Chand igarh Adm i n istration

e-Stamp

INDIA NON JUDICIAL

lN-cH296554597642017

02-Aug-2O21 04:01 pM

chgurnghi

[MPACC (cv)/ chimpspoT/ E-sN4p tND AREA pHASE-1/ CH_CH

suBlN-CHCH VpSpo7591 63521 84.1 1 737

CHANDAN KAPOOR

Article 12 Award

Not Applicabte

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: JUSTICE VINEY I\,1ITTAL

: SUFINDER KUMAR AND SBICAP SECURITIES LTD

: JUSTICE VINEY IVITTAL. 100

(One Hundred only)

*.1-- . \rt(<{qq qqd

Certificate No.

Certificate lssued Date

Certificate lssued By

Account Reference

Unique Doc. Reference

Purchased by

Description ol Document

Property Descriptjon

Consideration Price (Rs.)

First Party

Second Party

Stamp Duty Paid By

Stamp Duty Amount(Rs.)

,lt'r..I\,

\"/.,1

. - - - -.please write or type below this line

IN THE ARBITRATION MATTER UNDER BYE LAWS, RULES AND REGULATIONSOF NATIONAL STOCK EXCHANGE OF INDIA LTMITED

Before paner of Arbitrators comprising Justice (Retd.) Viney Mittar,Presiding Arbitrator, Shri B.R. Bansai and Mrs. Madhu ,. Singn,Arbitrators.

7 760

1.

2.

BETWEEN

MT. SURINDER KUMAR ...Applica nt/Cla imant

80, Sector L2 A, Panchkula, panchkula, Ambala. HARYANA _ I34tt2

PAN- ALIPK6682P

AND

M/s. SBICAP SECURTTTES LtMtTED ... Respondent

VIDYANAGARI PO, MARATHON FUTUREX 12TH FLOOR N.M. JOSHI MARG

LOWER PAREL, , MUMBAI , MAHARASHTRA - 4OOO13

Appearances:

Applicant/claimant: sh. Vivek sethi Advocate with Applicant surinder Kumar

Respondent: Sh. Deepak Dhane Advocate and Ms. Monica Choghale

AWARD

BRIEF FACTS OF THE CASE:

This is an application against the Order of GRC dated 06.10.2020

declining the claim of the claimant to the extent of Rs. 10,89,000/-.

The claimant had filed the complaint before GRC that the Respondent

had squared off his position of 1,.76 lakh shares of yes Bank on

06.03.2020 without his consent and had caused him a loss of Rs.

10,89,000/-. As per claimant he had cut position of 10,000 Shares of pNB

and one lot offuture on 06.03.2020 in his trading account. Even after cut

position the balance in his account was Rs. 1g,gO,O0O/-. Besides he

deposited Rs.6,00,000/- and he bought 1.,7S,OOO yes Bank Cash Shares.

So, there is no explanation for squaring off his position.

In the present claim petition, besides above allegations, the claimant has

alleged criminal breach of trust and fraud and increased his claim to Rs.

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4.

53,96,600/-, for 1,76,000 quantity of shares, purchased @ Rs. 36.85 per

share, which were sold off @ Rs.6.1875 per share causing loss of Rs.

53,96,600/-, as explained in para 16 of the claim petition. The claimant

also stated that he has not been provided a copy of KyC by the

Respondent and this amounts to fraud and unfair trade practice on his

part. The complainant had signed the KYC on i.6.06.2014 and since then

he has been trading through the respondent.

It is alleged that after repeated reminders through e-mails and SMSs the

Respondent has finally provided a copy of KYC through e-mail on

02.03.2021as mentioned in para 9 of the claim petition. lt is maintained

by the Applicant that the act of the Respondent is in violation of Clause

15 of SEBI Circular No. MTRSD/SE/Cir-I9/2009 dated 03.1.2.2009, as

mentioned in para 8 of the claim petition. lt is thus, alleged that the

respondent has fraudulently sold off his stocks on 06.03.2020 without his

consent and knowledge and has committed fraud upon him as mentioned

in para 22 of the claim petition.

