Arbitration Matter No. F&O/M-0014/2010

Transcription

1 Before the Panel of Arbitrators comprising of Mr. G. A. Nayak -- Presiding Arbitrator Mr. S.C.Gupta -- Arbitrator Mrs. Padma Rajendran --Arbitrator In the Matter of Arbitration under Bye-laws, Rules and Regulations of National Stock Exchange of India Ltd. (NSE) Arbitration Matter No. F&O/M-0014/2010 BETWEEN Angel Capital and Debt Market Ltd., (Trading Member) G-1, Akruti Trade Center, Road No.7, MIDC Marol, Andheri (East), Mumbai Mr. Ghanshyam S. Patel (Constituent) 1-6, Harish Nagar Society, Varacha Road, Surat , Gujarat State AND Applicant --- Respondent Appearances : Applicant : 1. Ms. Renuka Menon, Executive- Legal & Compliance. Duly authorized by the 2. Mr. Neel Mahendra M. Kumar, Asst. Manager, Company. Legal & Compliance. 3. Mr. Kunal Kothari, Asst. Manager, Legal. Respondent: Absent. Page 1 of 5

2 1. The Claim The Applicant, Angel Capital and Debt Market Ltd., a Trading Member of the NSE has prayed for an Award against the Respondent, Mr. Ghanshyam S. Patel, a Constituent of the Applicant for a sum of Rs.29,56, (Rupees twenty nine lakh fifty six thousand four hundred ninety nine and paise fifty two only) together with 18%p.a. till payment or realization. 2. Statement of the case filed by the Applicant The Applicant has filed the statement of the case dated January 25, 2010 along with the Annexures. The Respondent opened an account with the Applicant on January 23, 2006 after completing all formalities connected with KYC norm viz., Client Registration Form, Member Client Agreement (MCA) and Risk Disclosure Document (RDD) and other documents. He was allotted a unique client code GQ29 and was mapped under Surat Branch and later, at his request, his account was shifted to Acme Branch of the Applicant under the new accounting code GL999. The Respondent carried out transactions in NSE F&O segment through the Applicant from 12/10/2009 to 29/10/2009 and the contract notes and bills in physical form were delivered to him at his residential address registered with the company from time to time till 20/10/2009 when the Applicant started sending the contract notes and bills in electronic form (ECN) at the request of the Respondent on the ID provided by the Respondent. The Respondent received all the contract notes as evident from the proof of delivery by way of POD of courier and ECN log report. The trades were executed by the Applicant with the knowledge and instructions of the Respondent over phone. The transcript of the voice recording and a CD has been provided by the Applicant to show how the orders for trading were placed by the Respondent. The Respondent did not raise any query or objection to the contract notes for the transactions done by him. The Respondent used to carry out the intra day transactions in F&O segment on a daily basis and as result of this, there were losses suffered by him. His ledger account for F&O segment reflected a debit balance of Rs.29,56, as on 15/12/2009. This balance was arrived at after transfer of the Respondent s funds available in the books o the sister concern of the Applicant i.e., Angel Broking Limited to his F&O ledger with the Applicant on Oct 29, 2009 (Rs.2,99,999/-) and Dec 15, 2009(Rs.2,00,095.84), apart from levying delayed charges of Rs on 31/10/2009. The Applicant sent the ledger account statement regularly and the Respondent was aware of the position of his account. The Respondent issued a cheque dated Dec 20, 2009 drawn on Standard Chartered Bank, Surat for Rs.26 lakh towards part payment of his dues to the Applicant. (However, the date of the cheque was stated as Oct 20, 2009 in the statutory notice under Section 138 of Page 2 of 5

