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ARBITRAL AWARD A.M. NO : NSE/ARBN/F&O/K-0029/2012 under the Bye-laws, Rules & Regulations of Nationar stock Exchange of India Ltd.
BETWEEN NIRANJAN CHAKMBORTY 10, MANDEVILLE GARDENS, FLAT NO. 807 KOLKATA

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PAN NO.: ACKPCO121A

APPLICANT AND TRUSTLINE SECURITIES LIMITED.

TRUSTLINE TOWER B-3, SECTOR-3 DISTRICT GAUTAM

BUDH NAGAR NOIDA NOrDA- 201301 RESPONDENT

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claim of Rs. 1,64,480.00 by the applicant (Constituent) against the respondent (Trading Member) due to alleged
unauthorized trades by the respondent on the accounts of the applicant.

This arbitration matter relates to

STATEMENT OF CASE This may be summarised as follows

:

The applicant-client-investor, Niranjan Chakraborty had the bitterest of experience in share trading with the respondent trading member, his stockbroker, Trusline Securities Ltd. (hereinafter referred to as Trustline, for short).

The Contract Notes were to be delivered at the applicant's residence in hard copies in physical form as he was not a computer friendly person, besides he was unable to attend trading floor regularly being engaged in consultancy
business.

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The trading began with effect from 07.06.2011 and the last date of trading respect of Future/Niftv was 28.11.2O11 and that of cash seqment was

30.11.2011. The applicant suffered loss of around 1.75 to 2.0 lacs in a short period but maximum losses in Sale Lake Branch. His experience at the Russel street Branch office of the respondent was poor. lt w2as very difficult to get the contract notes because of lack of any system coupled with defective, old printer of Dot Matrix type, making the contract note unreadable. The result was, the applicant himself needing several visits to the office of the respondent to collect tne same. Most of the trading calls/suggestions were generating losses and in one trade of Infosys at highest rates as suggested by the Country Manager, the

applicant lost Rs. 36,1421-. Repeated visits to collect contract notes were not effective since it was denied on the plea that the connectivity was blocked by
their Corporate H.Q.

High value trades were executed by the respondent in his code without

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giving him the trade informations.

The applicant gives one typical example of contract notes dated 11.Og.2011 for Rs. 15,35,695 where he lost Rs. 5707.06 plus taxes and there are afleast 1g sucn contract notes that can be identified as unauthorised for which handing over of
document had been deliberately delayed by weeks.

ln F&O segment there had been 180 trades (09.08.2011 to 21.11.201 1) for Rs. 10,02,40,745l- generating loss of Rs. 1 ,05,770l-. In cash market losses are Rs.22,501/- as per statement dated 10.10.20i1 in 187 scrips, all in the salt Lake
office. All such trades were unauthorised and contract notes delayed/denied except trade on 07.07.11 at Russel for 50 X Infosys for additional loss of Rs. 36,1421- and
total loss is Rs. 1,64,4801-. Trade transaction valued at Rs. 10.75 crore was done only 36 days.
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The applicant strenuously puts forth that no orders were placed for the trades, that he never opened any e-mair address and no password, that there was no
question of sending or receiving of e-mails at an address on the basis of an e_mail lD

which was not his but was created by the respondent company. That apart, the respondent rrusfline was completely silent on applicant,s queries as to how they had
successfully e-mailed contract notes since the applicant never opened any e_mail account. STATEMENT OF DEFENCE Here is a summary of defence to the statement of case/craim by respondent Trustline. As for a preriminary objection, Trusfline has contented that appricant has fired a complaint before the consumer Dispute Redressal Forum. This shows that the applicant is trying various forum in order to harass the respondent with malafide intention to grab illicit money for the respondent.

The respondent contends that contract notes were arways derivered at the registered E-Mail lD of the appricant and copy of log reports fired in proof thereof.
Similarly there SMS sent with copy of SMS Log submitted.

It is further contended that trades were executed by the applicant himself or on

his directions by the respondent, that the losses suffered were a product of
applicant's own decision.

The applicant was supplied with the statement of account and he

had

confirmed the accounts statement by putting his signature thereon (copy enclosed).

The applicant is an educated man and experienced in share market. He was aware of the risks of the trades and he signed off the Risk Disclosure Document as
well.

He was aware of all the transactions/trades and did not raise any objection or point out discrepancies within the prescribed or right time. There was no unauthorised trades executed by the respondent as alleged.

The applicant has filed a bogus claim just to defame the reputation of the
respondent company and has made a false claim to cover up his losses. which were his own making, from the Company.

