Before the Sole Arbitrator, Mr. G.A.Nayak In the Matter of Arbitration under Bye-laws, Rules and Regulations of

National Stock Exchange of India Ltd. (NSE) Arbitration Matter No.CM/M-0055/2011

BETWEEN

Mr. Virendra Kumar Rawat ------ Applicant (Constituent) 1 Azad Nagar, Ujjain- 456 010 Madhya Pradesh. (PAN No: ABGPR8326P)

AND

Angel Broking Ltd., ------ Respondent No. 1 (Trading Member) G-1, Akruti Trade Centre, MIDC, Road No-7, Andheri (East), Mumbai – 400 093. Mr. Sharad Chandra Kataria, ---Respondent No. 2 (Sub-Broker) 68, Mussaddipura, Sati Marg, Ujjain – 456 006. Madhya Pradesh. Appearances :

Applicant : Mr. Kamal Agarwal, POA Holder.

Respondent No.1: 1. Mrs. Renuka Nair, Sr. Executive, Legal and Compl. Duly authorized

2. Ms. Aparna Pancholi, Asst. Manager, Legal & Compl. by the Respondent.

Respondent No. 2: Absent.

1. The Claim The Applicant, Mr. Virendra Kumar Rawat (a Constituent of the Respondent No.1) has lodged a claim with the NSE against the Respondent No. 1 (for short ‘Resp. No.1’), Angel Broking Limited (a Trading Member of the NSE) for a sum of Rs.2,93,955.21 (Rupees two lakh ninety three thousand nine hundred fifty five and paise twenty one only) towards losses incurred due to unauthorized trading in his NSE F&O segment account and consequent sale of his shares without the Applicant’s consent together with interest at 18% p.a. till payment.

2. Hearings • The Arbitration matter was initiated by issue of letter dated October 19, 2011, by the

Arbitration Dept. of the NSE upon receipt of Arbitration Application on October 07, 2011 from the Applicant.

• The initial hearing was scheduled for November 15, 2011 by issue of notices dated October 25, 2011 by the Arbitration Department of the NSE to both the parties.

• Subsequently, adjourned hearing to be held on December 28, 2011 was postponed and held on January 11, 2012. The final hearing was held on January 19, 2012

3. Statement of the case filed by the Applicant

The Applicant has filed the Arbitration Application in Form No. I along with the statement of case dated June 22, 2011 and its Annexures. The statement of case is, briefly, as follows:-

i. The Applicant has stated that he is an investor and had opened a client account and demat account with the Resp. No. 1 through the Respondent No.2 (for short ‘Resp. No.2’), a SEBI registered sub-broker of the Resp. No. 1. According to the Applicant, the Resp. No. 2 made a presentation about the broking services provided by the Resp. No.1 at Ujjain through the Resp. No. 2, as sub-broker. On the basis of this presentation given by the Resp. No.2, the Applicant had entered into Broker Client Agreement (BCA) and thereby established relationship as client, sub-broker and broker.

ii. The Applicant has submitted that in order to provide trading facilities in and around Ujjain area, the Resp. No.1 has installed online trading terminal in the office of the Resp. No. 2 and authorized the Resp. No.2 to accept the order instructions placed by the clients into the trading terminal installed in his office and confirm the transactions to the client including the Applicant after the online trading terminal confirms the trade.

iii. The Applicant has submitted that on 08/05/2007, the Applicant had issued one cheque No.296531 of Rs. 10,000/- to the Resp. No.1 and executed certain transactions in F&O segment during the period from 08/05/2007 to 15/05/2007 and the same have resulted into credit balance of Rs.2,800.05. The Applicant has further submitted that after

15/05/2007, the Applicant had not placed any order for any trade in F&O segment. The Applicant has enclosed the copies of the contract notes dated 09/05/2007 and 10/05/2007 for NSE F&O segment transaction and his ledger account statement in the books of the Resp. No.1 for the said period.

iv. The Applicant has submitted that, thereafter, during the period from 22/08/2007 till 14/10/2009, the Applicant executed 4 transactions for sale and purchase of shares in the NSE cash segment and the same have resulted into debit of Rs. 8,509.78. However, the Resp. No.1 had not transferred shares purchased by the Applicant in his demat account, as the practice followed by it. Thus, against the total debit of Rs. 5,709.73, the Resp. No.1 was having delivery of 375 shares of Ispat Ind. Ltd., in it’s demat account. A copy each of the contract notes dated 22/08/2007 and 23/01/2008 for cash segment trade and the Applicant’s ledger account in the books of the Resp. No.1 for cash segment transactions is enclosed with the statement of claim.

v. The Applicant has stated that during the first week of January 2010, the Applicant had planned to sale certain shares in future, so on 12/01/2010, he had transferred 3,115 shares of 5 companies (as per the details given in paragraph 7 of his statement of case) to the demat account of the Resp. No.1 so that his pay-in obligation against future sale can be completed smoothly. In this manner, according to the Applicant, the Applicant’s total 3,440 shares 6 companies were in the demat account of the Resp. No.1. The Applicant has submitted that he had not placed any other order either in F&O segment or under the NSE cash segment and therefore, there should not have been any change in his holding of shares in the demat account as well as his ledger account position with the Resp. No.1. Accordingly, the Applicant has a claim of 3,440 shares of 6 companies against the debit balance of Rs.5709.73.

vi. The Applicant has submitted that on or about 2nd week of January 2011, when the Applicant has requested the Resp. No. 2 to provide his demat holding details and ledger account, the Applicant was shocked after seeing in his ledger account, a series of unauthorized and illegal transactions in both NSE cash and F&O segments. However, as per the Applicant, based on the records shown to him by the Resp. No.2, the Applicant’s 3,440 shares of 6 companies were intact in the demat account of the Respondent No.1. When the Respondent No.2 was asked to explain about the debit entries in the Applicant’s account when he had not placed any order for transactions, the Resp. No.2 expressed his inability to explain the reasons, but confirmed that he had neither received any instructions from the Applicant nor entered any order instruction into online trading system installed by the Resp. No.1 in his office. The Applicant has, further submitted that the statement of the Resp. No.2 has shown and confirmed that it was the Resp. No.1 who was executing the unauthorized transactions in the Applicant’s account from some other terminal. Thus,

according to the Applicant, though there was debit balance due to Respondent’s unauthorized and illegal transactions in his name, his shareholding was intact.

