F
& O/M- 0049/2013
In matter of arbitration under the rules, 8ye-laws and regulation of national stock exchange India Ltd.
BETWEEN
Mr. Vivek Surendranath
(Constituent) -
..........Ap p lica nt
ChoPra
ol.tlti-- Jo ir"" Ron{a cenfno I Fxu ?vtht
flrrrnor Marqr Nqxj/vun Pouvf , rvrum - dl .
AND
Respondent
Kotak Secdrities Ltd.
6'il1#.di"i#"Pfl[;^r,6rdt Nro-{r, oll h,Eti W
,raia,iq, do.ttl . indod. Cf ) ,\^.!ubd.i -ltOOOl ]
Oenixnr
t This is aannArbitration
Refer*r6e submitted io me under, the rules, Bye-laws and regulation of National Stock
Exarches India Ltd. (NSE)
1.
The Applicant is the constituent of the Respondent and entered into Member Client Agreement on 18th
June
2.
26lofor commencing the trade terminal of
NSE Ltd. and was
allotted Client Code No.
LKYC9.
The Respondent is a company incorporated under the Companies Act 1956, and is the member of NSE
Ltd. under Member Code : 08081 and is registered with SEBI under Regn. No. INB/lNF 230801230.
on lI.')'\'
3.
The present Reference if filled
4.
The hearings in the said Reference were held
&
on
)'E'D. 6'7'Y -
10'10.2013
al
The Applicant Mr. Vivek Chopra, appeared with Advocate Mr. Anup Sharma. The
represented by Sr. Manager
-
-a
:>
tt
Legal, Ms. Yashaswini Shulka.
:o
o
6
NATUE.R.OF CTAIM
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,
I
3
The dispute had arisen in Nov. 2011, April/May /lulV 2Ot2
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7. The Respondent had willfully not followed/ Acted to the instruction of the Applicant,
loss to the tune
of Rs. 17,86,638.50/-, to the Applicant.
t
{
g
The Applicant had claimed Rs. 17, 86, 638,.560/- from the Respondent with interest thereon
p.a. from the date of application
till actual payment/ realization,
3R
5i
THE CASE OF THE APPLICANT
9.
The Applicant stated that on the advice
l.
ofthe Respondent, he used toplace orders with deaftrs
traders appointed by the Respondent.
10.
lt
is the case of Applicant that the Applicant had incurred losses on erroneous
officials of the Respondent as stated in Para 8 of the statement
of
case,
ro,
2
nrr.h.FJfpigryt
Lingerie Ltd. (3,000), Raymond's Ltd. (500+500) & Reliance Capital Ltd. (1,OoO)
orflDalbo*tt
'I
3O.O4.2OI2,3O.Os.2O12,O3.O7.2O72Respectively. q 3 i
11. tt
is
F
the case of Applicaht that, without the instruction of the Applicant, the Respond6n,
FtA
S {u.E#
a tfl" $it[rV j
{f
his instruction o" S.OBOU tg$tt
various scrips as stated in Para 10 of statement of case and Applicant was forced
12. tt is the case of the Applicant that the Respondent had ignored
scrips of Raymond Ltd.
looo Nos. Reliance Capital Ltd. 1000 Nos. and thereby ft"
*tt$utSt{ott.jfr
13. The Applicant stated that his reminders
to the
Respondent
for audio recording were also not
responded and thus the Respondent intentionally had put him into huge loss.
14, The Applicant produced transcrips of
the audio recording of the meeting with the Respondent in, their
office on 24.07.2Ot2, wherein the officials of Respondent had accepted and admitted fault on part of
trader/dealer in giving wrong advise to the Applicant and also agreeing loss of
Rs. 5 Lacs
while denying
loss of Rs. 10 Lacs on Lovable Lingerie Ltd. scrips.
15. The Applicant alleged
that the Respondent had violated terms and conditions as set out in various
-
Client Agreement and guidelines of SEBI in Not acting on instructions of the
clauses
of Member
Applicant and not providing voice recording.
15. lt is the case ofthe Applicant that Lovable Lingerie Ltd.- 3000Nos., were bought
Date 09.10.211 with stop loss, but such instruction were not followed by the Respondent and the
Applicant had suffered loss.