On the other hand, in the proceedings before GRC, as before this Tribunal

also, representative of the TM denied all the allegations stated by the

complainant. As per TM with regard to the transaction in dispute, i.e.,

squaring off transaction of FUTSTK YESBANK 26MAR20 on 06.03.2020, a

quantity of 1.,76,000 shares was squared off, as M2M loss exceeded 70%

of total available margin, as on 06.03.2020. YESBANK future rate dropped

down to approximately 85%. The said act of squaring off on his part was

as per terms and conditions of KYC and was very much in the knowledge

of the claimant. The TM reiterated that mark to market loss was 76.13%

of the available margin, hence as per terms and conditions of KYC, the

position of FUTSTK YESBANK 26MAR20 176000 quantity was squared off.

The TM clarified that at 9:57 AM on 06.03.20 thev sent an e-mail to the

complainant that shortfall observed in derivatives segment in his trading

account was Rs. 351546.76/- and requested to transfer funds to cover the

total shortfall by 11 AM on 06.03.2020. The TM further stated that the

client was cautioned vide the said e-mail that the positions may be

squared off earlier, in case of MTM losses reachin g 7O%o ol margin

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available before the stipulated time, without any notice on realtime basis.The mail was delivered to the client as per mail logs.

On the basis of the Contract note of trade date 06.03.2020, the TMexplained that additionar margin of Rs. 14,40,000/- was avairabre aftertaking into account the amount of Rs. 10,g9,000.00/_ realised aftersquaring off FUTSTK YESBANK 26 MAR20 176000 quantity at 1L:36:13 to11:38:38 and Rs. 3,52,335.500/- on sale of FUTSTK pNB by the client at09:L8:47. Further the crient sord i.0,000 shares of pNB between 09:i.9:37to 09:20:51 for Rs. 4,25,00O/-. The client had also transferred Rs.

6,00,000/- in his account on 06.03.2020. Thus, the client after thesquaring off the position by the TM had about Rs. 24.65 rakh out of whichbought YES BANK LTD 1,75,000 shares for Rs. 24,28,100.00/_ at 11.:51,:07

to 11:52:53 and also atI4:42:I3.

According to the TM, on 06.03.2020, due to market volatility, there washuge fluctuation in the yEsBANK share rates ranging from the Rs. 33.20 toRs.5.55 per share, and at the crose the price was Rs. r.6.20. The crient,sopen position of FUTSTK YESBANK 26MAR2O 1,,76,000 quantity wassquared off as M2M ross exceeded 7o% of the totar avairabre margin. on06.03.2020 Yes Bank future rate dropped down to approximately g5%.

The complainant had bought the shares after the TM had squared off theposition.

8. The GRC held that the TM acted in a bonafide manner as per terms of KyC

and declined relief to the complainant.

9. lt is in these circumstances that the comprainant has chosen to file thepresent application/reference raising a dispute against the said orderdated 06.10.2020 of tGRp.

10. Accordingly, the present arbitral tribunal is constituted.

Ll.Keeping into consideration the present pandemic situation, and with theconsent of all concerned, the matter was decided to be taken up by wayof video-conferencing, facilitated by NSE. Accordingly, a notice was sent

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1,2.

15.

1,4.

to parties intimating that the proceedings were to be held on 0g.07.202rat 4 PM. The parties were informed to submit their rerevant

claim/defence papers beforehand.

The aforesaid fixed time and date, the matter was taken up by way ofvideo-conferencing through the link provided by NSE. Besides allthe threeArbitrators, the Parties through their authorized representatives, as

noted above in the column of appearances, were present.

Both the parties were heard in detail. During the course of arguments also

the parties merely reiterated the stand taken by them, respectively intheir statement of claim/reply.

Primarily, it was maintained by the claimant that GRC has ignored the fact

that even if the value of his shares is taken to be nil, still the opening

ba la nce of the cla ima nt's trad ing accou nt was more tha n Rs.g,25,709.49/_

Hence, his account could not be squared off, and that too without his

consent.

As per the contention of the Applicant, GRC has also ignored the fact thatthe Respondent used to give margin call or send an e-mail in case of the

margin short falls of the trading account, and for those specific charges

are also deducted from the trading account of the claimant, as is evident

from the statement dated 05.03.2020, where an amount ofRs.1,8,973.87/- has been charged by the Respondent.

rt.

ro. It is further contended that,

06.03.2020 at 11:30 AM, when

balance of Rs. 19,26,709.49/-

bought 3,1.1.,387 shares @ Rs.

squared off.