vii. The Applicant has submitted that he has requested the Resp. No.2 for reversal of entries in the ledger accounts for NSE cash and F&O segments and he was assured by the Resp. No.2 that the Resp. No.2 would make inquiry with the Resp. No.1 and find out who had executed the transactions in the Applicant’s name and on what basis and would help the Applicant to remove the entries of the unauthorized transactions from the Applicant’s account. According to the Applicant, due to regular follow-up with the Respondents for reversal of the debit entries passed in the Applicant’s ledger account in respect of losses suffered while executing unauthorized transactions in his account and delayed payment charges, the Respondents admitted their fault and reversed the entries in respect of delayed payment charges levied in his ledger account on March 31, 2010. However, the Respondents failed to remove the debit entries in respect of unauthorized trades executed by them, despite repeated requests and reminders from the Applicant. According to the Applicant, he decided to take up the matter directly with the Resp. No.1 to protect his interest from such illegal activities and therefore, sent a letter to the Resp. No.1 mentioning therein full facts of the unauthorized transactions and requested for removal of the entries from his ledger account. The Applicant has stated that the Resp. No. 1 has failed to give any reply to the Applicant’s letter providing evidence for execution of unauthorized transactions in the name of the Applicant. The Applicant has submitted the copy of the Applicant’s said letter to the Resp. No.1 as Exhibit ‘F’.

viii. The Applicant has submitted that the Resp. No.1 has acted dishonestly and instead of removing the debit entries in respect of unauthorized and illegal transactions, arbitrarily taken a decision and sold 2,675 shares of 3 companies on 27/12 2010 for consideration of Rs.2,99,664.94. The Applicant has submitted that the shares were sold by the Resp. No.1 for the purpose of setting of alleged debit balance in the accounts of the Applicant arising from the unauthorized and illegal transactions in both the segments of NSE. As per the Applicant, after the aforesaid sale of shares, the remaining 765 shares of 3 companies (viz., 325 shares of Ispat Ind., 38 shares of Oil India and 402 shares of Pipavav Shipyard) were transferred by the Resp. No.1 to the Applicant’s demat account on 23/05/2011.

ix. The Applicant’s claim is based on the sale proceeds of the 2,675 shares in 3 companies (i.e., Rs. 2,99,664.94) after adjusting the debit balance of Rs.5,709.73, which works out to Rs. 2,93,955.21. The Applicant has also stated that he came to know about the unauthorized transactions on or about 2nd week of January 2010 (corrected as 2nd week of January 2011 in the Applicant’s rejoinder, later.) which were executed in cash and F&O segments of the NSE and the Resp. No.1 had sold the shares of the Applicant on Dec 27, 2010. According to the Applicant, after reckoning the Oct-Dec 2010 quarter end for the purpose of the limitation, the arbitration application filed by the Applicant on June 22, 2011 is within 6

months of the date of cause of action. The Applicant has also sought certain information like voice recording for order placement, terminal Id, location, name of the dealer, copies of contract notes, bills, POD, order and trade logs etc.

x. Accordingly, the Applicant has prayed for the Award in his favour and direction to the Resp.No.1 to pay a sum of Rs. 2,93,955.21 with interest at 18% p.a from the amount due till payment.

4. The Respondent No.1’s statement of reply The Resp.No.1 has filed its statement of reply dated 02/01/2012 on January 02, 2012 against the claim lodged by the Applicant. The Statement of defence is, briefly, as follows:-

a) The Resp. No.1 has stated that the Applicant got himself registered as its constituent through the sub-broker, Mr. Sharad Kataria, i.e., Resp. No.2 for opening the trading account with the Resp. No.1 and accordingly, executed KYC documents., namely, Client Registration Form, Member Client Agreement (MCA), Risk Disclosure Document (RDD) and Tripartite Agreement with Respondents and was allotted unique client code V9928 by the Resp. No.1 for the purpose of trading and maintaining statement of accounts and securities. On completing the said formalities, the Applicant started the trading through the Resp. No.1 on the NSE with effect from 08/05/2007 in F&O and 22/08/2007 in cash segment.

b) The Resp. No.1 has stated that the Applicant has not made any case in paragraph 4 of his statement of case that the Resp. No.1 has placed orders without receiving instructions from the Applicant. The Resp. No.1 has denied the contention of the Applicant with regard to placement of orders and violation of the regulation requirement, as false and malicious. The Resp. No.1 has denied that the Applicant has not carried out trades after 15/05/2007 in F&O segment of the NSE and after 14/10/2009 in NSE cash segment. According to the Resp. No.1, the Applicant has made payment of Rs. 10,000/- vide cheque No.296531 and the amount was duly credited to the Applicant’s account in F&O segment maintained with the Resp. No.1. After making payment to the Resp. No.1, the Applicant started carrying out his first trade in F&O segment on 08/05/2007 and continued till 29/04/2010. All the trades were carried out on the instructions of the Applicant and the Resp. No.1 issued contract notes and bills for each and every trades executed. The Applicant had no differences on the executed trades. The Resp. No.1 has annexed the copy of the ledger statement for NSE F&O segment of the Applicant since inception till date to the statement of reply (Exhibit ‘C’colly), apart from the ledger account statements for every calendar quarter sent by post under certificate of posting (UCP). A copy of proof of dispatch in respect of quarterly ledgers is attached to the statement of reply as Exhibit ‘D’. Thus, the Resp. No.1 has stated that transactions carried out in his account and their financial consequences were known to the Applicant from these quarterly ledgers also. The Resp. No.1 has submitted that the

Applicant made complaints about the trades for the first time vide his nil dated letter which was received by the Resp. No.1 sometime in February 2011 and to which the Resp. No.1 replied clearly denying allegations of the unauthorized trades vide its letter dated 01/03/2011, a copy of which together with courier receipt is attached by the Resp. No. 1 as Exhibit ‘E’. The Resp. No.1 has stated that the Applicant had lodged the said complaint of alleged unauthorized transactions after a lapse of nine months from the date of last trade of 29/04/2010 and the Applicant chose to raise the issue of the trades only after the Resp. No.1 sold his shares on 27/12/2010 for recovering the accumulated dues in his account. Thus, the Resp. No.1 has submitted that the Applicant’s claim of unauthorized trades in his account and unaware of the trades till January 2011 is not trustworthy and are liable to be dismissed. Further, according to the Resp. No.1, the Applicant has sought to rake up disputes about trades, carried out from the year 2007, in June 2011 by the instant arbitration reference and not paying the fee prescribed by the SEBI for filing the arbitration application after expiry of six months. The claim is, therefore, liable to be rejected because of non-compliance with SEBI guidelines.

