M/S PRRSAAR THROUGH ITS PROPRIETOR VED PRAKASH GUPTA versus NATIONAL STOCK EXCHANGE OF INDIA LTD.

Citation: [2019] 10 S.C.R. 291 · Decided: 22-07-2019 · Supreme Court of India · Bench: A.M. KHANWILKAR, DINESH MAHESHWARI · Disposal: Appeal(s) allowed

Judgment (excerpt)

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M/S PRRSAAR THROUGH ITS PROPRIETOR
VED PRAKASH GUPTA
v.
NATIONAL STOCK EXCHANGE OF INDIA LTD.
(Civil Appeal No.3260 of 2017)
JULY 22, 2019
[A.M. KHANWILKAR AND DINESH MAHESHWARI, JJ.]
Stock Exchange: Disciplinary Action Committee of National
Stock Exchange of India Ltd. found the appellant guilty of
indulging in financial irregularities and misconduct in conduct of
business and imposed fine/penalty of Rs.10 lakhs with suspension
from trading membership for five trading days – Before the
appellate authority, appellant had specifically raised the issue about
the appropriateness of the order suspending his trading
membership and also quantum of penalty imposed by the
appropriate authority – According to appellant, as per circular dated
27.06.2013, suspension of trading is not contemplated for
violations allegedly committed by him and penalty in terms of
circular dated 27.06.2013 could not exceed an amount of Rs.1 lakh
or 0.1% of the value of misuse, whichever is higher – Appellate
Authority, however, did not examine these contentions but proceeded
to reject the appeal on the ground that the penalty imposed by
appropriate authority cannot be said to be unreasonable or
excessive – Therefore, impugned order is set aside and appellant is
relegated to Appellate Tribunal by restoring the appeal for
reconsideration only on the issue of quantum of punishment.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 3260
of 2017
From the Judgment and Order dated 20.02.2017 of the  Securities
Appellate Tribunal at Mumbai in Appeal No. 53 of 2017
Mukesh M. Goel, R. C. Kaushik, Advs. for the Appellant.
V. Giri, Sr. Adv., Rabin Majumder, Sumit Nagpal,
Muthucharan S., Advs. for the Respondent.
[2019] 10 S.C.R. 291
   291
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SUPREME COURT REPORTS
[2019] 10  S.C.R.
The following Order of the Court was passed:
        O R D E R
1.  Appeal admitted.
2.  Heard learned counsel for the parties.
3.  This appeal takes exception to the order dated 20.02.2017
passed by the Securities Appellate Tribunal at Mumbai in Misc. Application
No.49 of 2017 and in Appeal No.53 of 2017, whereby the Appellate
Tribunal rejected the appeal preferred against the order dated 03.02.2017
passed by the Disciplinary Action Committee of National Stock Exchange
of India Ltd. which found the appellant guilty of indulging in financial
irregularities and misconduct in conduct of business, and for which a
fine/penalty of Rs.10 lakhs with suspension from trading membership of
the appellant for five trading days came to be imposed.
4. The argument of the appellant before this Court is that the
penalty/fine could be imposed only in the context of Circular dated
27.06.2013.  The relevant part of the circular read thus:
5. Thus, the appropriate authority could not have issued suspension
of trading membership of the appellant. Further, the authority could not
have imposed penalty/fine more than quantified in the circular extracted
above.
6. The respondent, however, relied on the bye-laws, Chapter IV
Rule 1, which reads thus:-
“Disciplinary Jurisdiction
(1) The relevant authority may expel or suspend and/or fine
under censure and/or warn and/or withdraw any of the
“19. Improper use of funds 
raised by placing of clients 
securities with bank/any 
other financial institutions 
viz. 
funds 
not 
used             
for 
respective 
client 
obligation/margins. 
 
Rs. 1,00,000/- or 0.1% 
of the value of misuse 
whichever is higher. 
 
Mis-utilization of clients’ 
funds and/or securities.” 
 
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membership rights of a trading member if it be guilty of
contravention, non-compliance, disobedience, disregard or
evasion of any of the Bye Laws, Rules and Regulations of the
Exchange or of any resolutions, orders, notices, directions or
decisions or rulings of the Exchange or the relevant authority
or of any other Committee or officer of the Exchange
authorized in that behalf or of any conduct, proceeding or method
of business which the relevant authority in its absolute
discretion deems dishonourable, disgraceful or unbecoming a
trading member of the Exchange or inconsistent with just and
equitable principles of trade or detrimental to the interests, good
name or welfare of the Exchange or prejudicial or subversive
to its objections and purposes.”
7.  The provision regarding suspension of business reads thus:
“Suspension of Business:
   (8)  The relevant authority may require a trading member to
suspend its business in part or in whole:
      (a) 

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