INVESTOR GRIEVANCES & ARBITRATION (STOCK EXCHANGES)

Source: BSE


Investor Grievances

BSE has established a Department of Investors Services (DIS) to redress investors' grievances. Since its establishment in 1986, the DIS has played a pivotal role in enhancing and maintaining investors' faith and confidence by resolving their grievances either against listed companies or against BSE's Trading Members. Following are the services offered by DIS:

Investors' Grievances against Listed Companies

  • Investors' complaints against listed companies are forwarded by BSE to the concerned companies, and a copy is sent to the complainant. The investors are advised to inform BSE if the complaints are not resolved within 30 days. If a company fails to redress the complaint within 30 days, BSE sends a reminder to the company. BSE follows-up with the companies and / or their Registrar & Transfer Agents, to resolve such complaints. If the total number of pending complaints against a company exceeds 25, and remain unresolved by the company for more than 45 days, then steps are initiated by BSE to suspend trading in the securities of such company till the pending complaints are resolved. BSE may also transfer such scrips to "Z" Group.
  • A "Z" category company indicates that it has not complied with the various provisions of the listing agreements including non-resolution of investors' complaints. Through the creation of "Z' category, BSE cautions investors to be more careful while investing such companies.
  • Investors are expected to submit their complaints on the prescribed complaint format to the nearest Regional Investor Service Centre of BSE depending on their respective address. This will enable the 66 Regional Investor Service Centres to process their complaint expeditiously. The investor shall approach the nearest Regional Investor Service Centre at the current address/registered office address of the constituent, as duly communicated.

Visit of Registrar & Transfer Agents to BSE

  • BSE regularly organizes visits of Registrars and Transfer Agents (RTAs) at its Registered Office to allow Trading Members and investors to have direct interface with them for redressal of complaints against companies listed on BSE.

Investors' Grievances against BSE's Trading Members

  • Investors are expected to submit their complaints on the prescribed Complaint Form.
  • The contact person for complaints through SCORES is as follows:

    Mr. Mahesh Ghadi, DM - Investor Services
    Contact No. : 022 22728517
    Email id : mahesh.ghadi@bseindia.com
  • BSE has started Regional Investor Service Centre at following locations to provide Investor Grievance Redressal (IGRC) and Arbitration Mechanism to the Investors.

Name of Centre

Operations Effective From

Mumbai, Delhi, Kolkatta and Chennai

31st January, 2009

Hyderabad, Ahmedabad, Indore and Kanpur

01st October, 2012

Bangalore, Jaipur and Pune

31st December, 2013

Vadodara, Lucknow and Patna

30th June, 2014

  • The investors shall approach the nearest Regional Investor Service Centre, the most recent address / registered office address of the constituent, as duly communicated in writing to the Trading Member in accordance with regulatory requirement is located. The hearings shall be held in the concerned Regional Investor Service Centre where the Applicant has filed his application for IGRC/Arbitration.

Regional Investor Service Centres

Ahmedabad

BSE Investor Service Centre

203/204,' Abhishree Avenue'
Near Nehru Nagar Circle
S. M. Road, Ambawadi
Ahmedabad - 380 015

Telephone No.: 079-2640 2992 / 2646 2992
Fax No.: 079 - 2640 2992
Contact Person : Mr. Nikhil Mehta

E-mail Id: nikhil.mehta@bseindia.com

Bangalore

BSE Investor Service Centre
Stock Exchange Towers,
Annexe Building No. 51,
1st Cross, J C Road,
Bangalore - 560027

Telephone No. 080 – 4150 5075
Contact person - Mr. Thilakraj Rai

E-mail Id : thilakraj.rai@bseindia.com

Chennai

BSE Investor Service Centre

No.4, Vijaya Towers, 3rd Floor Kodambakkam High Road
(Opp.to Palm Grove Hotel)
Chennai – 600 034

Tele. No.:044-42089959
Telefax No.:044-42089958
Contact Person : Ms. Deepa Rangarajan

E-mail Id: iscchennai@bseindia.com, deepa.rangarajan@bseindia.com

New Delhi

BSE Investor Service Centre

101, 1st floor, Aggarwal Corporate Tower,

Plot No. 23, District Centre, Rejendra Place

New Delhi 110 008

Tel. No. 011-25782116-18

Contact Person : Ms. Neha Gupta

E-mail Id:iscdelhi@bseindia.com, neha.gupta@bseindia.com

Hyderabad

BSE Investor Service Centre

Flat no. 302, Marigold Pavani Estates,
Dwarkapuri Colony,
Pujagutta,
Hyderabad - 500082