c) The Resp. No.1 has submitted that the Applicant has transferred 3,115 shares on January 12, 2010 from the Applicant’s DP account with State Bank of Indore directly to the Resp. No.1’s demat account for margin purpose. As such, the Applicant’s story that he transferred the above mentioned shares for selling through the Resp. No.1 is not creditworthy, because after transferring these shares in January 2010, the Applicant never once sought to sell these shares. According to the Resp. No.1, this story was created by the Applicant only after finding that the shares were sold and proceeds were applied towards liquidation of his unpaid dues.

d) The Resp. No.1 has denied that the shares purchased by the Applicant were retained with the Resp. No.1 as a matter of practice. According to the Resp. No.1, the shares were retained because the Applicant consented to maintain a running account of funds and securities with the Resp. No.1 instead of keeping a settlement to settlement account. Thus, the Resp. No.1 has clarified that in all cases where shares are paid for and the clients want their shares transferred to their demat account; the Resp. No.1 always releases the shares.

e) The Resp. No. 1 has also stated that from the documents produced by it by way of contract notes, bills etc., from to time, it is evident that the claim of the Applicant about carrying out trades in F&O segment only till 15/05/2007 and in cash segment of NSE only till 14/09/2009 is false. Besides, the Applicant in his letter dated nil attached as Exhibit ‘F’ to his statement of case has denied having carried out any trade at all in F&O and cash segments of NSE, but has now in the statement of case admitted trades till the said dates in F&O segment and cash segments of NSE; thus, the Applicant has contradicted himself by raising inconsistent allegations.

f) The Resp. No.1 has denied the Applicant’s allegation that the Resp. No.2, the sub-broker, has shown him ledger statements and he found that the ledger in NSE cash and F&O segment showed a series of transactions which were illegal. The Applicant was provided with the contract notes and bills at relevant time apart from the quarterly statement of ledger and statement of securities supplied to him. The Applicant also had access to the back-office website of the Resp.No.1 where complete cash and transaction details were available. He was aware that it is the Resp. No.1 and not the sub-broker viz., the Resp. No.2, who is responsible for maintaining his account statements and had been receiving these documents from the Resp. No.1. Besides, the Resp. No.1 has stated that it is not the Applicant’s case that he approached the Resp. No.1 for these documents and the Resp. No.1 refused or failed to provide them and therefore, he approached the sub-broker for these documents. Further, he had in fact these documents in his custody having received from the Resp. No.1. Hence, the allegation that the Applicant came to know of trades on NSE cash and F&O segments only when he was allegedly shown the ledger statements by the Resp. No.2 is false.

g) The Resp.No.1 has submitted that as on 26/12/2010, the Applicant’s account had a debit balance of Rs. 2,56,147.68 in NSE cash segment and an outstanding dues of Rs. 1,83,837.13 in NSE F&O segment as on 03/01/2011. The Resp. No.1 has further submitted that it sold 3,175 shares (including 2,675 shares out of 3115 shares transferred on 12/01/2010) of the Applicant for recovering unpaid dues on 27/12/2010. The sale proceeds of Rs. 4,42,232.94 was credited to the Applicant’s cash segment account and accordingly, after this entry, there was a credit balance of Rs. 1,86,085.26 as on 27/12/2010 in cash segment account. Subsequently, the credit balance in cash segment account stood at Rs. 1,90,769.26 as on 13/01/2011 after crediting dividend of Rs. 4,684/- which was utilized for the adjustment of debit balance in F&O segment account. The balance shares were released to the demat account of the Applicant on his request.

h) The allegations of the Applicant in his statement of case that, in 2nd week of January 2011, the Applicant’s shareholding was intact are absolutely false and without any basis, when these shares were sold on 27/12/2010, as per the Resp. No.1. The Resp.No.1 has stated that the Applicant has also stated in paragraph 14 of the statement of case that he came to know of the sale of shares by the Resp. No.1, but not revealed how and the source from where he came to know of the sale. Thus, the Applicant has contradicted himself by raising inconsistent allegations. The Resp. No.1 has stated that the Applicant has not produced the statement allegedly shown by the Resp. No.2, wherein the shares sold in Dec 2010 were allegedly shown as lying to the Applicant’s credit.

i) The Resp. No.1 has denied the allegations and contentions taken by the Applicant in paragraphs 11 to 13 (of the statement of the Applicant’s statement of case) as false, figment of imagination without any proof or substantiation. These statements, as per the

Resp. No.1, stem from the motivated alliance of the Applicant and the Resp. No.2 and their common cause against the Resp. No.1 for the reasons stated above. The Resp. No.1 has further stated that the Resp. No.1 is not aware of the assurances given by the Resp. No.2 regarding alleged unauthorized trades or otherwise and also what follow-up was made by the Applicant with the Resp. No.2. However, the Resp. No. 1 has strongly denied that it had ever admitted unauthorized and illegal trades in the Applicant’s account. The Resp. No.1 has submitted that the entries reversed in the Applicant’s account pertains to delayed payment charges on over day payments and not trade dues as such. According to the Resp. No.1, the Applicant assured payment of the dues, if delayed payment charges levied were reversed and accordingly, as a concession, the Resp. No.1 waived the delayed payment charges, but the Applicant went back on his promise compelling the Resp. No.1 to again levy delayed payment charges and then to sell his shares for recovering its dues.

j) The Resp. No.1 has stated that the shares were sold in Dec 2010 and the Applicant has for the first time approached the Resp. No.1 in Feb 2011 with a nil dated letter. The truth, as per the Resp. No.1, is that having found the shares sold for recovery of unpaid dues, the Applicant with the active support and connivance of the Resp. No.2 founded the present claim on falsehood and unsubstantiated allegations.

k) The Resp. No.1 has submitted that the claim of the Applicant for an amount of Rs. 2,93,955.21 against the Resp. No. is based on false and baseless allegations. The Applicant is not entitled to the sale proceeds of the shares sold on 27/12/2010 because it was in exercise of the Resp. No.1’s right of lien on said shares for recovery of its dues. The claim for the proceeds by the Applicant, according to the Resp. No.1, is mis-conceived and liable to be rejected.

