BEFORE THE SOLE ARBITRATOR SHRI M S PRATAP (In the matter of Arbitration under Bye-laws, Rules and Regulations

of the National Stock Exchange of India) Arbitration matter (AM) No. CM/C-0024/2010

Between M/s Geojit BNP Paribas Financial Services Ltd, th 5 Floor, FinanceTower, Kaloor, Cochin-682017 Applicant (Trading Member) and Mrs Jayanthi (ANJ 248), Flat DRC Royalty, Plot 7477, 8th Street, Baba Nagar, Villivakkam, Chennai 600 049 PAN : AHGPJ4719E Respondent (Constituent)

Contd..2

Page : 2 AWARD Geojit BNP Paribas Financial Services Ltd hereinafter referred to as the Applicant has filed the above Arbitration for recovery of Rs.1,07,512.25( Rupees One Lakh Seven Thousand Five Hundred Twelve and paise Twenty Five only) from Mrs Jayanthi residing at the above mentioned address hereinafter referred to as the Respondent. The facts giving rise to the above claim inter alia are on the following grounds. The Applicant has been operating as a registered Stock Broker with the National Stock exchange of India (NSE). The Respondent had registered herself as a client on 6/11/08 by entering into a Member-Client Agreement. She was actively trading ever since with the Applicants Anna Nagar Branch Office. The agreement is Ex-A1. In course of time between the period 20/07/09 to 15/09/09 due to various trades undertaken by the Applicant on behalf of the Respondent, the debit balance in her running account had touched Rs.1,07,512.25 (Rs. One lakh Seven Thousand Five Hundred Twelve and paise Twenty Five only). The Ledger Statements reflect the following amounts

Rs.626(Rs.Six Hundred Twenty Six only) under NSDL Account and Rs.1,06,886.25 ( Rs.One Lakh Six thousand Eight Hundred Eighty Six and paise Twenty Five only) under NSECM Account. Adding the permissible Penal Charges under the Member-Client Agreement, the total debit balance comes to Rs.1,20,012.25 (Rs.One lakh Twenty Thousand Twelve and paise Twenty Five only). However the Respondent had given a cheque for Rs.12,500/- (Rs. Twelve Thousand Five Hundred only) on 14/10/09 which was credited to her A/c. The Applicant had served the Arbitration Notice dated 12/10/09 (Ex A3) vide the Postal Acknowledgement (Ex-A4). The Applicant has been carrying out the trades as per her instructions from time to time and the contract notes are being sent to her, on her Contd..3

Page : 3 E-Mail ID as provided in the Agreement. As she failed to clear the above amounts, the Applicant prays for an award for Rs.1,07,512.25 (Rs. One Lakh Seven Thousand Five Hundred Twelve and Paise Twenty Five only) being the debit balance with interest @12% from the date of accruel of the debit along with the appropriate costs towards Arbitration. The respondent had submitted her reply to the claim inter alia on the following grounds. She

contends that She was illiterate, was never interested in Trading. She was compelled to open a Trading Account by the Representatives of the Applicant. She did not read and understand the contents of the Member-Client Agreement. The trades between 20/07/09 to 15/09/09 are all unauthorised. She was not keeping well during that period and had to be treated frequently at the Sudaram Medical Foundation. During remaining period, she was too week to indulge in trading. The entire placements during that period are unauthorised and as such the debit balance of Rs.1,07,512.25 (Rs.One Lakh Seven Thousand Five Hundred Twelve and Paise Twenty Five only) is not tenable, as all the transactions were carried out on behalf of the Respondent with malafide intention to gain brokerage. It is further alleged that the Email ID on which the Applicant has been sending Mails i.e.Vejaru 2001@yahoo.com whereas in the relevant form of authorising the applicant to send the documents by mail, she had provided as follows Vejaro_2001@yahoo.com. Therefore, She did not receive any mails sent to her. The Applicant had also not been sending the Quarterly Statements. She stopped trading from July 2009. On 17/09/09, one Shri Raju a Staff member from the Applicants Office visited her at her residence and informed her, that there was some balances due from her prior to her stopping, the trades from July 2009. As such he demanded a sum of Rs.12,500/(Rs. Twelve Thousand Five Hundred only) in full and final settlement of her dues as on 15/10/2009. She was shocked to receive the Notice demanding Rs.1,07,512.25 (Rs One Lakh Seven Thousand Five Hundred and Twelve and Paise Twenty Five only) . She along with her husband approached one Shri Srinivasan, the Branch Manager of the Applicants Anna Nagar Branch, who assured her that her account has been closed and the Notice has been sent by mistake and as such she did not send any reply to the Notice. Therefore the present claim is false. Since she stopped trading from July 2009, there was no need for her to react to any contract notes. The physical contract notes have also not been received by her. She also challenges the validity of the Present Application being time barred. application be dismissed. I have also gone through the relavant facts mentioned by the applicants rejoinder as well as the counter to the rejoinder filed by the respondent. Keeping in view the points raised in their respective claims and counter claims the following issues arise for decision. 1. Is the Application time barred? 2. Are the trade transactions between the period from 20/07/09 to 15/09/09 unauthorised? 3. If not, whether the claim of the Applicant genuine and established. Contd. 4 On the above grounds, she prays that the present

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4.

If so to what relief is the Applicant entitled to.