GRC has overlooked the fact that on

his shares were squared off, still he had a

in his account and the TM could have

5.L875/share on which his shares were

L7. Lastly, it is contended that the GRC has also ignored his past good conduct

and ill effects on his health suffered due to the acts of omission ano

commission of the Respondent. Further, besides, challenging the Order of

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the GRC, the claimant has also alleged non-supply of KyC documents and

criminal breach of trust and fraud by the Respondent.

18. All the aforesaid contentions have been vehemently contested and

denied by the Respondent-TM.

19. At the outset, the Respondent raised the objection that the allegations ofcheating, fraud and criminal breach of trust levelled by the claimant are

non- arbitrable, and, therefore, the present Arbitration claim is not

maintainable. In support of this contention, strong reliance has been

placed upon the judgement of Hon'ble Supreme Court in the matter of

Ayydsqmy vs. A. Paromasivam and Ors.2016 SCC Online SC 1110.

wherein it is held that "cases where there are serious allegations of fraud,

they are to be treated as non-arbitrable and it is onlv the civil court which

should decide such matters." Accordingly, it is stressed that on this

ground itself the present Arbitration reference deserves to be dismissed.

20. The Respondent confirmed that the claimant got himself registered as an

online client on 16.06.2014 and a copy of the KyC documents was duly

delivered to him on 21,,06.201.4, vide, DTDC Courier pOD M09116400.

Thereafter the claimant has been trading regularly since June 25,201,4 on

NSE F&O segment and he is well versed with the security market. Thus, it

is maintained that there is no violation of clause 15 of KyC committed bv

him.

The Respondent has further stressed as follows:

a. The Claim made by the Applicant is vague, unclear and without any

oa rticu la rs.

b. The Applicant firstly without any particulars made a vague claim

for Rs.10,89,000/- before the GRC of NSE. Thereafter vide the

present SOC, Applicant has made a claim for Rs. 53,96,000/- again

without any basis and particulars.

c. The Applicant has not provided any materialto show on what basis

he has arrived at a purchase price of Rs. 36.85 and there is no

material in support of the said price.

21.

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d. The Applicant while providing vague calculations at para nos. 6, LG

and 33 of his SOC has completely lost sight of the fact that theYESBANK F&O position 176000 was not purchased bv theApplicant on one particular day at a particular price. The said F&Oposition was purchased/accumulated by the Applicant in a span ofaround 4 months i.e., from December 27,2079 till March 2,2020and therefore the price of Rs. 36.g5 taken by the Applicant isincorrect and is without any justification and/or evidence insupport of the same. On this ground also the present Arbitrationclaim deserves to be dismissed.

e' Further, the Respondent is entitred under the Kyc (Ex-A attachedwith the Respondent,s statement of defence) and its MTM policyto square off the F&o positions on March 6,2020, the disputeddate of trades.

t. As per KYC clause no. LL, as agreed between the Applicant andRespondent, the Applicant is under an obligation toimmediately/forthwith pay all margins, as considered necessary bythe Exchange and by the Respondent/Stock Broker. Further, theRespondent is permitted in its sole discretion to collect additionalmargins (even though not required by Exchange) and the Applicantis obliged to pay such margins within stipulated time.

C. Further as per clause 19 of KyC, the Respondent is also entitled toexercise its right to riquidate/close out ail or any of the Appricantspositions for non-payment of margins or other amountsoutstanding debts etc., and it is agreed that ail rosses and chargeson account of riquidation/crose out shail be charged to and sharl

be borne by the Applicant.

h. Applicant and Respondent had also specifically agreed vide, clause

6 of KYC, i.e., "Liquidation policy,,, wherein it is agreed that theproduct features/guiderines of riquidation poricy are crarified onRespondent's website. The said policy, inter alia, also authorizesthe Respondent to square off/close out positions on days of high

market volatility or reasons beyond control.i. Applicant has also agreed and undertaken to immediatery deposit

with the Respondent all margins as per clause no. 11 of KyC.

