9911796707
TMI Blog1997 (9) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... licable." Admittedly, the total base capital deposited by the appellant with the exchange and clearing corporation is Rs. 70 lakhs and as per the circular of the Exchange NSCCL/CM/C S/0011, dated October 1, 1996, the gross exposure at any time should not exceed Rs. 7 crores, which is 10 times the base capital. According to the bye-laws of the NSE, any trading member who fails to deposit the margin money as provided in the bye-laws and regulations shall be required to suspend its business forthwith. In this case, the gross exposure limit of the appellant was Rs. 7 crores and the appellant admittedly exceeded to 33 odd crores of rupees on January 14, 1997. Clause (26) of the bye-laws of the National Stock Exchange is relevant and the same reads as under : "(26) A trading member failing to deposit margin as provided in these bye-laws and regulations shall be required by the relevant authority to suspend its business forthwith : A notice of such suspension shall be immediately placed on the trading system and the suspension shall continue until the margin required is duly deposited." The trading facility granted to the appellant was withdrawn because of gross exposure on Janu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not receive any message or warning asking him to reduce his limits/exposure. It is submitted by Mr. Rohtagi that on January 14,1997, the respondent permitted him to increase the limit up to Rs. 33 crores odd and then abruptly at 2.52 p.m. on January 14, 1997, discontinued the trading facility without giving him any warning or reasonable opportunity. Mr. Rohtagi submitted that the letter dated January 14, 1997, was received by the appellant after the trading facility was discontinued. He submitted that, according to the basic principles of natural justice, the respondent ought to have given the warning and reasonable opportunity to the appellant before abruptly discontinuing the trading facility granted to him. On the other hand, Mr. Arun Jaitley, learned senior counsel appearing for the NSE, submitted that admittedly the petitioner had paid Rs. 70 lakhs as the base capital or margin amount and his maximum trading limit was Rs. 7 crores and in no case, he could have exceeded that limit. The appellant's exceeding the limit itself was a clear violation of the NSE bye-laws and consequently the NSE was totally justified in withdrawing the facility provided to the appellant. Mr. Jaitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anuary 13, 1997, instead of reducing his trading limits went on grossly exceeding the limit and on January 14, 1997, the limit was increased from Rs. 12 crores odd to Rs. 33 crores odd. Mr. Jaitley produced a copy of the telephone bill to indicate that on January 14, 1997, on several occasions the appellant was asked to reduce his trading limit by repeated telephone calls from Bombay but the appellant on the contrary went on to increase the limit while altogether ignoring the warning given to him on the telephone. Mr. Jaitley has also drawn our attention to the letter of January 14, 1997, in which it is mentioned that at 12.01 hrs. the appellant's gross exposure was Rs. 12,30,51,822.50. At that time, the appellant was informed on the telephone to desist from increasing gross exposure any further. Instead of reducing the limit, the appellant increased it sharply to Rs. 25,49,60,847.50 at 14.20 hrs. At that time, the appellant was again informed on the telephone of the continued violation and was asked to immediately reduce the gross exposure. Admittedly, the gross exposure further increased to Rs. 29,20,16,412.50 at 14.25 hrs. At that stage, the appellant was again informed on tel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mediate explanation orally or otherwise may, in many cases, be sufficient compliance of natural justice. The court also observed in the aforesaid case that an elaborate and sophisticated methodology of a formalised hearing may be injurious to promptitude so essential in an election under way. The court further observed that there is no invariable standard of fair hearing and each case has to be decided on its own merits. The standards of natural justice vary with situations contracting into a brief, even post-decisional opportunity, or expanding into trial type trappings. Mr. Jaitley submitted that looking to the peculiar circumstances of the instant case, no better warning or cautioning or hearing could be given to this appellant. He also placed reliance on another judgment in State Bank of Patiala v. S.K. Sharma, AIR 1996 SC 1669. In this case, the court has taken the view that the real test is one by which it is to be evaluated what prejudice has been caused to the person concerned. In Howard v. Borneman, [1974] 3 WLR 660 (CA), while dealing with the principles of natural justice and requirement of notice, the court held as under (The passage quoted above appears i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into the compound of the girls' hostel and walked without clothes on them. It was indeed a very delicate matter and careful handling of the matter was required. The police could not be called in because if an investigation was started, the female students out of sheer fright and harm to their reputation would not have co-operated with the police. Nor was an enquiry, before a regular Tribunal feasible because the girls would not have ventured to make their statements in the presence of the miscreants, because if they did, they would have most certainly exposed themselves to retaliation and harassment thereafter. The college authorities would not have protected the girl students outside the college. Therefore, the authorities had to devise a just and reasonable plan of enquiry which on the one hand would not expose individual girls to harassment by the male students and, on the other, secure reasonable opportunity to the accused to state their case. For finding out the veracity of the allegations, the principal instituted an enquiry committee consisting of three members of the staff. The committee first called the girl-complainants and recorded their statements but not in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w was to be imposed in such matters, the girls would have had to go under the constant fear of molestation by the male students who were capable of such indecencies. The court observed that under the circumstances, the course followed by the principal was a wise one. The committee whose integrity could not be impeached, collected and sifted the evidence given by the girls. Thereafter, the students definitely named by the girls were informed about the complaint against them and the charge. They were given an opportunity to state their case. According to the Supreme Court, in the facts and circumstances of this case, there had been no violation of the rules of natural justice. In Russell v. Duke of Norfolk [1949] 1 All ER 109,118 (CA), the court observed : "The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth". In Byrne v. Kinematograph Renters Society Ltd. [1958] 2 All ER 579, 599 (Ch D), while dealing with the requirements of natural justice, the court observed that a person should know the nature of the accusati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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