Telephone No.: 040-30605844/45/46
Contact person - Mr. Siddharth Dixit

E-mail Id: siddharth.dixit@bseindia.com

Indore

BSE Investor Service Centre

201, Palika Plaza
Phase II, MTH Compound
Indore

Tele No.: 0731-4008208
Fax No.: 0731-4008222
Contact Person : Mr. Amit Keshri

E-mail Id: amitkeshri@bseindia.com

Jaipur

BSE Investor Service Centre

Office No. 401, Situated on 4th floor,
Durga Business Center,
Opp. Hotel Gangaur, M.I.Road, Jaipur - 302001
Contact Person : Mr. Chidrup Jain

E-mail Id: ipf.chidrup@bseindia.com

Kanpur

BSE Investor Service Centre

5th Floor, Padam Towers
14/113, Civil Lines
Kanpur - 208001

Tele No.: 0512 - 233 8115 / 233 8074
Contact Person : Mr. Jitendranath Shukla

E-mail Id: jitendranath.shukla@bseindia.com

Lucknow

BSE Investor Service Centre, Lucknow

109, 1st floor,
Saran Chamber -2,
5, Park Road,1
Hazaratganj,
Lucknow – 226001

Contact Person : Mr. Sanjeo Tripathi

E-mail Id:sanjeo.tripathi@bseindia.com

Kolkata

BSE Investor Service Centre

57 Jawaharlal Nehru Road,
Horizon, 2nd Floor Near Rabindra Sadan Metro
Kolkata - 700 071

Tele. No. :033-22821375,
Telefax No.:033-22821376
Contact Person : Mr. Anirban Guha

E-mail Id:isc.kolkata@bseindia.com, anirban.guha@bseindia.com

Mumbai

BSE Investor Service Centre

Cama Building, 1st floor,
Dalal Street,
Fort, Mumbai – 400001.

Tele. No.: 022-22721233/34
Fax No.: 022-22723677
Contact Person: Mr. Lochan Tendle

E-mail Id: stanies.crasto@bseindia.com

Patna

BSE Investor Service Centre, Patna

609, 6th floor,
Ashiana Plaza,
Budh Marg,
Patna – 800001.

Contact Person: Mr. Prashant Jha

E-mail Id: prashant.jha@bseindia.com

Pune

BSE Investor Service Centre

Shivleela Chambers,
4th Floor,752 Sadashiv Peth,
R.B.Kumathekar Marg,
Pune - 411030.

Tele. No. : 020-65202065
Contact person - Mr. Jason Dias
E-mail : jason.dias@bseindia.com

Vadodara

BSE Investor Service Centre, Vadodara

E/1, 109, Tower 3,
Kashi Visheswar Township Flat,
Jetalpur Rd,
Vadodara - 390007.

Contact person - Mr.Anoop Dwivedi
E-mail : anoop.dwivedi@bseindia.com

  • The complaints of investors against BSE's Trading Members are forwarded to the concerned Trading Members for resolution. Trading Members are supposed to give a reply within three working days from the receipt of the complaint from BSE. In case no reply is received from the Trading Member or the reply received from the Trading Member does not satisfy the complainant, the same is placed before Investors' Grievances Redressal Committee (IGRC).
  • BSE provides services of IGRC which in its meetings mediates and counsels the disputing parties to find an amicable solution. In order to organize such a meeting the Exchange sends Notices to both parties to remain present before the said IGRC. In cases, where an amicable solution cannot be reached IGRC suggests the complainants to opt for an arbitration, if they so desire. It records the final outcome in the matter in the form of minutes, a copy of which is handed over to both the parties, or mailed to an absent party.
  • The Exchange levies penalties on the Trading Member for not replying within the specified period to the complaints forwarded to them or not attending the IGRC meetings. Further, in case the Trading member fails to implement what is agreed before IGRC as recorded in the said minutes, the Exchange places the same minutes before the Disciplinary Action Committee when then levies the penalties.
  • The complaints amounting to less than Rs. 25,00,000/- is heard by the IGRC comprising of one member, and those amounting to more than Rs. 25,00,000/- are heard by the IGRC comprising of three members.
  • The Exchange has formed separate IGRCs for each Regional Investor Service Centre to deal with the cases. It will be in the interest of investors to ascertain the concerned Regional Investor Service Centre for filing his / her complaint, since the period consumed in redressal of complaint through IGRC will not be considered while measuring period of 'limitation' in filing arbitration application.