l) The Resp. No.1 has denied the unauthorized trades in the account of the Applicant and stated that all trades were placed on orders from the Applicant for which contract notes bills, statement of accounts etc., were furnished to the Applicant. The Resp. No.1 has produced copies of all these documents as also copies of trade and order logs with its statement of reply. However, the Resp. No.1 has submitted that the orders for the trades were not received on recorded lines and therefore, voice recording or transcript thereof cannot be produced. The Resp. No.1 has further submitted that there is no mandate for receiving orders on recorded lines and absence of voice recording by itself does not prove that the trades were unauthorized. As regards the information regarding terminal details, their identity, location name of Dealer etc., according to the Resp. No.1, they are not relevant to the case of the Applicant and are made only for the vexatious purpose. The Resp. No.1 is, however, submitted that the Resp. No.1 can furnish the details of the terminals from where the orders were placed, if the specific trade in respect of which the information is required is spelt out by the Applicant. The Resp. No. 1 has further clarified that all the trades were either placed from the Resp. No.2’s terminal or from the terminal

of the Resp. No.1, when the terminal of the Resp. No.2 encountered some problems. The Resp. No.1 has submitted that proving that orders were placed from either of these terminals, however, do not prove or disprove that the trades are unauthorized. The Applicant has not denied receipt of contract notes, bills etc., nor has demanded production of these documents from the Resp. No.1. On the contrary, the Applicant has advanced a new story that he wanted from the Resp. No.2 to show him these documents in January 2011.

m) The Resp. No.1 has submitted that the Applicant has not proved any case against it and belated allegations of unauthorized trades are without any basis and evidence and the Applicant failed to substantiate them with any evidence. The claim for payment is made without any basis or substantiation. The allegations of unauthorized trades have been leveled only after the Resp. No.1 sold shares for recovering its dues in Dec 2010, while the alleged unauthorized trades took place as early as between Jan and April 2010. The claim is, therefore, liable to be dismissed with cost to the Resp. No.1 and the Resp. No.1 has prayed that the claim be dismissed accordingly.

5. The Respondent No. 2’s statement of reply to the Applicant’s statement of claim The Resp. No.2 has filed his reply dated 09/11/2011 to the statement of case filed by the Applicant. The Resp. No.2 has submitted that the Resp. No.1 has contacted him on or about Oct 2006 and expressed its willingness to appoint him as its sub-broker to make use of his local relationship with investors as also for expanding branch network and business of the share broker. Accordingly, the Resp. No.2 completed all the formalities and documentation with the Resp. No.1 and obtained the SEBI registration as sub-broker sometime in Nov 2006. The Resp. No.2 has also submitted that after obtaining the permission from the NSE, the Resp. No.1 installed trading terminal ODIN in his office to enable the Resp. No.2 to execute the transactions on behalf of the clients introduced by him to the Resp. No.1. The online trading terminal (ODIN) Id No. is SCK. The statement of reply filed by the Resp. No.2 is, briefly, as follows:-

Ø The Resp. No.2 has stated that in no circumstances the orders placed by the client introduced by Resp. No.2 can be executed from the terminal outside the Resp. No.2’s office. In other words, according to the Resp. No.2, the Resp. No.1 has no right and authority to execute transactions in the name of the clients introduced by the Resp. No.2 directly from any other terminal. Thus, the transactions which were not executed from the terminal no. SCK installed by Resp. No.1 in the office of the Resp. No.2 cannot be valid and binding transactions on the clients and/or the Resp. No.2 can be held responsible for such transactions as a sub-broker.

Ø The Resp. No.2 has stated that whenever the Applicant had placed orders with the Resp. No.2, the Resp. No.2 had punched the order into terminal no. SCK and on confirmation of

the order into trade, he has intimated the Applicant and in fact the Applicant had honoured all the obligations. The Resp. No.2 has submitted that the Applicant has paid Rs. 10,000/- by cheque No. 296531 and placed order for F&O segment transactions only on 8 days for which the Resp. No.2 entered the transactions into the terminal No SCK installed in his office. The Resp. No.2 has stated that as per the Applicant’s ledger account in the books of the Resp. No.1, there was a credit balance of Rs. 2,800.05. The Resp. No.2 has stated that the applicant had not placed any order in F&O segment after 15/05/2007 and no order was placed in the terminal no. SCK installed in his office. The Resp. No.2 has confirmed that the Applicant has executed only 4 transactions in the NSE cash segment during the period from 22/08/2007 to 14/10/2009 and the Applicant had a debit balance of Rs.8,509.78 and 375 shares Ispat Industries were lying in the demat account of the Resp. No.1.

Ø The Resp. No.2 has submitted that it is true that the Applicant has transferred 3,115 shares of 5 companies into demat account of the Resp. No.1 on 12/01/2010 for the purpose of execution of transaction in F&O segment. The Resp. No.2 has submitted that the Applicant had not placed any order to the Resp. No.2 for sale and purchase of shares in NSE F&O segment and he has not entered any order instructions in terminal no.SCK.

Ø The Resp. No.2 has further submitted that on the basis of the request from the Applicant in the second week of January 2011, the Resp. No.2 has provided the Applicant’s ledger account and shareholding details to the Applicant. The Resp. No.2 has stated that on the basis of a complaint given by the Applicant and on verification of his record, it was surprising as to how there can be any transactions in the name of the Applicant from the terminal outside the Resp. No.2’s office. The Resp. No.2 has submitted that the Resp. No.1 has assured a reversal of entries in respect of bills which were posted in the Applicant’s ledger account for unauthorized transactions, but failed to give effect to the assurance.

Ø After persuasion of the complaint of the Applicant, the Resp. No.1 has reversed debit entries in respect of delayed payment charges as a first step to reverse the debit entries. However, in spite of the assurance given by the Resp. No.1 from time to time, the Resp. No.1 has failed to delete entries in respect of unauthorized transactions.

Ø The Resp. No.2 has further stated that it is true that the Resp. No.1 has sold 2,675 shares of 3 companies for a consideration of Rs.2,99,664.94 and transferred remaining shares of 765 shares (wrongly stated as 2,675 shares) of 3 companies to the demat account of the Applicant.

Ø The Resp. No.2 has submitted that the Resp. No.2, as a sub-broker is not liable for anything wrong done by the Resp. No.1, as a main broker. Since, according to the Resp. No.2, he, as a sub-broker, has not done anything wrong and it is purely dispute between the Applicant and the Resp. No.1, according to the Resp. No.2, he is entitled for discharge from the

present proceedings. The Resp. No.2 has prayed for the order of discharging him from any responsibility.

6. Respondent No.1’s counter-reply to the Respondent No.2’s statement of reply The Resp. No.1 has submitted its counter-reply to the Resp. No.2’s aforesaid statement of reply to the Applicant’s statement of case, received by the Exchange on December 27, 2011.The said counter reply is as follows:-

• At the outset, the Resp. No.1 has strongly denied all the allegations and contentions of the Resp. No.2 in his reply and submitted that the Resp. No.2 has attempted to make false and baseless allegations against the Resp. No.1 without any proof or evidence. Further, the Resp. No.1 has stated that the Resp. No.2 in his reply has just made a statement supporting what was stated by the Applicant in the Applicant’s statement of case without adducing any evidence.

