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TMI Blog2020 (2) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... s arising from such alleged fraud or similar major violations. This ex parte ad interim order was issued on [ 2019 (12) TMI 477 - SECURITIES APPELLATE TRIBUNAL, MUMBAI] . Even an oral mentioning was made by the Appellants before this Tribunal only on December 2, 2019 by which time a lot of water has flown under the bridge. Now it is on record before us that after a due diligence by NSE and NSDL securities have been transferred to the account of the clients. Therefore, further rights have been created/restored involving more than 80,000 investors. In this context, a prayer to recall the same or to retain the same as frozen accounts of those clients becomes untenable. As ordered in the matter of Bajaj Finance Ltd. [ 2019 (12) TMI 1271 - S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... securities. The issues covered in these appeals are the same as in the matter of Bajaj Finance Ltd v. SEBI, [Appeal (L) No. 585 of 2019 dated on December 3, 2019] by this Tribunal. Accordingly, we do not propose to deal with the details of the background as the same are covered in the said order. However, for convenience, we reproduce direction no. (iv) as contained in paragraph 21 of the impugned order as follows, since it is the basic issue of contention. (iv) The Depositories shall not allow transfer of securities from DP account no. 11458979, named KARVY STOCK BROKING LTD. (BSE) with immediate effect. The transfer of securities from DP account no. 11458979, named KARVY STOCK BROKING LTD. (BSE) shall be permitted only to the respecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel and Counsel appearing for the three Appellants as well as for the four Respondents. The learned senior counsel and counsel appearing for the Appellants emphasized Section 12 of the Depositories Act, 1996 which deals with pledge or hypothecation of securities held in a depository and the details relating to the same in the SEBI (Depositories and Participants) Regulations, 1996. They also explained how NSDL implements the above provisions in actual practice through certain provisions of their bylaws and business rules. It was also emphasized that various circulars relating to these provisions have been issued only to Stock Exchanges, Depositories and other related intermediaries regulated by SEBI and not to the Appellants and hence th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d these directions had to be implemented latest by August 31, 2019. Therefore, it was incumbent on the part of the Appellants/lenders to revisit their due diligence while continuing with or taking fresh pledges of securities and lending against them, particularly when the account in question was a non-house beneficiary account. It was also contended that in any case the rights of the pledgee is not above the rights of the pledger. Moreover, Respondent Karvy does not say anything relating to who owns those pledged securities. 6. Learned Senior Counsel and Counsel representing NSE and NSDL have submitted that whatever transfers have been done to the accounts of the actual shareholders has been done on the basis of thorough verification o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of water has flown under the bridge. Now it is on record before us that after a due diligence by NSE and NSDL securities have been transferred to the account of the clients. Therefore, further rights have been created/restored involving more than 80,000 investors. In this context, a prayer to recall the same or to retain the same as frozen accounts of those clients becomes untenable. As ordered in the matter of Bajaj Finance Ltd. (supra), Appellants are at liberty to approach SEBI. If any representations from the Appellants are pending or filed on or before December 6, 2019 before SEBI, the WTM of SEBI, after providing an opportunity of hearing to the Appellants, shall pass an order in accordance with law latest by December 12, 2019. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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