Investor Protection Fund

BSE set up an Investor Protection Fund (IPF) on July 10, 1986, to compensate the clients who suffer financial loss due to their member being declared as defaulters, in accordance with the Guidelines issued by the Ministry of Finance, Government of India. IPF is managed by the Trustees appointed by BSE. The Fund corpus is created as follows:

  • The Members contribute Re.0.01 per Rs.1 lakh of gross turnover, which is debited to their General Charges Account.
  • BSE contributes, 1% of the listing fees collected by it on a quarterly basis. The entire interest earned by BSE on 1% security deposit kept with it by companies making public/rights issues is credited to the Fund. As per the SEBI directive, auction proceeds that have been impounded in certain cases where price manipulation / rigging was suspected are transferred to the Fund.
  • The surplus lying in the account of the defaulters after meeting their liabilities on BSE is released to them after transferring 5% of the surplus amount to this Fund. The interest received on amounts invested from the corpus of the fund is credited to the fund at the end of each financial year.

Compensation Policy

At present, the Exchange compensates to the maximum extent of Rs. 15,00,000/- to the client of a defaulter from its Investors Protection Fund (IPF). The amount is paid to the extent of award amount or Rs. 15,00,000/-, whichever is lower. The revised amount of Rs. 15,00,000/- shall be applicable to the clients of the Trading Member of the Exchange, who are declared Defaulters after 5th December, 2009. (This amount has been progressively raised by BSE from Rs.10,000 in 1988 to the present level).
The arbitration Award obtained by investors against defaulters are scrutinized by the Defaulters Committee, a Standing Committee constituted by BSE, which may recommend to the Trustees of the Fund to release the payment, as per the applicable limits to the clients of Trading Members who have been declared Defaulter. After the approval of the Trustees of the Fund, the amount is disbursed to the investors. Those claims which are permissible for payment from IPF as per the Trust Deed are considered by the Defaulters' Committee for recommending payment from the Fund.

Arbitration

With a view to ensure speedy and effective resolution of claims, differences and disputes among non-Trading Members and Trading Members and Trading Members inter-se, BSE has laid down an arbitration procedure. This procedure is duly embodied in the Rules, Bye-laws and Regulations of BSE, and duly approved by the Government of India/SEBI, under the Securities Contracts (Regulation) Act, 1956.

In such case parties may chose the route of arbitration.

Name of Centre

Operations Effective From

Mumbai, Delhi, Kolkatta and Chennai

31st January, 2009

Hyderabad, Ahmedabad, Indore and Kanpur

01st October, 2012

Bangalore, Jaipur and Pune

31st December, 2013

Vadodara, Lucknow and Patna

30th June, 2014



The investors shall approach the nearest Regional Investor Service Centre, the most recent address / registered office address of the constituent, as duly communicated in writing to the Trading Member in accordance with regulatory requirement, is located. The hearings shall be held in the concerned Regional Investor Service Centre where the Applicant has filed the Application for IGRC/Arbitration.

Regional Investor Service Centres

Ahmedabad

BSE Investor Service Centre

203/204,' Abhishree Avenue'
Near Nehru Nagar Circle
S. M. Road, Ambawadi
Ahmedabad - 380 015

Telephone No.: 079-2640 2992 / 2646 2992
Fax No.: 079 - 2640 2992
Contact Person : Mr. Nikhil Mehta

E-mail Id: nikhil.mehta@bseindia.com

Bangalore

BSE Investor Service Centre
Stock Exchange Towers,
Annexe Building No. 51,
1st Cross, J C Road,
Bangalore - 560027

Telephone No. 080 – 4150 5075
Contact person - Mr. Thilakraj Rai
E-mail Id : thilakraj.rai@bseindia.com

Chennai

BSE Investor Service Centre

No.4, Vijaya Towers, 3rd Floor Kodambakkam High Road
(Opp.to Palm Grove Hotel)
Chennai – 600 034

Tele. No.:044-42089959
Telefax No.:044-42089958
Contact Person : Ms. Deepa Rangarajan