I Further it is clear from the MTM Loss policy available on the

Respondents website, that the Respondent is entitled to square offpositions in case MTM Loss reaches 70o/o of margin available before

the stipulated time on real time basis without any further

intimation to the Applicant. lt is relevant to note that not only that

the said policy is available on the Respondents website, but same

was also informed and brought to the notice of the Applicant vide

an email dated March 6,2020 at 9.57AM (Ex-E of SOD).

The respondent has drawn our attention to the details relating to

computation of Margin and MTM in order to analyze the said 70%

threshold, and the said computation is reproduced hereunder:

Particulars Values

Unrealized MTM: 2437600.OO

Realized MTM : 2315645.OO

G ross collateral: 40910.o0

Brokerage: 2336.L4

Cash margin: 6r.9s582.88

MTM Loss (in %\: (2437600.00 + 2316645.00) /6195582.88 - 2336.14) * 100 =

76.73%

l. Besides demonstrating the above details, even otherwise

Respondent was entitled to square off the F&O positions on

account of shortfall in margin.

m. The Applicant was provided margin statement at the end of day on

March 5, 2020 and was called upon to cover the shortfall.

n. The Applicant was specifically called upon vide an email at 9:57 am

on March 6,2020 to cover the shortfall by 11 AM. However, the

Applicant chose to ignore the aforesaid requests/demands made

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22.

by the Respondent. Therefore, the Respondent was entitred tosquare off the Applicants positions on account of non_payment ofma rgins.

o. Appricant during his terephonic conversations had acknowredgedshortfall of funds in his account and was wefl aware about thetosses which he is rikery to incur on the yESBANK F&o positions. rn

fact, the voice recordings clearly establish that the Applicant,sallegation of fraud, cheating, unauthorised trading are false and isan attempt to misread this Hon'bre Tribunar. The Respondentsubmitted that the ailegations made by the Appricant are baseress

and without any merit and the order of the GRC is reasoned,

without any illegarity and infirmity and has prayed for the dismissalof the present claim petition.

The arguments, through vid eo-co nfe rence, in th is case were heard on July08,2021, and the Award was reserved. The parties were also required tosubmit written submissions in the matter, which they have durysubmitted.

We have duly considered the entire matter, amongst ourselves also, andhave also gone through the Statement of Claim filed by the Applicant_

Claimant and the Reply filed by the Respondent-TM.

In our opinion there is no merit in the present Application/Reference filedby the Applicant-claimant and therefore, the same needs to be reiected.

25. The first question arises as to whether the allegations of criminal breacn

of trust, cheating and fraud in the claim petition are non_arbitral?

26. The claimant has alleged criminal breach of trust, cheating and fraud bythe Respondent on grounds of unauthorized squaring off his positions

without his knowledge and consent on 0G.03.2020 and thereby causing

him financial loss of Rs.53,96,600/-.

27. The Respondent raised the objection, that the allegations of cheating,

the claimant, are non-

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arbitrable and, therefore, the present Arbitration claim is not

maintainable. In support of this contention, he has relied upon thejudgement of Hon'ble Supreme Court in the matter of A. Ayyasamy vs. A.

Paramasivam and Ors.,Supro, wherein it is held that ,,coses where there

ore serious ollegotions of froud, they ore to be treoted os non-arbitroble

dnd it is only the civil court which should decide such motters.,, lt is thus

argued that on this ground itself the present Arbitration reference

deserves to be d ismissed.

In the written submissions, on this issue, however, the claimant has relied

upon the Judgement of the Hon'ble Supreme Court titled as Avitel post

Studioz Limited & Ors. Vs. HSBC Pl Holdings (Mauritius) Limited 2920(9)

SCALE 733;2020(3) Law Herald (SC) 2183 whereby it has been held that

" Mere foct thot criminol proceedings can or hove been instituted in

respect of allegotion of froud would not lead to conclusion thot the

dispute which is otherwise arbitrol, ceoses to be so."

After giving our deep and thoughtful consideration to this issue on the

basis of pleas of both the parties, we find that as of date no criminal

action has been initiated by the Claimant Therefore, we restrain

ourselves from going into the veracity or otherwise, of the said

allegation, levelled by the claimant.

