Before Shri Divakar Dev, Sole Arbitrator In the matter of Arbitration under the NSE, Regulations and Bye-Laws

of the National Stock Exchange of India Ltd. AM No.F&O/D-010/2010 Between Shri Pratap Singh Azad (Constituent) F/D-26 New Kavi Nagar, Ghaziabad U.P.-201002 and Sharekhan Ltd., Respondent (Trading Member) A-206, Phoenix House Phoenix Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai-400013 AWARD Applicant

Shri Pratap Singh Azad, the applicant, has brought for arbitration his dispute with the respondent M/s Sharekhan Ltd. Brief facts of the case are that the applicant is a client of the respondent and entered into an agreement with it on 13.05.2008. According to the applicant he is an online trading client and was trading in his account himself and had no problem in his dealings with the respondent till April 2009. The applicant's password was misused by one Shri Ashish, who was a relationship manager and unauthorized trading was done in the applicant's account during April-May 2009. The applicant claims that he did not share his password with Shri Ashish who somehow managed to access the applicant's account and indulged in unauthorized trading. By the time the applicant carne to know of such trades he had already lost about Rs. 50,000.00 and therefore allowed Shri Ashish to continue trading on applicant's behalf on the assurance that this loss will get recovered. This did not happen and the applicant suffered a total loss of Rs. 4,00,000.00.

2. The applicant's contentions have been disputed by the respondent who has claimed that all trades were done with applicant's knowledge and consent, contract notes for the same were regularly sent on the email address provided by the applicant. Similarly ledger/account statements were also sent regularly. According to the respondent the applicant had himself taken some positions in the F&O segment. Abnormal conditions developed in the market during May 2009 resulting in heavy loss to the applicant. The applicant is now trying to pass these losses to the respondent by claiming that these trades were done without his knowledge and authority. 3. The arbitration application was put on hold at the request of the applicant who went abroad to take up employment. Subsequently when the applicant furnished a Power of Attorney in favour of his brother, the matter was taken up afresh and heard. Both parties have given their consent to continuing these proceedings beyond the stipulated period of 6 months. 4. I have heard both the parties and have carefully gone through the documents filed in support of their respective claims. It is not disputed that certain positions in the F&O segment were taken in the applicant's account during the period of dispute and the same resulted in substantial loss to the applicant. The applicant has alleged that these trades were done by the relationship manager on his own and he operated the applicant's account without the applicant sharing his password. The applicant has however not produced any evidence in support of this unusual but serious allegation. In the statement of the case the applicant has himself stated that he came to know of these trades when he had already incurred a loss of Rs. 50,000.00 and he allowed Shri Ashish to do further trading in his account to recover this loss. This statement partly contradicts the applicant's claim that all these trades were done without his knowledge and consent. The applicant has complained about the so called unauthorized trading for the first time only on 18.05.2009 that is when the open positions in his account were under severe stress due to abnormal market position. It is not explained that when the applicant had already detected unauthorized trading when the loss was only 50,000.00, why did he wait till 18.05.2009 to take up this matter with higher authorities. It is not disputed that contract notes for all these trades were received by the applicant but he chose to remain quite till heavy losses occurred. Further from the correspondence filed by the applicant himself it is clear that on 18.05.2009 also the applicant sent an email to the respondent requesting that his positions in F&O segment be continued for another three days. For want of margin the respondent did not do so and squared off the positions on 19.05.2009 resulting in this loss. Similarly transcripts of the chat messages between the applicant and Shr Ashish filed by the applicant himself show that he was in regular touch wit the relationship manager and keeping track of the developments in the market. These actions of the applicant contradict his claim that he was unaware of these transactions and the same were done without his knowledge

and authority. His claim in this regard is not supported and is indeed contradicted by the documents that he has himself filed. His plea that his account was hacked by Shri Ashish as he did not share his password with him has been taken only after he suffered heavy losses. If such was indeed the case, one would have expected the applicant to react to such serious criminal action immediately and even take up the matter with the local police. The applicant has not taken any such action. On the contrary the applicant has allowed the relationship manager to do fresh trading for recovering the earlier loss and has even given instructions as late as on 18.05.2009 to continue with his positions for another three days. The applicant's actions/inactions clearly do not support his claims. The documents filed by him also do not do so and indeed contradict the same.

5. For reasons discussed above I find that the applicant has not been able to substantiate his allegations against the respondent at all. His arbitration application and claim for compensation of Rs. 4,00,000.00 has not been established and are hereby rejected. Both parties shall bear their arbitration expenses. Place: New Delhi Date: 17/03/2011 Shri Divakar Dev (Sole Arbitrator)