E-mail Id: iscchennai@bseindia.com, deepa.rangarajan@bseindia.com

New Delhi

BSE Investor Service Centre

101, 1st floor, Aggarwal Corporate Tower,

Plot No. 23, District Centre, Rejendra Place

New Delhi 110 008

Tel. No. 011-25782116-18

Contact Person : Ms. Neha Gupta

E-mail Id:iscdelhi@bseindia.com, neha.gupta@bseindia.com

Hyderabad

BSE Investor Service Centre

Flat no. 302, Marigold Pavani Estates,
Dwarkapuri Colony,
Pujagutta,
Hyderabad - 500082

Telephone No.: 040-30605844/45/46
Contact person - Mr. Siddharth Dixit

E-mail Id: siddharth.dixit@bseindia.com

Indore

BSE Investor Service Centre

201, Palika Plaza
Phase II, MTH Compound
Indore

Tele No.: 0731-4008208
Fax No.: 0731-4008222
Contact Person : Ms. Sheron Goyal

E-mail Id: Sheron.goyal@bseindia.com

Jaipur

BSE Investor Service Centre

Office No. 401, Situated on 4th floor,
Durga Business Center,

Opp. Hotel Gangaur, M.I.Road, Jaipur - 302001

Contact Person : Mr. Chidrup Jain

E-mail Id: ipf.chidrup@bseindia.com

Kanpur

BSE Investor Service Centre

5th Floor, Padam Towers
14/113, Civil Lines
Kanpur - 208001

Tele No.: 0512 - 233 8115 / 233 8074
Contact Person : Mr. Jitendranath Shukla

E-mail Id: jitendranath.shukla@bseindia.com

Kolkata

BSE Investor Service Centre

57 Jawaharlal Nehru Road,
Horizon, 2nd Floor Near Rabindra Sadan Metro
Kolkata - 700 071

Tele. No. :033-22821375,
Telefax No.:033-22821376
Contact Person : Mr. Anirban Guha

E-mail Id:isc.kolkata@bseindia.com, anirban.guha@bseindia.com

Lucknow

BSE Investor Service Centre, Lucknow
109, 1st floor,
Saran Chamber -2,
5, Park Road,1
Hazaratganj,
Lucknow – 226001

Contact Person : Mr. Sanjeo Tripathi

E-mail Id:
sanjeo.tripathi@bseindia.com

Mumbai

BSE Investor Service Centre

Cama Building, 1st floor,
Dalal Street,
Fort, Mumbai – 400001.

Tele. No.: 022-22721233/34
Fax No.: 022-22723677
Contact Person: Mr. Lochan Tendle

E-mail Id: stanies.crasto@bseindia.com

Pune

BSE Investor Service Centre

Shivleela Chambers,
4th Floor,752 Sadashiv Peth,
R.B.Kumathekar Marg,
Pune - 411030.

Tele. No. : 020-65202065
Contact person - Mr. Jason Dias

E-mail :jason.dias@bseindia.com

Vadodara

BSE Investor Service Centre, Vadodara

E/1, 109, Tower 3,
Kashi Visheswar Township Flat,
Jetalpur Rd,
Vadodara - 390007.

Contact person - Mr.Anoop Dwivedi
E-mail : anoop.dwivedi@bseindia.com

Patna

BSE Investor Service Centre, Patna

609, 6th floor, Ashiana Plaza, Budh Marg, Patna 800 001

Contact Persons : Mr. Prashant Jha

Email ID : prashant.jha@bseindia.com


JURISDICTION OF COURTS

The Courts in Mumbai shall have exclusive jurisdiction in respect of all proceedings to which the Exchange is a party. In case of all other proceedings, the Courts that have jurisdiction over the area in which the respective Regional Investor Service Centre is situated shall have jurisdiction.

All dealings, transactions and contracts which are subject to the Rules, Bye-laws, and Regulations of the Exchange, and every arbitration application shall be deemed in all respects as subject to the Rules, Bye-laws and Regulations of the Exchange, and shall be deemed to be and shall take effect as wholly made, entered into and to be performed in the city of Mumbai and the parties to such dealings, transactions, contracts and agreements shall be deemed to have submitted to the jurisdiction of the Courts in Mumbai for the purpose of giving effect to the provisions of the Rules, Bye-laws and Regulations of the Exchange. Provided however that upon the amendments to the Rules, Bye-laws and Regulations with regard to Regional Arbitration Centers and other incidental and consequential matters in connection therewith or relating thereto coming into force, the Courts in Mumbai shall have exclusive jurisdiction in respect of all proceedings to which the Exchange is a party, and in respect of all other proceedings, the Courts having jurisdiction over the area in which the respective Regional Arbitration Centre is situated, shall have jurisdiction.

