IPF claim admissibility turned on trading activity and the loan exclusion; continued trades defeated the 24-month inactivity objection.

SEBI's IPF framework, the NSE bye-laws and Defaulters' Committee guidelines governed compensation for claims against defaulting members, but excluded loan transactions with or without security. A claim could be treated as loan-like where trading activity had been absent for a substantial period, later clarified as 24 months. On the facts, the account holder's death did not itself terminate the trading arrangement or negate later trading entries, and the 24-month inactivity threshold had not been crossed because trading continued until 2017. The claim therefore did not fall within the loan exclusion and remained admissible under the IPF regime; the rejection could not be sustained.

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Issues: Whether the appellant's claim for non-receipt of funds and securities was inadmissible on the grounds that the account holder had died before the relevant trades and that the claim, on account of inactivity beyond 24 months, was to be treated as a loan transaction under the exchange bye-laws and IPF framework.

Analysis: The governing framework comprised the IPF-related SEBI circulars, the NSE bye-laws, and the Defaulters' Committee guidelines. Clause 12 of Annexure 1 to the SEBI circular dated 28 October 2004 contemplated compensation for legitimate claims against defaulting members, while Clause D of the SEBI circular dated 23 February 2017 provided that exchange-platform transactions were eligible for settlement from IPF subject to the Defaulters' Committee's norms. Bye-law 24(d) of Chapter XII excluded claims in respect of loans with or without security, and the Committee's guidelines treated a claim as loan-like where there was no trading activity for a substantial period, later clarified as 24 months. On the facts, the death of the account holder did not, by itself, extinguish the trading arrangement or negate subsequent trading activity recorded on the account. The continuation of trading activity until 2017 meant that the 24-month threshold had not expired. The claim therefore did not fall within the loan exclusion and remained admissible under the IPF regime.

Conclusion: The claim was admissible and the rejection order could not be sustained.

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