The issue of arbitrability of allegations of fraud appears to has been

settled by the Supreme Court in A. Ayyasamy vs. A. Paramasivam and

Ors. (supra), wherein it was laid down that the allegations of fraud

simplicitor may not be a ground to nullify the effect of arbitration

agreement between the parties. lt may be done where there are serious

allegations of fraud which make a virtual case of criminal offence, or

where allegations of fraud are so complicated that it becomes absolutely

essential that such complex issues can be decided only by a civil court,

on the appreciation of the voluminous evidence that needs to be

produced. 0N

,..2-./-.,..

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31. In the case of A. Ayyasamy vs. A. paramasivam and ors., 20r.6 scc onlineSC 1110, the Hon'ble Supreme Court has held as follows:

"ln the instant case, there is no dispute about the arbitration

agreement in as much as there is a specific arbitration clause in thepartnership deed. However, the question is as to whether the

dispute raised by the Respondent in the suit is capable ofsettlement through arbitration. As pointed out above, the Act does

not make any provision excluding any category of disputes treating

them as non-arbitrable. Notwithstanding the above, the courts

have held that certain kinds of disputes may not be capable of

adjudication through the means of arbitration. The courts have helo

that certain disputes like criminal offences of public nature,

disputes arising out of illegal agreements and disputes relating to

status, such as divorce, cannot be referred to arbitration. Following

categories of disputes are treated as non-arbitral:

i) Patent, trademarks and copy right;

ii) Anti-trust/com petition loss;

iii) Insolvency/windingup;

iv) Bribery/corruption;

v) Fraud;

vi) Criminal matters.

Fraud is one such category spelled out by the decisions of this Court where

disputes would be considered as non-arbitrable.

'Fraud' is a knowing m isrepresentation of the truth or concealment of a

material fact to induce another to act to his detriment. Fraud can be of

different forms and hues. lts ingredients are an intention to deceive, use

of unfair means, deliberate concealment of material facts or abuse of

position of confidence. The Black's Law Dictionary defines'Fraud'as a

concealment or false representation through a statement or conduct that

injures another who relies on it. However, the moot question here which

has to be addressed would be as to mere allegation of fraud by one party

against the other would be sufficient to exclude the subiect matter of

Confldential

11.

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dispute from arbitrations and decision thereof necessary by the civilcourt."

The Supreme court further observed that:".'.The allegations of fraud shourd be such that not only these allegationsare serious that in the normal course these may even constitute criminaloffence, they are also complex in nature and the decision on these issuesdemand extensive evidence for which civir court shourd appear to bemore appropriate forum than the arbitral tribunal....,,

still further, in the case of Ameet Larchand shah Vs Rishabh Enterprises,(2018) 15 SCC,678, the Apex Court once again reiterated the principleslaid down in Ayyasamy (Supra), and made the following observations:

"under the Act, an arbitration agreement means an agreement which is

enforceable in law and the jurisdiction of the arbitrator is on the basis ofan arbitration clause contained in the arbitration agreement. However, ina case where the parties alleged that the arbitration agreement is vitiatedon account of fraud, the Court may refuse to refer the parties toarbitration. In Ayyasamy case, this court held that mere allegation offraud is not a ground to nullify the effect of arbitration agreementbetween the parties and arbitration clause need not be avoided and theparties can be relegated to arbitration where merely simple allegation offraud touched upon internal affairs of parties is levelled. Justice A.K. sikriobserved that it is only in those cases where the court finds that there are

serious allegations of fraud which make a virtual case of criminal offence

and where there are complicated allegations of fraud then it becomes

necessary that such complex issues can be decided only by the civil courton the appreciation of the evidence that needs to be produced.......,,

In a recent Judgement of the supreme court of India titled as Avitel post

studioz Limited & ors. Vs. HSBc pl Holdings (Mauritius) Limited cited at2920(9) SCALE 733;2020(3)Law Heratd (SC)2183, it has been held that"Mere fact thot criminol proceedings con or hove been instituted inrespect of ollegation of fraud would not lead to conclusion thot the disoute

33.

which is otherwise orbitral, ceoses to be so.,'