• The Resp. No.1 has submitted that the Resp. No.2 is biased against the Resp. No.1, as the Resp. No.1 has suspended the Resp. No.2’s affiliation with it, as sub-broker, in view of large scale client defaults in payment of outstanding dues. The Resp. No.1 has, in some cases where the clients of the Resp. No.2 failed to fully discharge their payment liabilities to the Resp. No.1, made recoveries of the unpaid dues from the credit balances of the Resp. No.2. Hence, the Resp. No.2 is opposed to and inimical to the Resp. No.1 and sided with the Applicant to harm the interest of the Resp. No.1.

• The Resp. No.1 has submitted that the Applicant has, in his statement of case, relied for the purpose of his claim on the statements of accounts allegedly provided by the Resp. No.2,although the Resp. No.2 is neither responsible for maintenance of such statements of accounts nor to verify them on behalf of the Resp. No.1. According to the Resp. No.1, the Resp. No.2 ought to have informed the Resp. No.1 as and when the Applicant approached the Resp. No.2 with a request for any such statement of accounts. Instead, the Resp. No.2 has chosen to provide unverified statements himself, keeping the Resp. No.1 in the dark. The Resp. No.1 has stated that this was orchestrated only to make out a case that the client was not in receipt of any statement of accounts from the Resp.No.1.The Resp. No.1 has said that it would have been natural for the Applicant to approach the Resp. No.1 for the said documents, when the Applicant made payments and transferred his shares to the Resp. No.1. Further, no case has been made out that the Applicant approached the Resp. No.1 for the documents and having been denied them, he approached the Resp. No.2 for the same. Thus, according to the Resp. No.1, the whole story is fabricated to support the claim of the Applicant against the Resp. No.1 for the reasons stated above. The Resp. No.1 has also submitted that the Resp. No.2 instead, has provided deliberately fudged and forged the statement of accounts to the Applicant to bolster his illegal claims against the Resp. No.1. The Resp. No. 1 has, therefore, stated that the acts of the Resp. No.2 are mala

fide, his submissions before the present Forum are motivated and collusive and as such liable to be rejected.

• According to the Resp. No.1, the Applicant has not made any claims on the Resp. No.2, though for the reason not disclosed, the Resp. No.2 has been arraigned as a Respondent. But, as per the Resp. No.1, the Resp. No. 2 is not a disinterested party, is apparent from the extensive canvassing made by the Resp. No.2 in support of the case of the Applicant and deliberate act of providing forged statement of accounts. Accordingly, the Resp. No.1 has averred that as the Applicant and the Resp. No. 2 are acting in collusion with each other against the Resp. No.1, no reliance should be placed on the submissions of the Resp. No.2.

• The Resp. No.1 has denied all the allegations and contentions taken by the Resp. No.2 in his reply as false and figment of imagination without any proof of substantiation. The Resp. No.1 has further stated that these statements stem from the motivated alliance of the Applicant and the Resp. No.2 and their common cause against the Resp. No.1 for the reasons stated above.

• The Resp. No.1 has vehemently denied all other allegations of the Resp. No.2 in his reply as false and baseless and reiterated the contentions in its statement of reply.

7. Applicant’s rejoinder to the Respondent No.1’s statement of defence The Applicant has submitted his long and exhaustive rejoinder dated 05/01/2012 to the statement of reply filed by the Respondent on 09/01/2012. The important points raised in the rejoinder of the Applicant, having bearing on the matter, are, in brief, given below:-

• A review of documents attached by the Resp. No.1 with its reply clearly supports the case of the Applicant and establish in no uncertain terms that the F&O segment transactions for the period from 14/01/2010 to 29/04/2010 and cash segment transactions from 14/01/2010 to 15/04/2010 were not only unauthorized but also illegal and fraudulent.

• The trade files submitted by the Resp. No.1 shows that the said unauthorized transactions were executed from the terminal Id 15213 which is not the terminal Id of the sub-broker, i.e., the Resp. No.2 through whom the Applicant got registered. Execution of the Applicant’s transactions from terminal other than the sub-broker’s terminal is evident that the transactions were unauthorized and illegal and the Applicant cannot be held liable for such transactions. More so, when the Resp. No.2 has confirmed in his reply that the Applicant had not placed any order.

• The Resp. No.1 has in its reply admitted that it has no voice recording to produce as evidence that said transactions were executed on the basis of confirmed order instructions. No other credible evidence is produced by the Resp. No.1 to show that the Resp. No.1 had complied with regulation 3.4.1 of NSE F&O segment Regulations.

• Said unauthorized transactions under F&O segment have resulted into losses of Rs. 1,84,035.47 and cash segment also suffered losses. No demand was made by the Resp. No.1 against margin or MTM losses till date, which would have been made by any prudent broker in the normal course of business and to comply with regulation 3.10 of the NSE F&O segment Regulations.

• The copies of purported contract notes submitted by the Resp. No.1 shows most of the trades are Option trades. Order time under the contract notes shows that orders were executed throughout the days. The Resp. No.1 has preferred not to disclose how there can be series of transactions in a day without any communication with client. The Resp. No.1 also failed to give reasons as to why it has executed series of transactions in the name of the Applicant who is registered through the sub-broker.

• As per the clause 3 of the Tripartite Agreement clearly states that “the client is registered with the sub-broker as a client for the purpose of availing broking services through the sub-broker affiliated to the stock broker and is desirous of investing/trading in those securities/contracts/other instruments/admitted for dealings on the Exchange as defined in the Rules, Bye-laws and Regulations of the Exchange”. In view of this, it is clear that all the transactions of the Applicant should have been routed through the online trading terminal installed by the Resp. No. 1 in the office of the Resp. No.2, as sub- broker and in no circumstances transaction could have been carried out from any other terminal of the Resp.No.1, as a main broker. The transactions were executed from used Id 15213 were not only unauthorized but were illegal and fraudulent and the Applicant cannot be held liable for said transactions.

• The Resp. No.1 has made a bold statement, “there is no mandate for receiving orders on recorded lines and the absence of voice recording by itself does not prove that the trades were unauthorized”. The Resp. No. 1 has failed to produce any credible evidence that transactions covered in the reply were executed as per the instructions of the Applicant and as such cannot be binding on the Applicant.

• It is true that the Applicant had issued one cheque of Rs. 10,000/-, but the same was dated 8th May 2007, a date prior to the F&O segment trades and the same payment cannot make transactions for the period from 14/01/2010 to 29/04/2010 as valid. The Applicant has denied that the last trade in F&O segment was executed on 29/04/2010 and further denied that all trades were carried out on the instructions of the Applicant.

