9911796707
TMI Blog2000 (7) TMI 853X X X X Extracts X X X X X X X X Extracts X X X X ..... ulter through letter dated 6-7-2000 is bad and illegal. Directions are sought for refund of the amounts illegally detained by the first defendant. 2. This Notice of Motion has been taken out for interim reliefs. By prayer clause ( a ) a direction is sought to the first defendant to reactivate the plaintiff s BOLT, pay out the shares and securities for which the plaintiff has already made payments and generally permit the plaintiff to carry on its business as a main broker of the first defendant. Plaintiff also seeks restoration of the Bank Guarantee. Number of other prayers are also made which are in the form of injunctions and directions to the first Defendant. 3. The Plaintiff is a Public Limited Company. The first defendant is the Bombay Stock Exchange (BSE). The second defendant is the client of the plaintiff. The plaintiff is a Member of BSE having membership (clearing) No. 319. Under the Bye-Laws of the Stock Exchange, Mumbai, the broker is required to pay-in-shares (in case of sale of shares) and pay out the shares (in case of purchase of shares). In case the broker is unable to give delivery or take delivery of shares against payment the broker is respon-sible for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled upon the first defendant to inform the plaintiff as to why BOLT had been deactivated. Instead of giving reasons, by letter dated 29-6-2000 the plaintiff was called upon to explain as to why the plaintiff has failed to make early pay-in of the shares. By letter dated 30-6-2000, the plaintiff informed the first defendant that the plaintiff s ultimate client was reluctant to give delivery of the shares as the plaintiff s BOLT had been deactivated. The second defendant apprehended that the first defendant may withhold the margin money. By letter dated 30-6-2000 the plaintiff again requested the first defendant to release the Base capital as well as margin money. Instead of returning the margin money and the base capital the first defendant gave a press release in the Economic Times on 30-6-2000 announcing that the plaintiff s bolt had been deactivated. When all the requests of the plaintiff were denied, the plaintiff filed the present suit and took out the present Notice of Motion. 5. A notice was given of the hearing of the Notice of Motion on 3-7-2000 and that the plaintiff will be moving for ad interim reliefs before this Court on 4-7-2000. However, the suit was not number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain another set of facts have been brought on the record which may now be noticed. 7. The first defendant had auctioned 2,90,764 shares, the details of which are as under : Auction No. Auction date No. of shares auctioned Alleged difference D-61 30-6-2000 6,625 35,677,25 D-62 3-7-2000 66,805 18,75,645 D-63 4-7-2000 2,17,334 1,23,95,113.90 Total : 1,43,06,436.15 The Plaintiff had informed the first defendant by his letters dated 30-6-2000 and 3-7-2000 that defendant No. 2 is ready and willing to give delivery of the shares provided the share prices are paid over by the first defendant to the second defendant. Again by letters dated 4-7-2000 and 5-7-2000 the plaintiff expressed his willingness to pay in any other amount other than the difference in the auction price and the sale price of 2,90,764 shares. It is also pleaded that the order declaring the plaintiff a defaulter passed on 6-7-2000 was served on the plaintiff at its office on 7-7-2000 at 11.00 a.m. This was the time when the plaintiff was in Court seeking interim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . of shares 12-6-2000 435 53/20.6 13-6-2000 12,135 54/21.6 14-6-2000 7,585 55/22.6 15-6-2000 21,500 56/22.6 16-6-2000 25,210 57/23.6 19-6-2000 15,712 58/26.6 20-6-2000 60,000 59/27.6 20/06/00 435 Dates of Sales Shares sold Sett No./Date Date of Default No. of Shares Date of Auction/No. of shares 21-6-2000 16,150 60/28.6 21/06/00 12,135 21/06/00 435 22-6-2000 6,625 61/29.6 22/06/00 29,085 (7585 + 21,500 Sale of 14/15) 22/06/00 12,135 23-6-2000 66,805 62/30.6 23/06/00 25,210 23/06/00 7,585 26-6-2000 217,334 63/3.7 26/06/00 15,712 26/06/00 46,710 (21500 + 25210) 27/06/00 60,000 27/06/00 15,712 28/06/00 16,150 28/06/00 60,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said meeting. An affidavit has been filed by Mr. Srichand T. Gerela, Chief Executive Officer of the Defendant No. 1 in which the details are set out with regard to the meeting on 27-6-2000. It is stated that he had personally telephoned the plaintiff s office. The person who had attended the telephone was directed to inform the plaintiff that he should attend the office of the CEO. It is stated that in response to the telephone call the plaintiff attended. It is further pointed out that Jasmin B. Shah directly held 66.6 per cent shares in the Plaintiff s Company and indirectly held 33.3 per cent of the issued share capital through J.B. Share and Stocking Broking Limited, Defendant No. 2 herein. Thus J.B. Shah is said to be the person solely in control of the plaintiff as well as the sub-broker. Thereafter details of the discussions which took place are set out. These are not necessary for the decision of the Notice of Motion at this stage. 10. Mr. Vashi has submitted that the various requests made by the Plaintiff for supply of reasons to the defendants were never acceeded to. On the other hand it is submitted by Mr. Vahanvati that the whole story put forward by the plaintiff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulations. In fact the Rules and bye-laws are incorporated into the bargain by virtue of bye-law No. 192. Apart from this, the case put forward by the defendants cannot at this stage be disbelieved. It is prima facie apparent that the plaintiff has been indulging in non-delivery since 20-6-2000 till the deactivation of the bolt. Yet the impression which is given in the plaint is that the action has been taken only on the basis of the non-delivery of the shares with regard to rolling settlement Nos. 61 to 63. An impression is also sought to be given that the plaintiff had never defaulted before that. But a perusal of the table which has been reproduced above, prima facie , goes to show that defaults have been committed by the Plaintiff even prior to the latest default which led to de-activation of the bolt. I am also prima facie satisfied that the plaintiff has tried to play hide and seek with the Court. In the plaint it is nowhere disclosed that there was a meeting between the plaintiff and the officers of the defendants. Yet, 5 responsible officers of the BSE have sworn affidavits to the effect that meetings did take place on 27-6-2000 and on 6-7-2000. Whether or not there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since emergency powers of deactivation could only have been exercised by the Executive Director the decision to deactivate is against the provisions of the bye-laws and the Rules. This submission of Mr. Vashi may have had some significance had deactivation of the BOLT not been superseded by subsequent events. According to the defendants, a decision has been taken by the Competent Authority to declare the plaintiff a defaulter on 6-7-2000. The plaintiff has challenged the decision in this Suit. It is permissible for the plaintiff to make an application for being re-admitted after satisfying the BSE under the Rules and Regulations. 12. Keeping this in view, this Court had given an opportunity to the plaintiff to approach the BSE to see if some settlement could be reached. In fairness to Mr. Vashi, it has to be stated that all efforts had been made to reach a settlement. Unfortunately once a person is declared a defaulter even on readmission by virtue of rule 62( b ) the defaulter is not permitted to have direct trade on the BSE for a period of 2 years. Prima facie, there seems to be no provision also under the bye-law for the waiver of the condition. In such circumstances it w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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