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34. It is clear from the pleadings of both the parties that the claimant has

preferred to initiate legal proceedings only under the Arbitration Act, and

has reserved his right to initiate appropriate action under provisions ofIPC against the respondent. The allegations of fraud and misconduct and

breach of trust etc. levelled by the Applicant are, to our mind, simply

allegations, at this stage and cannot be treated serious enough to oust thejurisdiction of this Arbitralrribunalfrom proceeding with the adjudication

of the matter. Thus, it is clear that the law laid down by the Hon,ble

Supreme Court, as noticed above, squarely covers the facts of the present

case. Thus, we hold that the present application/claim petition filed by

the claimant/applicant before this Arbitral Tribunal is maintainable.

Whether the respondent had provided a copy of KyC or not?

With regard to non-supply of copy of KYC, it has been maintained by the

claimant that he has not been provided with a copy of duly executed KyC.

The allegation of the Claimant of non-furnishing of a copy of the duly

executed KYC is not established. We fully agree with the arguments of

the respondent that a copy of the KYC was delivered to the claimant on

21.06.2014, vide, DTDC Courier POD M09116400 dated 17.06.20'J,4, and

there is no rebuttal evidence on record by the claimant. We have no

reasons to disagree with the Respondent, who has discharged his

obligations as per clause L5 of KYC. So, the bald allegation of the Applicant

and his self-serving statement of non-supply of a copy of KYC, without any

supportive evidence is of no help to him. Further this allegation of non-

supply of a copy of KYC was not raised before the GRC. Nor any request

was made to the respondent by the claimant, at any stage. This plea of

the claimant is an afterthought, just to confuse the matter and provide an

illusory support to his claim. Undisputedly the claimant has been trading

through the respondent since June,20L4 and being an online investor had

access to all documents and details of the trades including the disputed

trades.

Whether the squaring off future shares

respondent were unauthorized or not?

35.

of Yes Bank on 06.03.2020 by

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36.

37.

with regard to this contentious issue, it has been maintained by theclaimant that there has been unauthorised squaring off positions on

06.03.2020, causing financial loss of Rs. 53,96,600 /_. The aforesaidcontentions have been specifically denied by the respondent.

At this stage, it would be relevant to notice the following observationsmade by GRC in the impugned Order:

"During the GRC proceedings, the complainant mentioned that on

05.03.2020 his position of FUTSTK yESBANK 2 MAR2O 176000quantity was squared off @ 0G.1g75 per share by the TM withouthis knowledge and consent although he was having sufficientmargin in his trading account. Complainant further stated that on

06.03.2020 he had sold his pNB shares and he had deposited

Rs.6,00,000/- in his account, therefore, balance in his account was

Rs.18,80,000. He further questioned that if there was shortage ofmargin in his account then how he was able to buy on cash 1,75,000

Yes bank shares of approximately of Rs.24,90,000/- on 06.03.20.

According to the complainant there is no valid explanation forsquaring off his position.

The TM reiterated that mark to market loss was 76.73% of theavailable margin, hence as per terms and conditions of KyC, the

position of FUTSTK YESBANK 26MAR2O 176000 quantity was

squared off. The TM clarified that at 9.57 AM on 06.03.20 they sent

an e-mail to the complainant that shortfall observed in derivatives

segment in his trading account was Rs. 3,5L546.76/_ and requested

to transfer funds to cover the total shortfall by 11 AM on

06.03.2020. The TM further stated that the client was cautioned

vide this e-mail that the positions may be squared off earlier, in case

of MTM losses reaching 70% of margin available before the

stipulated time without any notice on realtime basis. The mail Was

delivered to the client as per mail logs.

On the basis of the Contract note of trade date 06.03.2020, the TM

explained that additional margin of Rs. 4,40,000/- was available

after taking into account the amount of Rs. 10,g9,000.00/- realised

after squaring off FUTSTK YESBANK 26 MAR2O 1.76000 quantity at

1,4

11:36:L3 to L1:38:38 and Rs. 3,52,335.500/- on sale of FUTSTK pNB

by the client at 09:18:47. Further the client sold j.0,000 shares of

PNB between 09:L9:37 to 09:20:51 for Rs. 4,25,000/-. The client

had also transferred Rs. 6,00,000/- in his account on 06.03.2020.

