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TMI Blog2015 (7) TMI 621X X X X Extracts X X X X X X X X Extracts X X X X ..... ncorporated in the said circular dated December 3, 2009 with a view to instill greater transparency and discipline in the dealings between clients and the broker. This circular was issued by SEBI after detailed consultation with various quarters including Investors Association, Secondary Market Advising Committee of SEBI (SMAC), Market Participants and major stock exchanges. Therefore, it cannot be said that SEBI issued this circular dated December 3, 2009 as a directive only and not as a mandatory one. We have also perused the three subsequent clarifications issued by NSE on February 3, 2010, September 7, 2012 and October 29, 2013. None of the circulars, in any way, tends to dilute the concept of monthly/ quarterly running settlements o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adhar, Jog Singh and A. S. Lamba For The Appellant : Mr. Simil S. Purohit, Advocate with Mr. A. A. Mukri, Advocate For The Respondent : Mr. Shiraz Rustomjee, Senior Advocate with Mr. Manish Acharya, Advocate Per : Jog Singh The appellant is a company incorporated under the provisions of Companies Act, 1956, having its registered office at Mumbai. It is mainly acting as share broker and is a member of Bombay Stock Exchange (BSE) and National Stock Exchange of India Ltd. (NSE). In the present appeal, an order dated December 31, 2013 passed by SEBI is impugned by the appellant. By the said order, an aggregate penalty of ₹ 16 lac under Sections 15A and 15HB of the SEBI Act, 1992 has been imposed on the appellant for non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady been taken from the clients. Similarly, the appellant had taken a plea that the statement sent to its clients would show the retention of funds/securities regarding settlements. It was also specifically submitted by the appellant to the SEBI in the said letter/email that payment for funds/securities was done within a prescribed time and settlements of funds was done on monthly/quarterly basis. It was found to be a wrong submission reported to the SEBI which was contrary to the provisions of Clause C(6) of the Code of Conduct specified under Schedule II read with Regulation 7 of the SEBI (Stockbrokers and Sub-brokers) Regulations, 1992. 4. The respondent, accordingly, proceeded against the appellant by appointing an adjudicating offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over ₹ 25,000 are less than 500 in number, hence, aging analysis may not be considered as a base. It was further submitted that credit balances may be appearing in many accounts, but, the corresponding debit balance may be in a client s relative s account, hence, effectively the number of clients having credit balances on continuous basis would be insignificant in number. 6. After considering the reply to SCN filed by appellant, the learned adjudicating officer granted an opportunity of personal hearing to the appellant on December 23, 2013. In consonance of the principles of natural justice, the appellant reiterated its earlier stand during the personal hearing. After considering the submissions advanced by the appellant and mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in nature and are only directory. Shri Purohit further submitted that there were three subsequent clarifications issued by NSE on February 3, 2010, September 7, 2012 and October 29, 2013 which show that original circular dated December 3, 2009 was a work in progress circular. 9. We have minutely perused the contents of SEBI s circular in question as well as the three clarifications issued by NSE and we do not subscribe to the view advanced by the learned counsel for the appellant. The concept of monthly or quarterly running settlement of clients accounts by the brokers is incorporated in the said circular dated December 3, 2009 with a view to instill greater transparency and discipline in the dealings between clients and the broker. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the clarifications by NSE from time to time itself suggests the SEBI s circular was not mandatory. Admittedly, automated back office software for quarterly settlement was not installed by the appellant after the SEBI s circular in 2009 and such software was installed only in January 2013, i.e. after lapse of more than three years. Hence, contention of the learned counsel for the appellant in this connection is liable to be rejected. 11. We also note it from the records that the appellant in response to the initial queries/questionnaires raised by SEBI had categorically stated that it was complying with the provisions of circulars dated December 3, 2009 in its email/letter dated 11th/17th August 2012. Suddenly, on January 18, 2013 the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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