Taking up first issue of limitation, it could be seen from the Bye-laws, that the date to be reckoned is the date on which the claim, difference or dispute arose or shall be deemed to have arisen. In the present case, the relevant date, is the date on which the notice demanding payment of the disputed amount has been sent. Here, I find that though the notice is dated 12/10/09, it was actually sent on 13/11/09 and received by the Respondent on 17/11/09. Therefore, computing six months from 13/11/2009, the Application should have been filed by 12/05/2010. I find that the present Application is filed on 25/03/2010 and as such the same is well within the stipulated time limit. I am unable to accept the argument of the Respondent that each transaction date has to be reckoned separately since each transaction by itself does not constitute a cause of action until such time it becomes a subject matter of a dispute. The provisions in the Bye-laws are explicit. Therefore I hold that the Application is not barred by limitation. Taking up the 2nd issue, let me go through the records and examine the circumstances properly. Firstly there seems to be substance in the contention of the Respondent about the correct E-mail ID. On examining the relevant consent letter for digital documents, definitely there is confusion about the letter O. This aspect is further corroborated by the fact that the Mails sent by the applicant

admittedly were bouncing. It postulates, therefore that the correct i.d. is Vejaro_2001@yahoo.com and not Vejaru_2001@yahoo.com as recorded by the Applicant. The Respondent claims that all the transactions from 20/07/09 to 15/09/2009 are unauthorised. She submits, that she frequently visits Hospitals for diagnostics and treatment. She has admitted that she was never admitted into a hospital during that period. Therefore it is not impossible for her to give oral instructions to her Broker about placement of various orders despite such medical interventions. Admittedly no E-mail contract notes have reached her. The Applicant has however produced the extract of the U.P.C. under which the physical Notes have been dispatched during the disputed period. In the course of the proceedings, the Applicant has filed a petition for amendments of the claim Application. The same is allowed and as such the petition shall be read including those amendments. Especially the fact that the E-mails sent to her were bouncing which corroborates the contention of the Respondent that the Mails were being sent to a wrong ID. Therefore I will have to examine if the Applicant has been sending the same in physical form. The extract of the U.P.C. is available before me (Ex A2). The above record confirms that all the contract notes have been dispatched. Thus the above confirm proof of dispatch and not proof of delivery (P.O.D). During the course of the proceedings, the Respondent had categorically denied having received a single contract note in Physical Form. I am afraid, the above statement does not deserve reliance for the simple reason that when so many dispatches are made that too under Certificate of Posting, it is most unlikely, that not a single dispatch could have reached her. I can understand one or two not being delivered, but her Contd5

Page : 5 version that not a single note has been delivered to her can not be accepted at all. Therefore I hold that she was apparently in receipt of most of the contract notes if not all during the disputed period. This postulates, she was in the in the knowledge of trades undertaken by the Applicant. She had at no time attempted to protest the same. Taking up other defense that when one Mr Raju came to her house to collect a cheque for Rs.12,500/- in full and final settlement, she could have easily obtained a satisfaction receipt to that extent or in the alternative could have parted with the cheque under a covering letter reducing the same in to writing. Similarly, her version that Shri Srinivasan, when contacted personally had assured her that the Notice of demand was a mistake, she should have insisted on a written confirmation. In the absence of such documentary proof, her oral allegation can not be relied upon especially when not corroborated by written proof and specifically denied by both the concerned men in separate Affidavits filed before me (Ex A5 &6). Therefore I am inclined to believe the version of the Applicant that both her versions are not correct. Therefore, her first defense that she was illiterate and was compelled by the Representatives of the Applicant does not appear to be acceptable as no one can be compelled or forced to open an account in dealing in Stock market. Secondly her defence that she was frequently visiting hospitals without being admitted as an inpatient has no force since as already discussed above, her visits to hospital could not have stopped her from giving instructions by phone to her broker. Thirdly, she has not objected to any of the trades as per the contract notes or as per the Ledger statement sent to her. Lastly, her silence to the claim notice, confirm the truth that trades were all authorized. Therefore, I hold that the trades undertaken by the Applicant during the disputed period are not unauthorised. Now I will have to examine how far the claim amount is established by the Applicant. examined the contract notes for the period in question (Ex M6). I have

I have before me the Ledger

Statement (Ex M7, a & b) a) is the statement relating to NSDL Account for the period from 17/07/09 to 16/03/10 wherein an amount of Rs.626/- is shown as outstanding, b) relates to transactionwise statement where a debit of Rs.1,06,886.25 (Rs.one lakh Six Thousand Eight hundred Eighty Six and paise Twenty Five only) is shown as outstanding after giving credit to her cheque dated 14/10/09 for Rs.12,500/- (Rs.Twelve Thousand Five Hundred only) . Adding both the above, the total works out to Rs.1,07,512/- (Rs. one Lakh Seven Thousand Five Hundred Twelve only) which tallies with the claim amount. Therefore I hold that the claim amount is established. Therefore I hereby pass an award in favour of the Applicants for Rs.1,07,512/- (Rs. One Lakh Seven Thousand Five Hundred and Twelve only) with interest @ 12% per annum from the date of the award till realization. As such the Respondent is directed to pay the above amount to the Applicant. The costs of the Arbitration shall be borne equally by both the parties.

Chennai Date: 29/07/2010 M.S.PRATAP SOLE ARBITRATOR