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TMI Blog2019 (9) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... ent No.3 has committed any error. It may be that the previous Circulars issued by the SEBI from time to time, do not specifcally include a clause that in case of transaction not executed through the platform of BSE, the claim would not be entertained by the Respondent No.3. Nevertheless, there is no instance cited before us by the petitioner that any such claim in the past was entertained and allowed. The case of the petitioner was considered and disposed of after the Circular dated 23rd February, 2017 was issued. The Circular was therefore, correctly applied. In any case, Clause (b) of paragraph 2 of the said Circular can be seen as clarifcatory in nature and explicitly declares the policy of the SEBI to entertain only those claims of inve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the Respondent No.4 Company on 26th September, 2015 and was assigned a Unique Client Code Number. The petitioner paid certain amounts to the Respondent No.4 for purchasing specified shares on her behalf. However, such shares were not delivered to the Petitioner by the broker. It appeaars that the Respondent No.4 Company had likewise defaulted in its commitments for purchase and delivery of the shares of several other clients, on account of which a public notice dated 31st December, 2015 came to be published by the SEBI in a local daily on 1st January, 2016, inviting claims against the Respondent No.4, as a member of BSF. The clients whose money was not returned would file references for arbitration. The notice also specified th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m was duly verifed by the arbitral tribunal and found to be genuine. Arbitration awards were passed. The Fund has been created by the SEBI to mitigate the hardship of small investors who are unable to recover the amounts from the defaulting brokers without protracted proceedings. Subject to the limit prescribed, the petitioner s claim should have been sanctioned by the Fund. She submitted that the circulars issued by the SEBI from time to time never provided that if the transaction is not made through the exchange, the compensation from the Fund would not be payable. This was included in the Circular dated 23rd February, 2017 for the first time. The case of the petitioner arose long before the said Circular was issued. This Circular cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose investments may be blocked on account of defaulting brokers and who would find it extremely difficult to recover even part of such investment after protracted litigation. We also notice that contribution to the fund is from various sources which trace their origin to public funds. As per the paragraph 5 of the comprehensive guidelines for Investors Protection Fund, the contribution to the Fund is made from the following sources : a. 1% of the listing fees received, on a quarterly basis. b. 100% of the interest earned on the 1% security deposit kept by the issuer companies at the time of the offering of securities for subscription to the public, immediately on refund of the deposit. c. The difference o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irculars in order to comprehensively review investors grievance redressal mechanism. This Circular lays down different guidelines for the purpose of examining the grievances of the investors. Paragraph 2 of the Circular pertains to Investors Protection Fund and other similar Funds and lays down guidelines for utilization of the Fund. Clause (b) of Paragraph 2 pertains to admissibility of claims for making payment out of the Fund and provides that in the event of default by the member, all transactions executed on exchange platform shall be liable for settlement from the Fund, subject to maximum limit and subject to the appropriate norms laid down by the defaulters committee. As per this paragraph, thus, payment out of the Fund, in case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r did not return. These shares have been transferred on 8th May, 2015, which was much prior to creation of UCC. The arbitrators have awarded the applicant on above claims of the applicant. However, it is observed that there is no trades executed on the Exchange. Since there is no transaction on the Exchange the transaction is construed as a loan transaction. Hence claim is not recommended for any payment from IPF. In view of the above the Committee decided that not to recommend to the trustees of IPF for compensating from BSE-IPF against your claim on the basis of above observations. In view of the aforesaid, we wish to inform you that the IPF Trustees has accepted the recommendations of the Defaulters Committee and accordingly y ..... X X X X Extracts X X X X X X X X Extracts X X X X
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