2018 (1) TMI 1553 - AT - SEBI

NSE liability to pay the amounts admissible to the appellants - HELD THAT - Fact that the claim held liable to be paid (admissible) by the erring broker to the appellants comes to ₹ 1,70,69,707.50/- does not mean that NSE is liable to pay the said admissible amount to the appellants. Since the guidelines framed by NSE provide for maximum payment of ₹ 15 lakh from IPF, the appellant is not justified in seeking amount in excess of ₹ 15 lakh from IPF. WTM of SEBI has accepted the explanation given by NSE and accordingly discharged the show-cause notice issued to the NSE. In such a case, question of making NSE liable to pay the amounts admissible to the appellants does not arise at all. We see no merit in the appeal and the same is hereby dismissed

Summary

Issues:
Challenge to communication of National Stock Exchange Ltd. regarding admissibility of claim against expelled member Kassa Finvest Private Limited and restriction of maximum payable amount from Investor Protection Fund (IPF) to ?15 lakh.

Analysis:
The appeal was filed to contest the communication by National Stock Exchange Ltd. (NSE) determining the admissibility of the appellant's claim against expelled member Kassa Finvest Private Limited. NSE held that the claim was admissible to the extent of ?1,70,69,707.50 but limited the maximum payable amount from the Investor Protection Fund (IPF) to ?15 lakh. The appellant argued that since the claim was found admissible for a higher amount, NSE should not restrict it to ?15 lakh. The appellant referred to SEBI's order in the Kassa Finvest Private Limited case, alleging NSE's failure to monitor its registered broker. However, the Tribunal found no merit in these contentions.

The Tribunal clarified that just because the claim held liable to be paid by the erring broker amounted to ?1,70,69,707.50, it did not automatically make NSE liable to pay the same amount to the appellants. NSE's guidelines specified a maximum payment of ?15 lakh from the IPF, and therefore, the appellant's request for an amount exceeding this limit was deemed unjustified. The appellant's reliance on SEBI's order in the Kassa Finvest Pvt. Ltd. case was deemed misconceived. SEBI had accepted NSE's explanation and discharged the show-cause notice, absolving NSE of liability to pay the amounts admissible to the appellants.

Consequently, the Tribunal dismissed the appeal, stating that there was no merit in the contentions raised by the appellant. The appeal was dismissed with no order as to costs.