• The Applicant has denied the receipt of any contract notes, bills and quarterly ledger statement and denies having received such documents. The Exhibit ‘D’ attached with the reply of the Resp. No.1 shows that certain envelopes were delivered by the Resp. No. 1 to the postal department and there is no evidence as to what contained inside the envelope and whether envelope was delivered to the Applicant. Even if, it is admitted for the sake of argument that the Resp. No.1 has sent the quarterly ledger account

statement of the Applicant, then also a transaction executed without confirmed order instructions cannot become a valid and binding transaction on the Applicant because it cannot be substituted with the requirement of regulation 3.2.1 of NSE cash segment and 3.4.1 of NSE F&O segment.

• On a review of F&O transaction shows that there was a continuous debit w.e.f. 28/01/2010 and the debit was increasing from Rs.43,718.51 to Rs. 1,81,235.42 on 29/04/2010. Similarly, in the cash segment, there was a debit of Rs. 2,00,541.57 as on 14/01/2010 and the same has increased to Rs. 3,43,257.78 as on 01/04/2010. The Resp. No.1 has not made any demand and funded the unauthorized transactions from its own pocket.

• The unauthorized transactions were executed by the Resp. No.1 in the month of January to April 2010 and the Applicant’s shares were unauthorizedly and illegally sold by the Resp. No.1. Hence, the arbitration was invoked within 6 months from the date of cause of action and therefore, being an investor, is not liable to pay any arbitration fees.

• Under the Bye-laws and Regulations of the NSE read with the circulars, any transfer of shares by a client to a broker towards margin requires to be supported by a letter mentioning specially that the said shares are transferred towards margin. Also shares can only be treated as part margin provided there is a cash margin of more than 50%. However, there is no provision under the Bye-laws and Regulations of NSE which authorizes a trading member to not to complete pay-in and pay-out of securities by obtaining a letter from a client.

• The Applicant has denied that the Resp. No.1 had provided any log-in and password facility to the Applicant so as to enable the Applicant to have access to the back office information of the Resp. No.1. Even if, the access to back office was available to him, the same cannot make an unauthorized transaction as authorized, only because, the client had access to the back office ledger account.

• The Applicant has denied that as on 26/12/2010, the Applicant was liable to pay Rs. 2,56,147.68 under cash segment and Rs. 1,83,837.13 under F&O segment. The Applicant has submitted that he had executed transaction under F&O segment for the period from 08/05/2007 to 15/05/2007 and there was a credit balance of Rs.2,800.05. Similarly, he had executed transactions in cash segment for the period from 22/08/2007 to 14/10/2009 and there was a debit balance of Rs. 5,709.73 against which 375 shares of Ispat Industries were lying with the Resp. No.1. Therefore, the debit balance shown by the Resp. No.1 in paragraph 13 of its reply and in the ledger account attached therewith is the results of unauthorized transactions in the Applicant’s name and the Applicant cannot be held liable for such debits.

• The Applicant has filed the present claim by disputing the validity of F&O segment transactions after 15/05/2007 and cash segment transactions after 14/10/2009. The

Resp. No.1 has produced order log trade log file as Exhibit ‘H’ which shows execution of transactions from the terminal outside the sub-broker’s office. The Resp. No.1 has under paragraph 18 of its reply admitted having no evidence that the Applicant had placed any order for execution of transactions during the disputed period. Further, for non-placement of order, the Applicant cannot have any evidence, but the broker who has executed the transactions without instructions to produce evidence.

• The Applicant has, therefore, prayed for the Award on the basis of claim filed by the Applicant.

8. The Respondent No. 1’s sur-rejoinder

The main points in the reply of the Resp.No.1 received on 19/01/2012 to the rejoinder of the Applicant are, briefly, as follows:-

i. The Resp. No. 1 has reiterated its contentions given in the Resp. No.1’s reply to the Applicant’s statement of case (i.e., under item 4 above) as also in its counter-reply to the statement of reply of the Resp. No.2 (viz., under the item No. 6 above).

ii. The Respondent has further stated that the Applicant is falsely alleging that the Resp. No.1 has not provided information/documents sought by the Applicant, whereas the Resp. No.1 has provided necessary documents with its reply as requested by the Applicant in his statement of case, besides informing non-availability of voice recording in its reply. Information about the trading terminal No. 15213 is provided by the Resp. No.1 only. The Applicant is simpliciter contending that since the terminal belongs to the Resp. No.1 and not to the Resp. No.2, the trades are unauthorized. The Resp. No.1 has submitted that a sub-broker client placing orders directly with the broker with whom the sub-broker is affiliated does not render the trade illegal or unauthorized. The Resp. No.1 does not have information about the counter-party to the trades or counter party broker and as such, the information cannot be provided to the Applicant. Further, this information does not at all help the case of the Applicant that the trades are unauthorized.

iii. The Resp. No.1 has vehemently denied the contention of any unauthorized trades executed in the Applicant’s account and put to strict proof thereof. The Resp. No.1 has further stated that the Applicant’s contention of the trades not executed by him only took place when the Resp. No.1 liquidated the Applicant’s shares for recovery of outstanding unpaid dues on 27/12/ 2010.

iv. The Respondent has, therefore, prayed that the claim of the Applicant be dismissed with cost to the Resp. No.1.

9. Documents relied upon

KYC documents, viz., Client Registration Form, Member Client Agreement (MCA), Risk Disclosure Document (RDD), Tripartite Agreement and other voluntary documents, copies

of correspondence between parties, statement of accounts, contract notes, delivery instruction slip, demat account statement and MG 13 and margin statement. The Sole Arbitrator has decided to take on record only those specified documents and information which he directed the parties to produce, while closing the matter as per the record of proceedings at the final hearing held on January 19, 2012.

