BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI Date of Decision : 18.10.2019 Appeal No. 432 of 2019 KSBL Securities Ltd. G-55, Third Floor, Royal Palace, Vikas Marg, Delhi110 092 …Appellant Versus National Stock Exchange of India Limited Exchange Plaza, Bandra-Kurla Complex, Bandra East Mumbai – 400 051 …Respondent Ms. Rinku Valanju, Advocate with Mr. Akshit Jain, Advocate i/b Mr. Amit Gupta, Advocate for the Appellant. Mr. Rashid Boatwalla, Advocate with Ms. Shreya Anuwal, Advocate i/b Manilal Kher Ambalal & Co. for the Respondent. CORAM: Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member Justice M. T. Joshi, Judicial Member Per: Justice Tarun Agarwala (Oral)

1. The appellant is a registered Portfolio Manager registered

with Securities and Exchange Board of India (Portfolio Managers) Regulations, 1993. The appellant is also a broker. The appellant entered into a Portfolio Managing Service Agreement with Sunil Gupta. It transpires that Sunil Gupta sent an Email dated March 11, 2019 to the appellant indicating the appellant that he would stop trading with the appellant from June 30, 2019 onwards. This Email was duly acknowledged by the appellant. On June 28 2019, Sunil Gupta intimated the appellant to stop all the trading activities and transfer the balance amount of ` 1,00,00,706.29/- from the ledger account to his bank account by June 30, 2019. Pursuant to the said Email, the appellant accordingly cleared his liability and issued a cheque amounting to ` 1,00,00,706.29/- on June 30, 2019 in favour of Sunil Gupta. The record suggest that the appellant made a request to Sunil Gupta praying that he should not encash the cheque as the appellant was short of funds. It transpires that the Sunil Gupta did not encash the cheque on the request of the appellant and ultimately presented the cheque for encashment on August 07, 2019 which bounced on August 08, 2019. Sunil Gupta accordingly made a complaint before the Investor Services Cell of the National Stock Exchange of India Limited (“NSE” for convenience) on August 26, 2019 where the appellant admittedly was a trading member.

2. The record also indicates that objections were raised by

the appellant to the extent that the appellant have raised a dispute before the Arbitrator and that the transactions in question was in the nature of loan financing which is out of the framework of the Exchange and, therefore, the complaint cannot be considered by the Investor Grievance Cell.

3. Investor Grievance Cell issued an order dated September

13, 2019 rejecting contention raised by the appellant and allowed the claim of Sunil Gupta directing the appellant to pay a sum of ` 1,00,00,706.29/- to Sunil Gupta. The Investor Grievance Cell held that the Memorandum of Understanding between the appellant and Sunil Gupta indicate that the appellant was conducting its trading operations and had issued a cheque towards its liability while closing the ledger account of Sunil Gupta.

4. By a communication dated October 01, 2019 NSE

informed the appellant that the appellant is required to deposit the amount admissible to the investor and, on account of insufficient funds in the appellants’ exchange due account, the payment cannot be made to the investor. The exchange accordingly directed the appellant to make the necessary funds available to the exchange dues account failing which they could withdraw the trading facilities of the appellant. The appellant being aggrieved by the order dated October 01, 2019 passed by the NSE has filed the present appeal.

5. The contention of the appellant is, that he is a registered

under SEBI (Portfolio Managers), Regulations, 1993 and there is a dispute with regard to payment to Portfolio Managing fee with his client Sunil Gupta for which a dispute has already been raised before the Arbitrator which is pending. It was thus contended that under the NSE guidelines complaints in respect of transactions which are already subject matter of Arbitration proceedings cannot be entertained by the Investor Services Cell of the Exchange.

6. Having heard the learned counsel for the appellant, we

find that no details have been provided as to what exactly is the dispute raised by the appellant which is alleged to be pending before the Arbitrator. From a reading of paragraph 5.3.6 of the Memorandum of Appeal, we find that the dispute between the appellant and Sunil Gupta relates to non-payment of Portfolio Management Services (PMS) fee by Sunil Gupta to appellant. The decision by the Investor Grievance Cell relating to refund ` 1,00,00,706.29/- is towards the bouncing of cheque which has nothing to do with the alleged dispute raised by the appellant with regard to the PMS fee. The contention raised that the Investor Grievance Cell of the Stock Exchange had no jurisdiction to decide the complaint of Sunil Gupta is misconceived. The contention that such dispute cannot be raised since the matter was already pending before the Arbitrator is also erroneous in as much as the dispute before the Arbitrator is not the same dispute. We are further of the opinion that the appellant is not entitled for any discretion any relief from this Tribunal. The bouncing of the cheque disentitles the appellant from claiming any relief. We are also of the opinion that Sunil Gupta was a necessary party and non-impleadment of a necessary party is fatal. In the light of the aforesaid, the appeal lacks merit and is dismissed summarily. Sd/- Justice Tarun Agarwala Presiding Officer Sd/- Dr. C.K.G. Nair Member Sd/- Justice M. T. Joshi Judicial Member 18.10.2019 Prepared & Compared By: PK