TaxTMI 
TaxTMI 
2023 (8) TMI 1669
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.... that there was a trading account in the name of Nanak Chand, husband of the appellant with the broker Amrapali Aadya Trading & Investment Pvt. Ltd. (hereinafter referred to as 'Amrapali'). This broker became a defaulter under the bye-laws and rules of NSE with effect from October 11, 2017. The appellant lodged a claim on December 20, 2017 with the Defaulter's Section of the exchange against the defaulter Amrapali for non-receipt of securities purchased and non- receipt of funds on sale of securities involving Rs. 65,95,597.45. The committee in its meeting held on June 28, 2019 approved the claim of the claimant to the tune of Rs. 54,47,832.27 and directed the appellant to file an indemnity undertaking. The indemnity undertaking was given by the appellant. The Defaulter Section of the exchange reviewed the documents so filed and observed that the appellant's husband had died on October 10, 2012 and that the claim was filed for the trades which were executed after the death of the claimant and that certain payments were also received from the broker in the account of the claimant during 2012 to 2018. The Committee reviewed the matter and by an order dated May 14, 2020 rejected the c....
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....ulter: (a) which arises out of a contract in securities dealings in which are not permitted or which are not made subject to Bye Laws, Rules and Regulations of the Exchange or in which the claimant has either not paid himself or colluded with the defaulter in evasion of margin payable on bargains in any security; (b) [deleted] (c) which arises from any arrangement for settlement of claims in lieu of bona fide money payment in full on the day when such claims become due; (d) which is in respect of a loan with or without security; (e) which is not filed with the Defaulters' Committee within such time of date of declaration of default as may be prescribed by the relevant authority." A perusal of Clause (d) of the Bye-law 24 indicates that claims in respect of a loan with or without security will not be entertained by the Defaulter's Committee. 8. Chapter XIII of the Bye-laws provides that where a trading member's constituent suffers a loss from the said trading member being declared as a defaulter by the Exchange under Chapter XII then no claim of a claimant shall be eligible for compensation from IPF unless he has acted as a constitu....
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.... provides that Defaulters' Committee shall not entertain claims in respect of a loan with or without security. The Committee deliberated on the nature of claims which could be construed as transactions in the nature of loan and thereafter decided that for the purpose of processing of claims following could be considered as broad guidelines in assessing a claim as loan with or without security. 1. Where the claimant has given funds to the defaulter with the apparent intention to trade but, however, the claimant has not furnished any evidence with respect to the execution of trades for a substantial period of time after entering into an agreement with the defaulter and from the available records it is evident that the defaulter had passed on credits which may be construed to be payments in the nature of interest; 2. Where the claimant has given securities to the defaulter with the apparent intention to trade but, however, the claimant has not furnished any evidence with respect to the execution of trades for a substantial period of time after entering into an agreement with the defaulter and from the available records it is evident that the defaulter had pa....
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.... apparent from the records furnished by the claimant. The Committee also decided that the above guidelines are generic in nature and the conclusion would further depend on documents submitted by each of the claimants and hence, Committee would ultimately take a view of every claim based on the above guidelines and the relevant documents." 12. These guidelines provides that where a claimant has given funds or securities to the defaulter with an intention to trade but has not executed any trade for a substantial period of time and from the available records it is found that the defaulter has passed on credits which may be construed in the nature of payment of interest then such fund / interest given by the claimant will be treated as a loan under Chapter XII of the Bye-laws. Item no. 8 of the guidelines further provides that where a claimant has failed to withdraw the credit balance and/or securities from the defaulter for a substantial period of time without any trading activity then the said deposit of funds / securities would be treated as a loan. 13. In addition to the above, in the 56th minutes of the meeting of the Defaulter's Committee held on 9th June, 2015 tha....
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.... or which are not made subject to Bye-Laws, Rules and Regulations of the Exchange; (b) which arises from any arrangement for settlement of claims in lieu of bona fide money payment in full on the day when such claims become due; (c) which is in respect of a loan with or without security; (d) which is not filed with the Defaulters' Committee (MCSGFC) within such time of the date of declaration of default as may be prescribed by the relevant authority; (e) Claims of associate persons; (f) Claims not supported by adequate documents in respect of payments made to/received from trading member and also securities delivered/received, etc.; (g) Claims for trades that are not executed on the Exchange; (h) Claims of investors whose unique client codes are not registered with Exchange; (i) Claim for damages/harassment/miscellaneous charges; (j) Claim for the interest on the amount claimed; (k) Loss emanating from delayed delivery of securities; (l) Subscription/redemption of units under MFSS (Mutual Fund Service System) platform, trades executed on SLB (Securities Lending and Borrowing); ....