10. Reasoning and conclusion I have carefully gone through the statements of claim and reply submitted by the parties, contract notes/bills and other documents and also heard both the sides patiently and exhaustively. My observations based on the documents and evidences are given below:-

a. Transactions in the Applicant’s trading account(F&O segment and cash segments) i) F&O segment

The Applicant has admitted having done the trades in the NSE F&O segment during the period from 08/05/2007 to 15/05/2007 after paying a sum of Rs. 10,000/- by way of a cheque No. 296531 on May 08, 2007. There was a credit balance of Rs. 2800.05 as at the end of 15/05/2007, as per the Applicant’s ledger account statement produced by the Resp. No.1 in NSE F&O segment. Thus, there is no difference in the statements of accounts produced by both the parties in this regard. However, there is a dispute with regard to transactions during the period from 14/01/2010 to 29/04/2010 in the NSE F&O segment. The Applicant has categorically stated that the transactions carried out by the Applicant during the said disputed period are not only unauthorized but also illegal because of various irregularities committed by the Resp. No.1 viz., not obtaining confirmed order instructions from the Applicant before executing them through online trading terminal, not using the online trading terminal of the sub-broker bearing no SCK for the transactions during the said period and executing transactions through the trading terminal of the Resp. No.1 having user Id of 15213, not demanding upfront margin in cash more than 50% while taking collateral securities for margin, not taking a letter from the Applicant specifying the securities to be transferred for margin as per regulations, not calling for additional margins to cover shortfall and MTM losses, most of the trades are Options trades, according to order time the orders were executed through out the days and series of transactions intra day without communication etc. The Resp. No.2, the sub-broker of the Resp. No.1 also supported the contention of the Applicant by submitting that the Applicant has not placed any order after 15/05/2007 with the Resp. No.2 and no order was executed through the terminal No. SCK installed in Resp. No.2’s office by the Resp. No.1. The Applicant has suffered losses of Rs.1,84,035.47 in F&O segment account due to unauthorized transactions during the said disputed period. There was a continuous debit balance in his F&O ledger account, which was increasing gradually from Rs.43,718.51 to Rs. 1,81,235.57 as on 29/04/2010.

The Resp. No. 1 has, however, defended its case by stating that all the trades were carried out on the instructions of the Applicant and the Respondent has issued contract notes, bills, statement of accounts, apart from sending quarterly statement of funds and securities to the Applicant regularly by post under certificate of posting (UCP). However, the Applicant has denied having received such documents and termed the POD as fabricated and forged. The Resp. No.1 has also submitted that the complaint of the Applicant received by it in Feb 2011 alleging unauthorized trades after a lapse of 9 months from the date of last trade. Besides, the Resp. No. 1 has further submitted that the Applicant has transferred 3,115 shares of 5 companies on January 12, 2010 from the Applicant’s DP Account with State Bank of Indore directly to the Resp. No.1’s demat account by way of margin for trading. Although, the Applicant has stated that the transfer of shares is for sale in future, the Resp. No.1 has submitted that the Applicant’s story is not creditworthy because after transfer of these shares in Jan 2010, the Applicant has never once sought to sell these shares. However, the Resp. No.1 has also produced order log trade logs and also a statement showing the trade data and the trading terminal no.s from where the trades were executed during the disputed period. Further, the Resp.No.1 is candid in its statement that it is not in a position to produce voice recording or transcript thereof, as there is no mandate for receiving orders on recorded lines and absence of voice recording by itself does not prove that the trades were unauthorized.

ii) Cash segment The Applicant has also alleged that the transactions in NSE cash segment from 14/01/2010

to 15/04/2010 were unauthorized on account of the same grounds as stated in F&O segment. These transactions have also resulted in losses in the Applicant’s cash segment account. The Applicant has further stated that there was a debit of Rs.2,00,541.57 in the Applicant’s cash segment ledger account as on 14/01/2010 and the same has increased to Rs.3,43,257.78 as on 01/04/2010.Thus, the Applicant has concluded that the Resp. No.1 has not made any demand and as such funded from its own pocket.

I have gone through the documents produced by both the parties as well as their contentions and arguments in the pleadings and statements very carefully and am of the view that there are a few unanswered questions and situations in the story of the Applicant as given below:-

Ø I have seen the profile of the Applicant as given in the Client Registration Form along with the documents submitted at the time of registration attached therewith. I find that the Applicant is a professional, either medical practitioner or in other profession and was receiving pension as per bank pass book enclosed with the KYC documents. His income range is stated to be Rs. 10-25 lakhs per annum and he has experience of 17 years in capital market, 5 years in derivative market and 4 years in other investment field. He has rightly opted for trading in capital/cash as well as derivative segment. The said

information in the KYC form has not been denied by the Applicant and as such seems to be correct. The investment experience of the Applicant is corroborated by the huge portfolio of shares accumulated (in over 70 companies) as an individual as well as Karta of HUF, according to the holding statement of erstwhile State Bank of Indore (now State Bank of India{SBI}), Depository Services as on 21/04/2007. Thus, it can be assumed that the Applicant is fully aware of and conversant with the rules of the game of investment.

Ø The Applicant is, prima facie, a HNI investor going by his net worth, annual income and profession, although he has claimed to belong to a middle class family in his statement of case (page 7- paragraph 21). Besides, the Applicant also declared in his KYC form that he has not registered with any other Broker-Member, whereas his statements of transactions issued by the State Bank of Indore and SBI for the period 01/04/2009 to 31/03/20011 show that a number of transactions carried out through other trading members viz., Arihant Capital Markets Ltd., and Exclusive Broking House Ltd.

Ø The parties have not spelt out any form or manner of placement of order, since it is not always possible to give the order in writing, looking to the situation in the dynamic capital market and the voice recording or transcript thereof is not mandatory.

Ø The Applicant has denied having given any confirmed order instructions during the said disputed period in both NSE cash and F&O segments. According to him, the transactions executed during the said period by the Resp. No.1 in its own trading terminal instead of the terminal no SCK of the Resp. No.2 when he was a sub-broker client. The Applicant has also denied having received the documents such as contract notes, bills, statement of accounts for the transactions during the said disputed period and feigned ignorance of what is happening in his accounts with the Resp. No.1. He has also justified his stand of denial by stating that he need not produce any evidence and shifted the burden of proof on the Resp. No.1, who has executed the trades without his confirmed order instructions. Though this stand of the Applicant goes with the Bye-laws and Regulations and seems to be acceptable, the question arises as to how the Applicant was placing confirmed orders with the sub-broker, the Resp. No.2 in respect admitted trades, documents or mode of placement of orders, receipt of contract notes, bills etc., from the Resp. No.1 vis-à-vis disputed trades which have not been explained. This gains more significance, when the Resp. No.1 produced the data relating to trading terminal used during the said disputed period, according to which the trading terminal bearing the no SCK of the sub-broker, i.e., the Resp. No.2 also figured. The arguments of the Resp. No.2 and the Applicant relating to the trading terminal used by the Resp. No.1 having user Id of 15213 only during the disputed period has fallen flat to the ground, going by the said statement. This gives much support to the Resp. No.1’s contention that the Applicant and the Resp. No.2 formed motivated alliance against the Resp. No.1 for furtherance of their common cause. Besides, the argument that the sub-broker client should necessarily trade through the

trading terminal of the sub-broker does not have much substance, as the Tripartite Agreement executed by the parties does not contain specific clause prohibiting trading through the terminal other than the one installed in the sub-broker’s office during the Agreement in existence. The parties to the dispute in the instant matter have also not produced any circular from either the Exchange or SEBI precluding the sub-broker client from trading through the trading terminal other than that of the trading terminal installed in the sub-broker’s office. Further, it is impossible to have such a water-tight arrangement in real situations encountered by the technical failures/problems in the terminal, sub-broker not having trading limit from the main broker or reached the maximum limit, discontinuance of sub-broking business by sub-broker while the agreement is not terminated for want of settlement etc. In such situations, the sub-broker client has necessarily to approach the main broker for his or her trading requirements.