The disputing parties, namely the Trading Member and Non-Trading Member are expected to send documentary proof, like contract notes, bills, ledger accounts, statement of accounts, and other relevant documentary proof, along with the prescribed Arbitration Form, duly filled in, to the respective Regional Arbitration Centre.

The Arbitral Tribunal is appointed from the Arbitration Committee appointed for the purpose. The Committee consists of retired Judges of High Court, experienced Solicitors, Advocates, Chartered Accountants, Company Secretaries and other experts. Arbitral Tribunals, consisting of arbitrator / s other than non-trading members are appointed to decide the disputes between the Trading Member and Non-Trading Members.


Arbitration between Trading Members inter-se

Arbitration Committee

The provisions relating to Arbitration Committee which deals with arbitration between Trading Members inter-se are laid down in the Bye-laws Nos.282 to 315 of the Rules, Bye-laws and Regulations of Exchange.

A three-tier arbitration machinery has been provided at BSE to resolve the disputes between the Trading Members. All claims, complaints, differences and disputes between Trading Members arising out of, or in relation to any bargains, dealings, transactions or contracts are subject to arbitration, and are referred to the Arbitration Committee. The Arbitration Committee is appointed by the BSE's Board of Directors every year.

Lower Bench Arbitration

A Bench of three Arbitrators from the Arbitration Committee is constituted to look into such disputes if the value of the claim exceeds Rs. 25,000 while only one arbitrator hears the dispute if value is less than Rs. 25,000. A Trading Member filing an arbitration reference is required to attach a coupon of Rs.100 along with his arbitration application. Both, the applicant and the respondent, or their authorized representatives are required to be present in the arbitration meetings. After hearing the parties, the arbitrators give the Award.

An aggrieved Trading Member, who is not satisfied with the Award of the Lower Bench Arbitration Committee, may file an appeal before the Full Bench of the Arbitration Committee within seven days from the date of receipt of the award by him, if the principal amount of the claim disallowed by the lower bench to the Appellant exceeds Rs 1,00,000, or if the amount awarded against the Appellant by the lower bench (without taking into account interest from the date of Award) exceeds Rs.1,00,000. The Trading Member who desires to file an appeal before the Full Bench of the Arbitration Committee is also required to deposit the amount of the Award or shares as stated in the Lower Bench Award with BSE, along with a fee of Rs.500. The deposit amount/shares are retained with BSE until the case is decided by the Full Bench. In the Full Bench Arbitration meetings, all the members of the Arbitration Committee decide the case of Appeal against the Award of the Lower Bench.

Appeal before the Board of Directors

A Trading Member who is not satisfied with the award of the Full Bench Arbitration Committee may prefer to make an appeal before the Board of Directors, if the principal Amount of claim disallowed by the full bench of the Arbitration Committee to the party dissatisfied with the Award exceeds Rs.5,00,000, or if the amount awarded by the full bench against a party dissatisfied with the Award (without taking into consideration interest from the date of Award) exceeds Rs. 5,00,000. An Appeal should be filed within seven days from the date of the Award of the Full Bench Arbitration Committee by paying a fee of Rs.750 and also by depositing the Award amount / shares as stated in the Award with the Stock Exchange. The Board of Directors is the final Appellate Authority in the case of arbitration between Trading Members. Beyond this level, there is normally no Appeal provision; but in exceptional situations, the Board of Directors may permit a Trading Member to make a further appeal to a Court of Law.

Arbitration between Non-Trading Members and Trading Members

Bye-laws Nos. 248 to 281 of the Rules, Bye-laws and Regulations of BSE deal with the procedure regarding arbitration between non-Trading Members and Trading Members of BSE.

Period for filing Arbitration: The period for filing the claim in Arbitration is governed by the Law of Limitation Act, 1963, and the period consumed during the process of Investor Grievance Redressal Committee is excluded for computing the period under the Law of Limitation Act, 1963.

