware of the trades in his account by the Respondents. 5. It is further pointed out that NSE F&O regulation 3.10 (a) makes it mandatory for the trading member to collect minimum margin as requirement in order to buy or sell the derivatives contract. However, the Respondents have entered into several trades on behalf of the Applicant without any margin money standing to his account nor have the Respondents approached the Applicant to furnish any undertaking to provide a margin deposit or additional margin which is a pre-requisite for F&O trading despite there being a continous debit balance in the F&O segment. 6. It is further pointed out that the Applicant during the entire course of his trading with the Respondents has not issued a single cheque in favour of NSE F&O segment and all

cheques were issued in the cash segment of BSE only, nor have the Respondents demanded a single cheque from the Applicant in the F&O segment of the NSE.

In view of the above, it is submitted that all dealings by the Respondents in the account of the Applicant should be catogorised as unauthorised and invalid.

7. The Respondents in their reply have taken up the preliminary issue of Limitation and Jurisdiction. It is submitted that the Applicant has alledged trades which were executed on the floor of BSE in the year 2007-2008. The Application is clearly filed beyond the period of limitation of six months from the date of trade. Moreover, all the alledged trades were on the floor of BSE and not NSE. Therefore, this tribunal will have no jurisdiction to adjudicate the Applicants claim.

8. On merits it is submitted that the Applicants total claim is for Rs. 1,53,602.26/- and not Rs. 3,26,533.37/-. It is pointed out that according to the Applicant, shares were sold with his consent from which he was entitled to Rs. 1,91,693.3/-. The Applicant has further stated that he purchased some shares amounting to Rs. 1,34,091/- from the amount lying to his credit above. Thus on the Applicants own admission, the balance amount to his credit would be Rs. 1,53,602.26/9. The Respondents have submitted that they carried out trading only as per the instructions of the Applicant and the said trades are reflected in the statement of accounts of the Applicant which has been sent to the Applicant. Further, since the Applicant had opted for digital mode of contract notes, the same were forwarded to him at his E-mail address supplied by him. It is submitted that the last trade was executed on 16-6-2008 but the Applicant had not challenged or questioned the trades alleged to be unauthorised till the filing of the Application. 10. Exfacie, the Application is barred by limitation. Admittedly all transactions were carried out on the floor of the Exchange in the year 2007-08. The last payment of Rs. 96,000/also made on 28-1-2010. This Application has been filed on 27-7-2010, more than six months from the date of disputed transactions and therefore, barred by limitation under the Bye Laws of NSE. Further, the present claim is not in respect of trades done on NSE but for trades in BSE. Admittedly, no cheque was issued in favour of NSE F&O segment and all cheques were issued in the cash segment of BSE. Thus, the tribunal has no jurisdiction to adjudicate in

the matter. It is also pertinent to note that the Applicant had filed his claim before the BSE but the same was dismissed on 13-10-2010.

11. Even on merits, we find no substance in the Applicants case that the trades done were unauthorised as they were without his knowledge or consent as there was no valid member-client agreement as he had only signed on blank documents. The Applicant has admitted his signatures on the said member-client agreement and therefore, cannot be heard to say he is not bound by the contents of the agreement. Contract notes were sent to the Applicant at the E-mail ID mentioned in the agreement. Therefore, the Applicant was fully aware of the trades carried out in his account but did not object to the same till he started suffering losses.

In these circumstance, we find the Applicants claim to be without substance and therefore, pass the following order:

AWARD

1. Application dismissed. 2. No order as to costs. 3. NSEIL is directed to file the Original Award which is engrossed in triplicate with requisite non-Judicial Stamp, and to forward one Original Copy to each of the parties.

Mumbai. Dated this 14th day of February 2011.

(Justice A. S. Aguiar) Former Judge Bombay High Court Sole Arbitrator.