Thus the client after the squaring off the position by the TM had

about Rs. 24.65 lakh out of which bought yES BANK LTD 1,75,000

shares for Rs.24,28,100.00/- at 11:51:07 to LL:52:53 and also at

1,4:42:13.

On 05.03.2020, due to market volatility, there was huge fluctuation

in the YESBANK share rates ranging from Rs. 33.20 to Rs. 5.55 per

share and at the close the price was Rs. 16.20. The client's open

position of FUTSTK YESBANK 26MAR20 t,76,000 quantity was

squared off as M2M loss exceeded 7Oo/o ol the total available

margin. On 05.03.2020 Yes Bank future rate dropped down to

approximately 85%. The complainant had bought the shares after

the TM had squared off the oosition".

38.No tenable explanation has been offered by the claimant before us to

justify as to differ from the said reasoning. Obviously, the entire burden

of proof to prove the unauthorized squaring off his positions on

06.03.2020 i.e., the above said disputed transactions, was upon the

claimant which has not been discharged at all. The mere allegations

without any supportive evidence cannot be relied upon.

39.On the other hand, the Respondent has produced a copy of the e-mail

(Exhibit E) dated 06.03.2020, 9:57 AM, showing intimation to the claimant

regarding shortfall of Rs. 3,51,546.76 in his trading account and also

intimated that the position may be squared off in case Mark to Mark

fosses (including full net option premium) reaching 7 0%o of margin

available before the stipulated time on realtime basis without any further

intimation. The Respondent has also explained the positions in a tabular

form of the details relating to computation of margin and MTM loss of

76.73% much above the 70% threshold. The Respondent has further

played the audio recording (Exhibit C) showing the confirmation of

squaring off the positions on account of failure to meet out the margin

short fall by the claimant on 05.03.2020. The claimant has, in n ncertain'n\\'-'..75

terms confirmed his voice and admitted the contents of the voicerecording, before this Tribunal. This clearly established that on 06.03.2020the squaring off the positions by sale of 1,76,000 vESBANK SHARES @ Rs.

6.L875 per share by the Respondent was in the knowredge of the craimantand well within the rights of the Respondent in accordance with theagreed terms of the Kyc and on account of losses exceeding 7o%io as per

MTM policy. The claimant very weil understood the reasons andcircumstances under which the F&o positions were squared off on rea

time basis. The conduct of the Appricant crearry shows that whenYESBANK FUTURE on 06.03.2020, after squaring of his position, furtherdropped down by approximately g5%, and the Claimant in order tomitigate his losses in yESBANK F&o positions, immediatery bought1,75,000 equity shares of yESBANK, as is evident from Exhibit_F, i.e., a

copy ofcontract notes forthe trades executed on 06.03.2020. There is no

rebuttal evidence by the claimant on record.

40.Thus, we are of the clear opinion that in this transaction time was theessence to meet the margin shortfall and despite the claimant having

been put to notice the claimant failed to act. Due to high volatility in the

market, when the M2M loss was 76.73% of the available margin, the

Respondent was left with no option but to square of the position. The

Respondent has acted bonafide and had given a prior intimation to the

claimant before squaring off his position as the claimant failed to meet

out the deficit margin. The squaring off by way of sale of shares ofclaimant by the Respondent are in consonance with the agreed terms and

conditions between the parties and the Rules and Regulations of SEBI.

41.In these circumstances, we entirely agree with the reasoning given by the

GRC as extracted above, and hold that TM has acted bonafide in order tomitigate the losses due to huge volatility in the stock market. He further

acted as per the agreed terms and conditions of KyC.

42.No other point arises for our consideration nor has

the parties.by any ofbeen argued

a

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43.Accordingly, for the above stated reasons, we find no merit in the present

Applicatioq/claim Petition fired by the craimant, and dismiss the sameand accordingly the order of the GRC is upheld.

Q'--Justice (Retd.) Viney Mittal

(Presiding Arbitrator)

Date: ts fog /Lo at

Place: Chandigarh

Mr. B.R.Jarfsal

(Arbitrator)

Mrs. lM{dhu P. Singh

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