BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
DATE : 12.04.2019
Appeal No. 466 of 2018
Kotak Commodity Services Pvt. Ltd.
Nirlon House, 1st Floor,
Dr. Annie Besant Road, Opp. Sasmira,
Near Passport Office,
Mumbai – 400 030.

……Appellant
Versus
National Commodity & Derivatives
Exchange Ltd.
Ackruti Corporate Park, 1st Floor,
L. B. S. Marg, Kanjur Marg (West),
Mumbai – 400 078.

…… Respondent
Mr. Somasekhar Sundaresan, Advocate with Mr. Rahul Karnik,
Ms. Yugandhara Khanwilkar, Mr. Bankim Mehta, Ms. Jinal Rathi,
Advocates for the Appellant.
Mr. Aayush Singhvi, Advocate with Mr. Mahaveer Rajguru,
Advocate i/b Regstreet Law Advisors for the Respondent.
CORAM : Justice Tarun Agarwala, Presiding Officer
Dr. C. K. G. Nair, Member
Justice M. T. Joshi, Judicial Member
Per : Justice Tarun Agarwala, Presiding Officer (Oral)
1.

We have heard Shri Somasekhar Sundaresan assisted by
Ms. Yugandhara Khanwilkar, the learned counsel for the appellant
and Mr. Aayush Singhvi with Mr. Mahaveer Rajguru, the learned
counsel for the respondent.

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2.

A show cause notice dated July 31, 2018 was issued by
National Commodity & Derivatives Exchange Ltd. (hereinafter
referred to as, ‘NCDEX’) for violation of open interest limits in Guar
seed or Guar gum contracts. The appellant was directed to show
cause as to why a penalty of Rs.77,17,06,599/- should not be
imposed. The show cause notice relied upon various entries in the
bank statements, ledgers, trade-data and demat account, the extracts
of which were depicted in the annexure to the show cause notice.
Subsequently, a supplementary show cause notice dated August 16,
2018 was issued by which the appellant was asked to show as to why
financial penalty of Rs. 8,25,35,302/- should not be imposed. The
list of documents that were specified on which the respondent was
relying upon was indicated in Annexure III to the supplementary
show cause notice. For facility, the same is extracted hereunder :“1. Exchange circular no. NCDEX/TRADING-095/2006/195 dated July 31,
2006.
2. Exchange circular no. NCDEX/TRADING-107/2006/223 dated August
29, 2006
3. Exchange letter no. NCDEX/2011-12/MWS-1360 dated January 05, 2012.
4. Exchange circular no. NCDEX/TRADING-003/2012/010 dated January
10, 2012.
5. Exchange circular no. NCDEX/RISK-001/2012/011 dated January 11,
2012.
6. Exchange letter no. NCDEX/2011-12/MWS-1438 dated January 14, 2012.
7. Bank Statement of the clients as received from FMC.
8. Ledger account of the clients as received from the respective member(s).

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9. Caution letter no. NCDEX/2017/ENF/56 dated June 02, 2017.”
3.

The appellant applied for a host of documents, some of which
was supplied and others were rejected on the ground that it was
confidential and privileged. The appellant being aggrieved by the
non supply of certain documents has filed the present appeal.
4.

Having heard the learned counsel for the parties at some length,
we find that some of the documents which have been sought by the
appellant amounts to a roving and fishing enquiry.

We are,
therefore, confining the present appeal to only a certain set of
documents which in our opinion at this stage appears to be relevant.
5.

As per the supplementary show cause notice the respondent is
relying on the following documents which are mentioned at serial
nos. 7 and 8, namely, bank statement of the clients as received from
FMC and ledger account of the clients as received from the
respective members. The extract of the bank accounts and the ledger
entries have been indicated by the respondent in their show cause
notice dated July 31, 2018. We find from the extract of the bank
statements and ledger entries that reference has also been made to
certain demat accounts of certain members as well as trade-data. In
our opinion, the law requires that if the respondent is relying upon
those entries/data which have been indicated in the show cause
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notice and the supplementary show cause notice, it is obligatory for
the respondent to allow inspection of that entries/data to the
appellant.
6.

We accordingly dispose the appeal directing the respondent to
allow inspection of redacted entries as indicated in the show cause
notice dated July 31, 2018 and supplementary show cause notice
dated August 16, 2018 with regard to bank statements, ledger entries,
trade-data relied upon in the show cause notice and reference to the
demat accounts of the various members.
7.

The Appeal is accordingly disposed of.

Sd/Justice Tarun Agarwala
Presiding Officer
Sd/Dr. C. K. G. Nair
Member
Sd/Justice M. T. Joshi
Judicial Member
12.04.2019
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