C.A. No.-002690-002690 / 2009. RUSODAY SECURITIES LTD. vs NATIONAL STOCK EXCHANGE OF INDIA LTD. Supreme Court, 20-11-2020

Court:Supreme Court (India)
Judge:HON'BLE MR. JUSTICE A.M. KHANWILKAR, HON'BLE MR. JUSTICE B.R. GAVAI
Writing for the Court:HON'BLE MR. JUSTICE A.M. KHANWILKAR
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2690 OF 2009
RUSODAY SECURITIES LTD. ...APPELLANT
Versus
NATIONAL STOCK EXCHANGE
OF INDIA LTD. & ORS. ...RESPONDENT(S)
WITH
CIVIL APPEAL NO. 9571 OF 2019
J U D G M E N T
A.M. Khanwilkar, J.
1. These appeals under Section 22F of the Securities Contracts
(Regulation) Act, 19561 take exception to the judgment and order
passed by the Securities Appellate Tribunal at Mumbai2 in Appeal
No. 84 of 2009 dated 13.01.2009 and in Appeal No. 118 of 2015
dated 04.06.2019.
1 for short, “the 1956 Act”
2 for short, “the Tribunal”
1
Digitally signed by
NEETU KHAJURIA
Date: 2020.11.20
13:41:55 IST
Reason:
Signature Not Verified
CIVIL APPEAL NO. 2690 OF 2009
2. In this appeal, the appellant challenges the judgment/order
dated 13.01.2009 of the Tribunal wherein it had upheld the order
of expulsion against the appellant, from the membership of the
National Stock Exchange of India Limited3 - Respondent 1. The
said order was passed in the aftermath of the withdrawal of
trading facilities of the appellant on 13.10.1997 and consequent
closing out of all outstanding positions on 14.10.1997 by the
National Securities Clearing Corporation Limited4 - Respondent
2.
3. The appellant herein, desirous of functioning as a stock
broker in the stock market, registered itself as a Trading Member
with NSE/Exchange in November, 1994. As a pre-condition of
such registration, the appellant was obliged to and did submit an
undertaking in favour of the Exchange so as to strictly comply
with the practice and stipulations in the applicable Byelaws,
Rules, Regulations and other instructions of the Exchange issued
from time to time. The said undertaking was given by the
appellant on 19.06.1995.
3 for short, “NSE” or “the Exchange”, as the case may be.
4 for short, “NSCCL” or “Clearing Corporation”, as the case may be
2
4. As per the conditions prescribed in the Bye Laws,
Regulations and Rules of the Exchange, the appellant was obliged
to maintain a set of deposits with the Exchange, namely -
Interest Free Security Deposit (IFSD), security deposit (bank
guarantee), margin money in cash and margin money in the form
of bank guarantee. The sum total of these deposits of the
appellant, collectively termed as the Base Capital of the trading
member, amounted to Rs.1.29 crores.
5. In the year 1996, NSE transferred its clearing and
settlement functions to its wholly owned subsidiary company
NSCCL/Clearing Corporation. In furtherance of the original
undertaking given by the appellant in favour of the Exchange, the
Board of Directors of the appellant executed a subsequent
undertaking dated 19.03.1996 in favour of the Clearing
Corporation, whereby the appellant unconditionally resolved to
abide by all Rules, Regulations, circulars etc., of the Corporation.
Consequently, the appellant was admitted as a Clearing Member
of the Clearing Corporation.
6. On 19.05.1997, the Exchange adopted and circulated the
Circular No. NSCC/CM/C&S/030, originally issued by the
3

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