CASE OFTHE RESPONDANT
17.
lt
is
the case of the Respondent that,
The Respondent had always acted upon the instruction of the Applicant.
18. The Applicant has
confirmed in his statement of case, at Para No. 8, that the advice of the officials of
the Respondent, he had instructed the dealers/ traders for purchase of scrips.
Viz. Lovable Lingerie Ltd. Date 09.11.2011 - 3000 Nos., Raymonds Ltd. Date 30.04.2012
Date 03.05.2012
-
500 Nos. and Reliance Capital Ltd. Date 24.07.2Ot2
-
-
500 Nos. &
1000 Nos.
19. The Applicant had never objected while taking delivery of above scrips and paying for same.
20. lt is the case ofthe Respondent that the Applicant has been willfully, knowingly putting false allegation
of not following his instruction for sell/ purchase.
21. The Respondent had alleged
without admitting lapse on their part that, the Applicant had made faulty
calculation of losses suffered, considering selling or buying rate as loss amount suffered & not the
differential amount.
22. The Respondent had denied
that they have not violated any terms of Member- Client Agreement nor
any guidelines of SEBI.
23. lt is the case of the Respondent that he hadn't ignored instructions of the Applicant to Sell/ Buy scrips
of various companies as claimed by the Applicant, nor had given him wrong advise nor forced him to
act on such advice, but the Applicant acted on his own decision.
24. The Respondent had offered to the Applicant, inspection of voice recording available with the
Respondent in their office, but the Applicant had not responded.
25. The Respondent submit that voice recording as produced by the Applicant's discussion with the official
of the Respondent is about general discussion or wrong advice given and not with respect to any
particular transaction and does not establish about Date/ Time/ Place of voices recording.
26. The Respondent submitted that, as per voice recording produced by the Applicant, it
Appf icant had not disputed about sell instruction Date 24.07.2OL2 were not
/<-,
is clear
that the
followed. Further, it is also
clear from voice recording Date 09.11.2011, that there were no instruction
to sell. Even during
conversation Date 25.04.2012, the Applicant never mentioned that his instruction
to sell
Lovable
Lingerie Ltd. was not followed. Further, on 09.11.2011, the Applicant was just seeking advice on
whether to sell or not, Lovable Lingerie Ltd. and asked for stop loss at 500, but such rate never reached
on that day and hence auto option not exercised under Exchange mechanism.
27. The Respondent has submitted
that during conversation, no where the Applicant stated about
loss
suffered due to not following of Sell/ Buy instruction
28. The Respondent could not produce any transcripts of voice recording except 08.11.2011, O9.L1'2OIL,
22.03.2OI2 & 25.O4.2OI2 as records were not retrievable.
FINDINGS
29. The dispute in the Reference has arose due to loss suffered by the Applicant on account of mainly
(i)
(ii)
Due to erroneous advice by the Respondent
Due to ignoring Buy/sell instruction by the Respondent.
30. To decide on
the issues, transcriptions of voice recording furnished by the Applicant
/
Respondent
were highly relied over by me. Since contents of transcript furnished by both parties to the dispute
were not disputed, playing Audio CD was not necessary
31. On going through the transcript of voice recording, no instance was found of objection raised right/
wrong on advice given by the Respondent. lt could be understood that advice by the Respondent was
taken by the Applicant, in ordinary course of trading. lt is observed, that claim for erroneous advice for
SBI
& M&M was not made. lt is further noted that, complaint by applicant for erroneous advice on
09.11.2011 on Lovable Lingerie were first time made on t6.t2.2OLL only. Even no complaints were
made for not following buy instruction for Reliance Capital and Raymond shares. Accordingly, theory of
loss occurred due
to wrong advice by the Respondent is not convincing and hence rejected
32. Claim of loss occurred due
to buy/ sell instruction not followed or erroneous trade advice, were on
under mentioned dates:
sR.
NO.