An Arbitral Tribunal of one arbitrator is appointed if the value of the disputed claim is up to Rs. 25 lakhs. If the value of claim is greater than Rs. 25 lakhs, an Arbitral Tribunal of three arbitrators is appointed. Arbitral Tribunals constituted, comprise of only non-trading Member / s to decide such arbitration references. A party dissatisfied with the Award given by the Lower Bench can file an Appeal with the Appellate Bench under the Rules, Bye-Laws and Regulations. In case if appeal is preferred in, the same is decided by the Appellate bench of three Arbitrators and the Award passed by the Appellate Bench is final and binding on the parties subject to challenge u/s 34 of Arbitration and Conciliation Act, 1996. The Award is enforceable the decree of the Court on expiry of a period, provided under section 34(i) of Arbitration and Conciliation Act, 1996. Bye-laws of BSE provide that an arbitration reference be decided normally within a period of 4 months, from the date of Appointment of Arbitrators. However, an extension for a maximum period of 2 months may be considered by the Exchange.

Process of Arbitration

Applications may be filed by non - Trading Members against Trading Members and vice-versa. The disputing parties are advised to refer to Byelaws 252 of BSE, relating to 'Limitation', while filing an Arbitration application with BSE.

Arbitration application forms (Form 1, 2, 1A, 2A; as applicable) along with Form 20/21, Claim Sheet, Check List, Instructions and list of Arbitrators could be downloaded from the BSE's website and is also available free of cost at Regional Investor Service Centres of BSE.

Documents to be submitted

Following are the documents to be submitted for filing an application for arbitration:

a. Statement of the case explaining brief history of the relationship of applicant with the respondent, details about the dispute and the nature of transaction/s and bifurcation of the claim amount into claim on account of genuine delivery based transaction and square off transaction/s.

b. Contract Notes pertaining to the transaction in dispute

c. Bills issued/ received by the applicant

d. Copy of the Statement of Accounts given by the Trading member

e. Documents pertaining to receipt / delivery of shares

f. Any other documents in support of the claim

g. An accurate list of the documents produced

h. PAN / GIR No. of the applicant

i. Certified copy of the Balance Sheet of the applicant showing the dues

j. Copy of acknowledgement of the latest Income Tax Return

There are various forms for Arbitration proceedings depending upon whether the claim amount is up-to Rs. 25 lakhs or above.

In the case of claims up to Rs. 25 lacs the applicant proposes the names of three Arbitrators and respondent gives consent to any one of them and such person consented by the respondent acts as an Arbitrator in the matter. In case the respondent fails to consent or refuses to consent to any of the proposed Arbitrators, the Managing Director, and Chief Executive Officer of BSE as per Rules, Bye-laws and Regulations of BSE, appoints the Arbitrator in the matter. (Fees will be applicable as per the fee structure. Both the parties have to deposit the fees and the fees deposited will be refunded to the Award holder after the deduction of statutory charges.

Deposit of the fees will be exempted for applicant client in case where the claim amount is up to Rs. 10 Lakhs for Arbitration Reference filed on or after November 7, 2012 onwards.

In the case of claims above Rs. 25 lacs, an Arbitral Tribunal of three Arbitrators is appointed; one each by an Applicant, Respondent and the Managing Director or Chief Executive Officer of BSE under its Rules, Bye-Laws and Regulations. If parties or any of the parties authorize/s BSE to appoint an Arbitrator on his / her / their behalf or if the parties or any of the parties fail/s to appoint the Arbitrator/s, the Managing Director or Chief Executive Officer of BSE appoints the Arbitrator/s on their behalf. (Fees will be applicable as per the fee structure. Both the parties have to deposit the fees; and the fees deposited by the party in whose favour the award is finalized will be refunded to him / her after deducting the statutory charges.

A copy of the documents filed by the applicant along with Forms 3, 4 and 5 / 3A, 4A and 5A (as applicable) are sent by BSE to the respondent advising him / her / them to submit the details of counter claim, if any, consent to the proposed arbitrator / appointment of arbitrator (as applicable), and payment of arbitration fees (as applicable). The above forms are also available on BSE website through downloads. Both parties are intimated by BSE regarding the appointment of arbitrators. Subsequently, Notice of Hearing is sent to both the parties. The hearings are then arranged as decided by the Arbitrators. Minutes of every hearing is prepared and taken on record. Advocates may appear on behalf of each party after taking permission from the Arbitral Tribunal.