Ø The other argument put forth by the Applicant to treat the transactions as unauthorized during the disputed period is that the Resp. No.1 has not raised any demand for additional funds to meet shortfall in margin and MTM losses, apart from allowing the Applicant’s transactions when there was debit balance in the ledger accounts of both cash and F&O segment of NSE. I have gone through the statements of accounts and margin and MG13 statements and am of the opinion that it is the trading member who has to meet overall margin requirement based on the volume of transactions and dynamic market situation and arrange funds immediately to be paid to the Exchange and/or clearing member, lest his operations get suspended. Simultaneously, the trading member is required to collect the margin, additional margin etc., from the client, failing which he would face penal action from the Exchange including penalty. However, the transactions in F&O segment without upfront margin or additional margin are irregular but not illegal; if, the trading member has adequate credit in other accounts of the client with him. In the instant case, the Resp. No.1 has allowed the transactions in the F&O segment account of the Applicant during the disputed period based on the opening credit balance available in the F&O account and also collateral securities held by the Resp. No.1 on behalf of the Applicant as margin. The Applicant’s contention that there should be more than 50% cash margin, if shares are treated as part of the margin has not been substantiated by the Applicant by producing the extract of the Bye-laws and/or Regulations of the Exchange or circulars issued by the Exchange and SEBI. As regards specific letter from the Applicant to treat the specific shares as margin, the clauses of the MCA and voluntary documents executed normally take care of the requirement. In this case, the Delivery Instruction Slip (DIS) has been used for transfer of shares as collateral for margin which has been discussed in the following paragraph. Although, there were debit balance in the ledger accounts the Applicant, the value of the collateral securities might be adequate to meet the margin, even after considering the debit balance. This was proved when the sales proceeds of a

part of the shares sold by the Resp.No.1 on 27/12/2010 were more than adequate to liquidate the debit balances in both the ledger accounts of the Applicant and the balance amount of Rs.5,932.13 was refunded to the Applicant. However, I have seen that there were irregularities/shortfall with regard to margin requirements, as evident from the MG 13 statement and margin statement submitted by the Resp. No.1. This is also evident from the margin shortage penalty levied in the Applicant’s F&O segment ledger account.

Ø The issue relating to the transfer of 3,115 shares 5 companies by the Applicant on 12/01/2010 from his demat account with State Bank of Indore to the demat account of Resp. No.1, allegedly for sale in future or margin for trading has been examined in the light of the DIS copy produced by the Applicant. It is observed there from that the shares were transferred for off-market traders to the DP account of the Resp. No.1 with the HDFC Bank without filling up the instructions column in the slip. In the absence of any instructions, the Resp. No.1 has treated them as collateral securities for margin and allowed the F&O transactions from 14/01/2010 onwards. The Resp.No.1 has argued that if the transfer is meant for sale of those shares in future and not for margin, the action of the Applicant of never seeking to sell these shares does not suggest so. The contention of the Resp. No.1 appears to be in order based on the Applicant’s trading in shares through other trading members as evident from the transaction statements of State Bank of Indore and SBI during the same period. It is also inconceivable that as an experienced investor like the Applicant would have left the transferred shares with the Resp. No.1 for long, but for margin for trading in F&O segment.

Ø I have also verified the contract notes, bills and the statements of accounts in respect of said disputed period and observe that the trades are not in huge volumes, involving a number of shares/stocks in a day giving rise to suspicion as to irregularity and abnormality. Though, there were intraday trades in limited securities in both the segments, there were also only one or two transactions in a day in the later part of the trading period. The contention of the Applicant that most of the F&O transactions are in Options trades, which are illiquid, is not substantiated, as there were equal number of Futures trades also and the Resp. No.1 has not, prima facie, experienced difficulty, in closing out/squaring off the open positions in both types of securities/contracts.

Ø The Applicant has lodged the claim of Rs.2,93,955.21 based on the sale proceeds of his shares of Rs.2,99,664.94 on 27/12/2010 after adjusting the debit balance of Rs. 5,709.73. However, the contract note for the trade date of 27/12/2010 shows the sale proceeds of Rs. 4,42,232.94 which includes sale proceeds of 2,675 shares of 3 companies transferred on 12/01/2010 aggregating Rs.3,01,751.05 ( Rs.3,00,845.75 after brokerage, taxes etc.). Thus, the Applicant has not given any basis on which he has arrived at the sales proceeds of his transferred shares as Rs. 2,99,664.94.

b. Arbitration fee

The Resp. No. 1 has raised issue of non-payment of arbitration fee by the Applicant for the delay in filing the Arbitration Application after the expiry of six months, as he has raked up the dispute about trades carried out from the year 2007, in June 2011. The matter was examined by the Arbitration Dept., of the Exchange on receipt of the arbitration reference from the Applicant. After taking into consideration all the relevant facts, the Exchange has decided not to collect the arbitration fee from the Applicant.

In view of the above circumstances, it is rather difficult to precisely arrive at the conclusion. Since these are civil proceedings, the criterion for deciding the issue is preponderance of probabilities. Thus, based on the authenticity of the facts put forth by both the parties, the decisions are taken. In this case, the facts presented by the Respondent appear to be more reliable. Thus, the claim of the Applicant fails and accordingly, not maintainable. The arbitration reference of the Applicant is, therefore, dismissed.

Accordingly, the Sole Arbitrator gives the following Award:-

Award

I, the Sole Arbitrator in the Arbitration Matter No: CM/M-0055/2011 between the Applicant, Mr. Virendra Kumar Rawat (Constituent) and the Respondent No.1, Angel Broking Ltd., (Trading Member) give my Award as under:-

1. The claim of the Applicant viz. Mr. Virendra Kumar Rawat for Rs. 2,93,955.21 (Rupees Two lakh ninety three thousand nine hundred fifty five and paise twenty one only) against the Respondent No.1 viz., Angel Broking Ltd., is rejected.

2. Cost of the arbitration to be borne by the Applicant. 3. No order as to cost and expenses. 4. The Award is signed in three originals. NSE may retain one stamped original and forward

one original each to the Applicant and the Respondent.

Place: Mumbai G.A.Nayak Date: April 19, 2012 Sole Arbitrator