The complaint of the applicant is without any merit and should be dismisseo.
PROCEEDINGS

The first hearing of the matter took place on January 17,2013. Hearo
preliminary submissions from the applicant Niranjan chakraborty appearing in person

as well as from Somnath Pal, senior R.M. of the respondent rrusline, duly representing the company Material documents from the side of the respondent
Trustline were wanting in the files. However, Mr. pal for Trusfline submitted material documents, KYC and others only on that day of first hearing copies thereof were

supplied to the applicant, the Exchange and the arbitrator. other material and vital documents were still to be properly organized and for adjudication of the matter, Mr. Pal was instructed to submit a list of documents like contract notes, E-log thereof, physical dispatch and delivery of the same, sMS log and statement of accounts. The applicant was directed to submit a reply/rejoinder to the statement of defence, if so desired. Next date of hearing was fixed on February 07,2013.
The second hearing was on February 7,20'13. Heard further submissions from

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both sides and perused the documents. lt appeared that certain documents from both

sides may be required for a proper adjudication of the matter. Hence, following
directions given.

1.

The applicant was to submit some documentary evidence, duly

authenticated, to show that the designated email id (address) as relied upon by the
respondent was created/manufactured by Trustline.

2. 3.

The applicant had also sought to file a written prayer for investigation of

the said email id which was allowed.

The respondent was directed to submit, proof of delivery of some

'bounced back' (ECN) contract notes at the address ofthe applicant.

The 3'd Hearing took place on March 08, 2013. One Mr. Debi Prasad Dighal came up to represent the applicant, duly authorised by a power of attorney from
applicant Niranjan Chakraborty, who was absent that day. The representative of the respondent Trustline, Mr. Somnath Pal was present.
However, Mr. Dighal was not fully prepared to make his submission on behalf

of the applicant and requested from another day so that he could make

his

submission next day in presence of the applicant to assisuadvise him. Heard further submission in the matter from Debi prasad Dighal as well as from Mr. pal, the
representative of the respondent company.

In the course of the hearing, Mr. somnath par, the representative of the
respondent was asked by this Arbitrator for his answer a particular question material to the dispute between the parties and this was the question "ln his point-to-point

reply to the respondent's reply dated 09.01.2013 for para 1 & 2, the applican! claimant has categorically stated -'lt is only on the day of first hearing on January
17,2013 that I received Xerox copy of complete agreement for the first time'. Mr. pal. do you admit this ?"
The answer to this question by Mr. par was

- "yes, I suppried the photo copies

poA, EcN etc. only

of total documents of accounts opening Kit including McA, RDD,

on the date of first hearing on 17'n Jan. 2012',.,The matter then was adjourned.

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The 4'n and final hearing of the matter took place on 3.4.13. On that day, the

in person along with Debi Prasad Dighal, his advisor, duly represented. Mr. Somnath Pal for the respondent Trustline was also present.
applicant appeared
Examined material documents. Heard further submissions from both the oarties.
Hearing was concluded and Award reserved.

FtNptNGS W|TH REASONS ANp CONCLUSTON

The material points alleged by the applicant Niranjan Chakraborty in support

of his case and those sought to be countered by the respondent Trusfline in their
statement of defence have already been discussed.

In the first place, it might be said that the applicant has spared no pains to drive home his case/claim with submissions apparently sound. These are logical
conclusions from his frustrating experience with the trading member statement of case in 2.0 (experience

stock-broker,
his 3.0

the respondent. Particularly, applicant's specific allegations contained in

at respondent's Russel Street Branch),

(Trading at TSL, New Salt Lake Branch), (a) (b) (d) (e) & (q), then at 4.0(bl. at S.O(c)

are all met with answers by the respondent Trus ine in their statement of defence which are vague, uncertain and evasive.

The respondent's plea by way of a 'preliminary objection' that since the

applicant ha s also filed a complaint before the consumer Dispute Redressal Forum, it shows that the applicant in order to harass the respondent with malafide intention wants to grab illicit money from the respondent sounds absolutely hollow. There is no stopping-legally{he applicant approaching this Forum trying to get his claim satisfied in accordance with law, filing a case before the consumer Forum notwithstandino.
This preliminary objection, therefore, cannot be sustained. Now, coming to the heart of the matter in dispute whether or not the trades by

the respondent were unauthorised we find, there are cracks far too many in the
respondent's defence.

one of the main grievances of the applicant is that all along he insisted upon
physical contract notes and denied access to material documents by the respondent

and that he never opened e-mail address which falsifies their claim that contracr

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notes were delivered regularly at applicant' e-mail address, that delivery of all material document were inordinately delayed making it troublesome for the applicant
to try collecting them from their office.

The records of the case revealing documentary evidence and conduct of the respondent company unmistakably betray the truth and legitimacy of the applicant,s
grievance.