As per the provisions of Bye-laws 254 of the Rules, Bye-laws and Regulations of BSE, the Arbitral Tribunal shall make the award within three months from the date of appointment of Arbitrators or within an extended time, if approved by the Managing Director and Chief Executive Officer of BSE. But it shall not be more than two months. The award has to be a speaking award. Ex-parte awards are also given. The final award is printed on stamp paper of Rs. 100 and signature / s of Arbitrator / s are obtained on the final award. The award is forwarded to the applicant as well as to the respondent.

Within 15 days from the receipt of the Award, either party involved in arbitration may request the Arbitral Tribunal to correct any compensational/arithmetical/clerical typographical or any other error. Or it may request the Arbitral tribunal to give a clear interpretation of a specific point or of a part of the Award or to make an additional Award regarding the claims presented in the Arbitration proceedings which may have been omitted in the Award.


Appeal provision in the Bye-laws pertaining to Non-Trading Member V/s Trading Member Arbitration

Time Limit: Appeal against the Award of the arbitrators is to be filed within 30 days from the date of receipt of the award.

Deposit: A party appealing against an award is required to deposit with the Exchange the amount or securities (or value thereof) due under the Award, if the award has been passed against him. This amount is deposited with an understanding that the said amount shall be released to the party in whose favour the Appeal is decided, if the same is not challenged in the Court under the provisions of Arbitration and Conciliation Act, 1996.

Fees for Appeal: A party appealing against an award is required to pay the necessary appeal fees as decided from time to time.

Appeal Memo: A party desiring to prefer an appeal against an award of the Arbitrator(s) is required to submit five sets of Memorandum of Appeal.

Appeal Bench : The Appeal filed by a party against an award will be heard and decided by an Appeal Bench of three Arbitrators, appointed by the Managing Director and Chief Executive Officer of BSE. The Appeal Bench decides the appeal within three months from the date of appointment of Arbitrators, or within an extended time, which if approved by the Managing Director or Chief Executive Officer of BSE, which shall not be more than two months.

SETTLEMENT OF AWARDS AGAINST DEFAULTER MEMBER

An Award against a defaulter Trading Member is placed before the Defaulters' Committee (DC). The Defaulters' Committee recommends payment to the award holder from the Investors Protection Fund (IPF) of the Exchange to the extent of award amount or maximum permissible amount from the Fund, whichever is lower. At present the maximum amount payable from the IPF, per client per defaulter is Rs. 15,00,000/-, which shall be applicable to the clients of the Trading Member of the Exchange, who will be declared Defaulter after 5th December, 2009. The claims which are found to be eligible for payment as per the Trust Deed of IPF are considered by the Committee for recommending payments from the fund.

The Committee in its periodical meetings considers the various assets available in the account of the defaulter and appropriates the same in the order of priority specified under the Rules, Bye-laws and Regulations of the Exchange. The clients who obtain the arbitration awards are considered for payment from the assets of the defaulter.


Assets of a Trading Member comprises of the following :

1. Securities to be received by the Trading Member for the settlement

2. Membership security deposit (in terms of cash, Fixed Deposit Receipts, securities lying with BOI Shareholding Limited).

3. Any Deposits lying in the account of defaulter with the Exchange.

4. Bad Deliveries claimed by the Trading Member who is subsequently declared defaulter, when rectified by the respective Trading Member. When a Trading Member is declared a defaulter, the DC clubs all these assets and disburses them in the order of priority, as given below. Liabilities of a defaulter arise only out of those transactions which are executed through the trading mechanism of BSE.

Priority of Disbursement

Once a Trading Member has been declared a defaulter his liabilities are settled in the following order of priority as provided under the Rules, Bye-laws and Regulations of the Exchange :

1. Dues of the Trade Guarantee Fund

2. Dues to SEBI, BSE, and Clearing House, as decided by DC

3. Trading Members who have obtained arbitration awards against the defaulter

4. Non-Trading Members (clients of defaulter) who have obtained arbitration awards against the defaulter

5. Dues to the Investor Protection Fund (IPF)

Only in case the 1st preference in the above mentioned list is satisfied fully, the Committee proceeds towards the 2nd preference in the list, and so on. In case the first preference has been fully satisfied and the remaining assets are not sufficient to satisfy the next preference fully, the next preference is satisfied on a pro-rata basis, and so on. In case a Court of Law declares the defaulter as adjudicated insolvent, all the above claims stand at par.

 

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