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TMI Blog2019 (9) TMI 591X X X X Extracts X X X X X X X X Extracts X X X X ..... Sikha, Mr. Rushin Kapadia, Advocates i/b. Cyril Amarchand Mangaldas For The Respondent : Mr. P.N. Modi, Senior Advocate with Mr. Nihar Mody, Mr. Ashish Prasad, Mr. Abhiraj Arora, Mr. Vivek Shah, Advocates i/b. ELP, Mr. Mustafa Doctor, Senior Advocate with Mr. Mihir Mody and Mr. Sushant Yadav, Advocate i/b. K. Ashar & Co, Mr. Shyam Mehta, Senior Advocate with Mr. Sachin Chandarana, Advocate with Mr. Rashid Boatwalla, Mr. Rahul Jain and Mr. Pruthvi, Advocates i/b. Manilal Kher Ambalal, Mr. Robin Shah, Advocate, Mr. Somasekhar Sundaresan, Advocate with Mr. Tomu Francis, Mr. Manish Chhangani and Mr. Arka Saha, Advocates i/b. Khaitan & Co., Mr. Kunal Katariya, Advocate with Mr. Kunal Kothary, Advocates i/b. Mr. Zerick Dastur, Advocates & Solicitors Mr. Pulkit Sukhramani and Ms. Stuti Shah, Advocates i/b. J. Sagar & Associates, Mr. Janak Dwarkadas, Senior Advocate with Ms. Anuja Bhansali, Advocate i/b. Raval Shah & Co. JUDGEMENT Per : Justice Tarun Agarwala 1. This group of appeals are connected with each other in one way or the other and revolves around an issue with regard to an annulment of a trade. Thus all these appeals are being decided together. 2. We have heard the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irecting ISSL to move an appropriate application under Clause 5 of Chapter VII of the Bye Laws of NCL for annulment of trades. This Tribunal directed that if such an application was filed, the Clearing Corporation would decide the matter at the earliest after hearing the parties. 8. The Clearing Corporation NCL by an order dated 24th June, 2019 rejected the application of ISSL for annulment of trade on the ground that appropriate orders can only be passed after investigation on all allegations of fraud is completed by SEBI and Economic Offence Wing (hereinafter referred to as 'EOW'). The Clearing Corporation was of the view that it is not an appropriate case where NCL should start a parallel investigation and exercise its powers under Clause 5 of Chapter VII of the Bye Laws of NCL or pass any interim order. 9. Against the order of the Tribunal dated 15th May, 2019, ISSL filed a Special Leave Petition before the Supreme Court of India which was disposed of by an order dated 26th June, 2019 directing ISSL to file an appropriate appeal/petition before the appropriate forum questioning the veracity and legality of the order dated 24th June, 2019 passed by the Clearing Corporation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted. Emails dated 30th January, 2019 and 4th February, 2019 was sent seeking return of their securities. Since no action was taken nor any opportunity of hearing was given at the time of passing the exparte interim order by SEBI on 27th February, 2019 nor any opportunity was given to them by SEBI when the exparte interim order was confirmed on 17th May, 2019 nor any opportunity was given to the appellant when SEBI passed an order dated 20th June, 2019 modifying its earlier orders, the appellant has approached this Tribunal praying that they are vitally affected by the order dated 20th June, 2019 and, therefore, the said order should be set aside. 10. Dalmia Cement (Bharat) Limited has filed Appeal Lodging No.358 of 2019. Dalmia cement also alleged that certain shares and units kept in their demat account was illegally transferred by Allied to ISSL. Complaints were made to SEBI as well as to EOW. SEBI did not act on their complaint. On the other hand EOW passed an order directing ISSL not to deal with the securities till further orders. 12. This appellant (Dalmia) contends that SEBI should have protected their interest while passing the exparte order and confirmatory order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d against. (4) The Securities Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned adjudicating officer. (5) The appeal filed before the Securities Appellate Tribunal under sub-section (1) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within six months from the date of receipt of the appeal." From a perusal of the aforesaid it is clear that, an appeal can be filed against an order or decision of a recognized stock exchange or the Adjudicating Officer or any order made by SEBI. 17. Section 2(J) defines stock exchange as under:- "(j) "stock exchange" means- (a) any body of individuals, whether incorporated or not, constituted before corporatisation and demutualisation under sections 4-A and 4-B, or (b) a body corporate incorporated under the Companies Act, 1956 (1 of 1956), whether under a scheme of corporatisation and demutualisation or otherwise, for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities." The purpose of a stock exchange is to assist, regulate or control ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of contracts and differences thereunder, delivery of, and payment for, securities, and any other matter incidental to, or connected with was transferred to a clearing corporation. Sub-Section (4) of Section 8-A provides that the provisions of Sections 4, 5, 6, 7, 8, 9, 10, 11 and 12 of the Act will apply to a clearing corporation as it applies to a recognized stock exchange. 22. Pursuant thereto, the NSE Clearing Limited (NCL) came into existence as a clearing corporation under Section 8-A of the SCRA Act by a notification dated 26th September, 2017. The SEBI renewed the recognition for a period of three years under Section 4 read with Section 8-A of the SCRA Act. As a result of this notification, NCL is a recognized clearing corporation under the SCRA Act. 23. The limited question is, whether the respondent-NSE Clearing Ltd. being a recognized clearing corporation is akin to a recognized stock exchange or not? We find that an order of the recognized stock exchange is appealable under Section 23L of the Act. Some of the duties and functions of a recognized stock exchange has been transferred to a clearing corporation namely, NSE Clearing Ltd. This clearing corporation has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laws of the clearing corporation. 29. We find that Section 11 and 11B of the SEBI Act gives wide powers to the SEBI (Board) to protect the interest of investors in securities and to promote the development and regulate the securities market. Under Section 12A of the SCRA Act, SEBI (Board) has power to issue directions to any stock exchange, clearing corporation or an agency associated with the securities market. By our earlier Order dated 15/5/2019 in Appeal No.138 of 2019, IL&FS Securities Services Ltd. vs. SEBI and others, we held that SEBI has wide powers to consider the complaint with regard to an annulment of a trade. 30. We had also held in the said order held that even where a person is affected either directly or indirectly, the said person would have a right to apply for modification of the order and if such a person applies for being heard for protection of its interest, SEBI could not deny the opportunity of being heard. In the light of the aforesaid, we find that Novjoy and Dalmia made a specific request to SEBI for being heard because of which they were kept outside the hearing room and were not heard leading to an order being passed by SEBI dated 20.6.2019 modif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal to go into the question at this stage. We are of the opinion that such matter is required to be decided by an authority. Since NCL has refused to decide the application for annulment of trade on the ground that parallel investigation is being conducted by SEBI, we dispose of all the aforesaid appeals with the following directions:- (i) All the appellants will file an appropriate application for redressal of their grievances before SEBI by 8th July, 2019 annexing their earlier applications / complaints / emails and praying for specific relief / reliefs. (ii) Counter-parties like Citi Bank and similarly connected entities may appear before SEBI and place their objections, if they so desire. (iii) SEBI will consider all the complaints and applications and provide an opportunity of hearing to the appellants, to all interested parties and take a conscious decision by reasoned and speaking order; (iv) All the parties will appear before SEBI on 10th July, 2019 at 3 p.m. on which date SEBI will hear and decide the matter, and if for some reason, the hearing is not concluded on that day, SEBI will hear the same on a day to day basis till it is concluded. SEBI would thereafte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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