To my mind, the futility of their defence is awefully exposed with the straight admission of the representative of the respondent at the 3'd hearing dt. March g,
201

3 that he supplied the photo copies of total documents of accounts opening kit including McA, RDD, PoA, EcN etc. onlv on the date of first hearinq on 17th Jan

2012.
Now, in the first place, this inordinate, unexplained and inexcusable delay cuts at the root of the respondent's pleas that everything, from their side in the matter of

their routine

and indeed stale- exercise of so-called regularly sending of contract notes, sMS, ledger statement etc. and then drawing the routine presumption agarn

that everything was to the knowledge of the applicant and the loss was applicant's own making, the respondent had nothing to do with it. In fact, the respondent had enough to do with it but they miserably failed. The said "admission" by respondent needing no proof, at least from the side of the applicant, only vindicates his stance

backed by his firm and persistent allegations against the respondent as already
discussed.

Next, most importantly, this delayed submission of vital material document is beyond redemption and it is a blatant breach of the Exchange/sEBl rules and

lt is also a deliberate denial by the respondent company, the stocxbroker, to allow access to these document so that the applicant also get an
regulations.
opportunity to receive and see them at the right time and also respondent within the prescribed time. Plainly, these vital, material documents were intentionally withheld

by the respondent. In my opinion, this is not only and infringement of the rule and regulation but also unfair, unjust and violative of the principles, of natural justice which is the 'sine qua non' of the arbitration proceedinq.

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Coming to evidence and proof in terms of the contract note which could be the

sheet anchor for the respondent to dislodge the applicant's claim that he was not aware of the transactions and that he did not place any such orders for the traoes.
But everything regarding the all-important contract note looks shady. The applicant
has stoutly maintained

and repeatedly

that he never opened any e-mail account,

nor did he have any password. Besides, he lodged FIR dt. 25.09.2012 against this

Trust Line Securities. He has also filed an authenticated, notarised documenr connecting "Gmail by Google" that finds questionable discrepancy in the e-mail id
relied upon by the respondent.

The contract notes by the respondent also is patently defective in that it failed

in its mandatory requirement - that "all ECNs sent through the e-mail shall be
digitally signed, encrypted, non-tamperable and shall comply with the provisions of

the lT Act, 2000" (vide SEBI Circular No. MRD/DoP/SE/Cir-20l2005). There is atso no proof of delivery of the 'bounced-back' e-mail to an e-mail id, which, as already
indicated, is shrouded in grave suspicion. No reliance can therefore be made on any

so-called communication by respondent to the applicant, specially on the face of stubborn statements and allegations of the applicant as stated above. The so-called voice-recording in connection therewith pales into insignificance, besides being noisy and indistinct.
In this connexion, it may be borne in mind that the very objective of the SEBI

Act (Preamble) are, among others, is to protect the interest of investors in securities. to promote the development of securities market aiming at market efficiency, inteqritv
and transparencv. The SEBI Circulars issued from time to time and drawing particular

attention to the stockbrokers enjoins "protection of interest of investors. In SEBI Circular No. MIRSD/SElcn49l2009 (lnspection Dept. Circular of NSE dt. June 17,
2010), in connection with dealings between a client and a stock broker, SEBI wanted to instill qreater transparencv and discipline.
In our instant case, for reasons as stated above, I am constrained to say that

in the matter of

securities between the applicant-client and the respondent-Stock Broker, the respondent rrustline has miserably failed to protect the interest of the applicant and also to maintain the transparency and discipline dealings

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demanded of them. CONCLUSION

Thus, in view of what is stated above, I conclude and hold that the claim of the

applicant succeeds. He is entitled to get an award for

interest against the respondent, Trust Line Securities Ltd.
In the result,

a sum of Rs.

1,64,480/-

(Rupees One Lac Sixty Four Thousand Four Hundred Eighty only) together with

AWARD

That the application of the applicant Niranjan Chakraborty against the

respondent Trust Line Securities Ld. ls herebv allowed on contest.

The applicant do get an award against the respondent for a sum of Rs. 1,64,4801- (Rupees One Lac Sixty Four Thousand Four Hundred Eighty) only
together with interest at the rate ol 12o/o per annum from the date of his application in Form I i.e. 12.11.2012 till full realisation.

This arbitral award is made in three originals duly dated and signed and the
same are filed with the exchange. The Exchange shall arrange to send one original
each to the parties to the dispute and the stamped original award shall be retained by

the Exchange.

Date:APRIL 24,2013
Place: Kolkata

Justice Arunabha Barua

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(Retd).(f)

SOLE ARBITMTOR

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