2022 (3) TMI 1639

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....SCRA" for convenience) for violation of SEBI Circular dated November 18, 1993 by mis-utilising funds of clients for purposes other than those mentioned in the Circular such as for settlement of debit balance client's or proprietary obligations or for own purposes, as well as for granting margin exposure to proprietor or debit balance clients. 2. The appellant is registered with SEBI as a Stock Broker of National Stock Exchange of India Limited ("NSE" for convenience), Bombay Stock Exchange Limited ("BSE" for convenience) and MCX Stock Exchange Limited ("MCX-SX" for convenience). Based on an inspection for the period April 01, 2014 to December 2015, a show cause notice dated June 14, 2019 was issued to show cause as to why an inquiry ....

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.... than- i. Money properly required for payment to or on behalf of clients or for or towards payment of a debt due to the Member from clients or money drawn on client's authority, or money in respect of which there is a liability of clients to the Member, provided that money so drawn shall not in any case exceed the total of the money so held for the time being for such each client; ii. such money belonging to the Member as may have been paid into the client account under para 1 C [ii] or 1 C [iv] given above; iii. money which may be mistake or accident have been paid into such account in contravention of para C above." The aforesaid indicates that the broker shall not use funds of clients for any purpo....

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....ch internal creditor cannot be termed as mis-utilization. Only the internal credit balance cannot be considered but also the external creditor's balance should have been considered and compared. The learned AO however found that the circular does not make such difference between any internal and external account. The funds were lent by Axis Bank on each count in the amount of Rs. 6 crore each out of which an amount availed is shown in the next column." .... 8. The learned counsel for the appellant submitted before us that in the show cause notice the respondent had relied on a formula which, in fact, was not in existence at the time of the disputed period but was incorporated in circular dated September 26, 2016 which ....