2012 (7) TMI 884 - AT - Companies Law

Summary

Issues involved: Appeal against monetary penalty imposed by National Stock Exchange for irregularities in maintaining client ledger, sending contract notes, and displaying notice board.

Irregularity 1 - Client Ledger Maintenance:
The appellant, a stock broker, was penalized for maintaining one ledger account for clients who also acted as sub-brokers. The Securities Appellate Tribunal found ambiguity in the regulation requiring separate ledger accounts for each client's transactions on the stock exchange. The appellant complied with the directive to maintain separate accounts for clients acting as sub-brokers. The Tribunal deemed the penalty of Rs. 25,000 unjustified due to the regulation's lack of clarity.

Irregularity 2 - Contract Notes Dispatch:
The appellant faced a penalty for not sending contract notes directly to clients within 24 hours, instead routing them through sub-brokers. The Tribunal noted that the appellant issued contract notes promptly, within the prescribed time frame, and sent them to clients through sub-brokers as per regulations. It found no violation in this practice and overturned the penalty of Rs. 10,000.

Irregularity 3 - Notice Board Display:
The penalty imposed for not displaying the trading member's notice board at the sub-broker's office was dropped by the Internal Committee for Minor Actions of NSE. This issue was not challenged in the appeal.

Conclusion:
After considering arguments from both parties, the Securities Appellate Tribunal allowed the appeal, setting aside the impugned order and ruling in favor of the appellant. No costs were awarded in this decision.