(i)
NAME OF SCRIPS
/
QW
9.11.11
Lovable Lingerie Ltd
/
3000
(ii)
30.04.2012
Raymond Ltd
Buy & stop loss & erroneous
trade advice
Buy & Erroneous trade Advice
(iii)
(iv)
30. 05.2012
Raymond Ltd / 500
Reliance Capital Ltd. / 1000
Raymond Ltd. / 1000
Reliance cap/1000
Buy & Erroneous trade Advice
Buv & Erroneous trade Advice
(v)
(vi)
DATE
03.07.2012
24.7.20L2
24.7.20L2
/
500
INSTRUCTION
Sell
Sell
33 . From the Statement of Case, at one stage at Para No. 10, the Applicant alleges that scrips were bought
without his instructions and in Para no 8, makes statement that he had bought as per erroneous advice
of the Respondent. Even transcripts of voice Recording Date 08.11.2011, 9.II.2OLL & 24.07.2OI2 do
not prove claim of the Applicant that Buy Transaction of Lovable Lingerie Ltd. (3000), Raymond Ltd.
,.7)
(_>-
(1000), Reliance Capital Ltd. (1000) were without instruction. Respondent further had, instead of
objecting such transaction, had paid for such transaction and took delivery of same Buy transaction of
Lovable Lingerie (3OOO) is of 08.11.2011 and not of 09.11.2011, as apparent from transcripts of audio
recording & contract note produced by the Applicant. Thus Buy transaction of 5r.No.32 (i), (ii), (iii), (iv)
above, could not be considered as without the instruction of the Applicant and loss due
to
buy
transaction not followed is rejected.
34. Claim for loss on account of not following instruction for Sell of Lovable Lingerie (3000) for stop loss
was not made & even though it is not claimed in this Reference, but even otherwise also not allowable
as stop loss of 530 fixed by the Applicant, not triggered on Exchange and the Respondent cannot be
held responsible for loss due to that. Even the Applicant had preferred to keep same even thereafter
and had not initiated to sell on next day i.e. 11.11.2011
35. I conclude that claim of the Applicant on account not following Buy instruction is not proved and
appears to be after thought, hence not allowable. Even after Sell instruction being not followed by the
Respondent, as alleged, on 09.11.2011the Applicant had not immediately objected/ communicated to
the Respondent with by mail or other mode for not following sell instruction.
36. Transcripts produced by
the Applicant, confirms to some extent about loss occurred due to wrong
advice by the Respondent, but no where it is specified about particular transaction, for which loss
is
claimed. Further, since authencity of the transcript is not challenged by the Respondenu we have
presumed same as of 24.07.2012.
37. Even as apparent from transcript
of audio
recording DT. 24.07.2013 The Respondent has not
responded to the sell instruction from the Applicant for sell
of Raymond Ltd. (1000) and
Reliance
Capital Ltd. (1000) on 24.07.2Ot2. However, the Applicant had wrongly claimed loss amount being sell
value of above scrips. The actual loss to the Applicant could be differential value of rate at which his
scrips were instructed to sell and sell rate on opening of next day, which he would have presumably,
sold since not sold on day of sell instruction. Since time of sell instruction was not we have considered
seff instruction .ate on 24.07.2012 and opening rate as
of 25.07.2012as per Bhav copy rates furnished
by NSE.
As
u
nder
SATE
NAME
Nos.
INSTRUCT!ON
RATE
24.07.20t2
Raymond Ltd,
1000
364.65
OPENING
RATE
25.07.20L2
355.70
DIFFERENTIAT
LOSS
RATE
AMOUNT
8.95
8950
of sale instruction, rate not
triggered on 24.07.2072. nor on
Rate
Reliance Capital
Ltd.
1000
382.85
338.15
25.O7.20L2, Hence
determined.
38. The Applicants claim is party allowed.
no
loss
AWAND
A.
The Applicants clalm ls party allowed
B.
The bss on account of not following sell lnstructlon for Raymond's and Rellance capital, as worked out
.
ls determined at Rs. 3,950/-. The Respondrnt ls llable
to pay Rs.8950/- alorg with interest @ 12% p.a
from date 24.o7.2ot2 till date of actu.l p.yment.
C.
No award as to cost
*
Mumbal dt
AL
day of t{ovember, 2013
t-qt-.r
ry--
-
(sHArtEsH R.GHEDTAI
ARBITRATOR