Alice Blue Finance Services Pvt. Ltd vs National Stock Exchange Of India Ltd

We have heard Mr. Prakash Shah, the learned counsel for the appellant and Mr. Vyankatesh Dhond, the learned senior counsel assisted by Mr.

Rashid Boatwalla, the learned counsel for National Stock Exchange of India Ltd. through video conference.

Against the order of Settlement Committee dated June 6, 2020 imposing a penalty of Rs. 4,35,02,000/- and suspension of trades for one day, the

present appeal has been filed. The learned counsel for the appellant contends that the penalty has been imposed on the basis of a circular dated

August 10, 2011 which has been rescinded by the Circular dated August 1, 2019. Further, by another circular dated December 16, 2019 a maximum

penalty of Rs. 15 lacs could be imposed for false reporting of margin collection from the client in the F&O segment. On the other hand, Shri Dhond,

the learned senior counsel vehemently disputes this proposition and contends that the circular dated August 1, 2019 and December 16, 2019 are not

applicable to the instant case.

Having heard the learned counsel for the parties, we find that a sum of Rs. 4.32 crores has been imposed for false reporting of margin collected

from the client in the F&O segment. According to the learned counsel for the appellant, 100% penalty has been imposed whereas a circular dated

August 10, 2011 indicates that a penalty upto 100% could be imposed considering the facts and circumstances of that particular case.

Considering the aforesaid, we find that the element of proportionality in the imposition of fine / penalty pursuant to the circular dated August 10,

2011 arises for consideration. Further, whether the circular of 2011 is applicable in the instant case is another point which has to be considered.

In the light of the aforesaid, we direct the respondent to file a reply within four weeks from today. Two weeks thereafter to the appellant to file

rejoinder. The matter would be taken up for admission and for final hearing on August 24, 2020. In the meanwhile, we direct that the impugned order

suspending the trading of the appellant for one day shall remain stayed during the pendency of the appeal provided the appellant deposits a sum of

Rs.Two crores before the respondent within four weeks from today. The penalty amount so deposited will be kept in an escrow account by the

respondent and would be subject to the result of the appeal. Urgency application No.156/2020 and Stay application No.157/2020 are accordingly

disposed of.

Parties are directed to take instructions from the Registrar 48 hrs. before the date fixed in order to find out as to whether the matter would be taken

up for hearing through video conference or through physical hearing.

The present matter was heard through video conference due to Covid-19 pandemic. At this stage, it is not possible to sign a copy of this order nor a

certified copy of this order could be issued by the Registry. In these circumstances, this order will be digitally signed by the Presiding Officer on behalf

of the bench and all concerned parties are directed to act on the digitally signed copy of this order. Parties will act on production of a digitally signed

copy sent by fax and/or email.