3 Negotiable Instruments Act dated Nov 18, 2009 sent to the Respondent). The cheque bounced on presentation to the Bank. Subsequently, the Respondent issued two cheques drawn on The Varacha Co-operative Bank, Surat for Rs.18lakh each on Oct 28, 2009 which were dishonoured and returned with remarks insufficient funds by his bank. The Applicant, therefore, filed the case with the Metropolitan Magistrate Court at Andheri, Mumbai under Section 138 of the Negotiable Instruments Act, 1881 against the Respondent on Dec 31, 2009 which is pending before the Court. The Respondent has not made any payment towards discharge of his liability and the said sum of Rs.29,56, is due and payable by him to the Applicant as on 15/12/2009. The Respondent has no securities /collaterals lying in his account with the Applicant. As the Respondent failed to pay the said sum, a letter dated Dec 30, 2009 was sent to him calling upon him to pay the amount due and payable by him to the Applicant within 7 days from the date of receipt of the letter failing which the legal action for recovery of dues would be initiated. However, the Respondent refused to accept the aforesaid letter and the envelop containing the demand notice was returned to the Applicant with the remark Refused. The Applicant, therefore, lodged the Arbitration Application with the NSE against the Respondent claiming a sum of Rs.29,56, together with % p.a. till payment or realization. 3. The Respondent s statement of defence The Respondent has neither filed his statement of reply against the claim lodged by the Applicant nor appeared before the Panel of Arbitrators (hereinafter referred to as Panel ) despite the notices issued to him by the NSE for the hearings. 4. Hearing. The Arbitration matter was initiated by issue of letter dated February 25, 2010 by the Arbitration Dept. of the NSE upon receipt of Arbitration Application on January 25, 2010 from the Applicant. The initial hearing was scheduled for March18, 2010 by issue of notice by the Arbitration Department of the NSE vide its notice dated March 04, 2010 to both the parties. Subsequently, adjourned hearings were held on April 12 and 26, The notices sent to him by courier at his residential address registered with the Applicant and the Exchange for the hearings were returned with remark Refused. Even the initial letter sent by the Exchange forwarding the copy of arbitration application and statement of case together with Annexures to the Respondent also came back. The Applicant also could not succeed to serve certain documents on the Respondent as directed by the Panel. However, the Applicant sent the notice of the last hearing i.e., on 26/04/2010 Page 3 of 5

4 through on the Respondent s ID, although the notice for the said hearing sent by the Applicant through speed post was returned with remark Refused. The Respondent did not attend the hearings either in person or through authorized representative. Besides, there was no communication from him for his non-appearance at the hearings. The Panel, therefore, felt that sufficient opportunity was given to the Respondent to defend his case. The Panel was also of the opinion that it was a deliberate attempt on the part of the Respondent to avoid arbitration proceedings and payment of dues to the Applicant. 5. Conclusion The facts averred by the Applicant have gone uncontroverted and unchallenged. The Respondent has not disputed that he had not traded through the Applicant and that he was not liable to pay any debt to the Applicant. The Respondent had issued 3 cheques in Oct 2009 towards part payment of his dues which were bounced and the case against him under Negotiable Instruments Act is pending in the court. The arbitration application is filed by the Applicant well within six month s from last transaction and as such not barred by limitation. The Applicant has submitted various documents and statements viz., copies of Client Registration Form, MCA, RDD, letter of authority, ledger statement, contract notes, bills, trade logs of transactions done on Oct 29, 2009 by the Respondent, holding -cum -transaction statement of demat account, MG13 statement and CD of voice recording with transcript etc. for placing orders of transactions in support of its claim and genuineness of the transactions. The transactions shown in the contract notes match with the trade logs and are in order. In the aforesaid circumstances, the Applicant is entitled to get its claim realized to the tune of Rs. 29,56, with interest. Page 4 of 5

5 Accordingly, the Panel of Arbitrators makes the following Award :- Award The Respondent is directed to pay to the Applicant a sum of Rs. 29,56, (Rupees twenty nine lakh fifty six thousand four hundred ninety nine and paise fifty two only) towards its claim with p.a. from the date of filing this Application (i.e. January 25, 2010) till payment or realization. 1. The cost of the Arbitration to be borne by the parties equally. 2. No order as to costs. 3. The Award is signed in three originals. The NSE will retain one of the stamped original and forward one stamped original each to the Applicant and the Respondent. G.A.Nayak S.C.Gupta Mrs. Padma Rajendran Presiding Arbitrator Arbitrator Arbitrator Mumbai Date: May 19, 2010 Page 5 of 5