BP Equities Private Limited vs NSEIL

IN THE SECURITIES APPELLATE TRIBUNAL AT
MUMBAI

ST
DATED THIS THE 1 DAY OF SEPTEMBER, 2026


CORAM : Justice P. S. Dinesh Kumar, Presiding Officer
Ms. Meera Swarup, Technical Member
Dr. Dheeraj Bhatnagar, Technical Member


Appeal No. 989 of 2022


BETWEEN


BP Equities Pvt. Ltd.
th
4 Floor, Rustom Building,
Veer Nariman Road,
Near Akbarallys,
Fort, Mumbai – 400 001.




…. Appellant


By Mr. Kunal Katariya, Advocate i/b S D & Associates for the
Appellant.

AND

National Stock Exchange of India Ltd.
Exchange Plaza, Block G, C 1,
Bandra Kurla Complex, Bandra (East),
Mumbai - 400 051.



… Respondent

By Mr. Vyom Shah, Advocate with Mr. Rashid Boatwalla, Mr.
Pranav Kethineni, Advocates, Advocates i/b Manilal Kher
Ambalal & Co. for the Respondent.

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THIS APPEAL IS FILED UNDER SECTION 23L OF SCRA,
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1956 TO SET ASIDE ORDER DATED SEPTEMBER 16,
2022 PASSED BY NSE.

THIS APPEAL HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON AUGUST 19, 2026, COMING ON FOR
ST
PRONOUNCEMENT OF ORDER THIS 1 DAY OF
SEPTEMBER 2026, THE TRIBUNAL MADE THE
FOLLOWING:

ORDER

Per : Dr. Dheeraj Bhatnagar, Technical Member

This appeal is directed against order dated September
16, 2022 passed by Member and Core Settlement
2
Guarantee Fund Committee of NSE by which penalty of Rs.
16,49,500/- has been imposed for certain violations of NSE
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circulars .

2. We have heard Mr. Kunal Katariya, learned advocate
for the appellant and Mr. Vyom Shah, learned advocate for
the respondent.

3. Brief facts of the case are :-

i. BP Equities Pvt. Ltd. is a trading member of NSE
which deals in the Capital Market since November
2000 and Future & Options (F&O) since
September 2001.


1
Securities Contract (Regulation) Act, 1956
2
National Stock Exchange
3
NSE circulars dated 30.09.20 and 06.11.2017 and 25.02.2021

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ii. SEBI conducted a comprehensive joint inspection
of the books of accounts and records available
with the exchanges and depositories from
November 2, 2021 to January 31, 2022, which
covered the inspection period from April 1, 2020
to October 31, 2021. Based on the inspection,
SEBI issued a letter of findings on February 4,
2022, which was replied by the appellant on
February 28, 2022.

iii. SEBI allocated this case to NSE on March 29, 2022
for post inspection enforcement action.

iv. The Exchange vide email dated April 13, 2022
informed the appellant about allocation of the
matter to NSE and provided an opportunity of
hearing to appellant on May 26, 2022.

v. Post hearing the oral submissions of the appellant,
interim directions were issued on July 2, 2022
directing recovery of all loans.

vi. Based on examination of the information provided
by the appellant, the committee held the
appellant guilty of 17 violations, based on which
monetary penalty of Rs. 16,49,500/- was
imposed vide the impugned order dated
December 16, 2022. Hence, this appeal.

4. Mr. Kunal Katariya, learned advocate for the appellant
submitted that out of the 17 violations, the appellant is
challenging only 4 violations in the present appeal, while in

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Securities and Exchange Board of India

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case of 7 violations, the appellant has been let off with
warning and in remaining violations, small amount of
penalty has been imposed/ warning issued, which the
appellant is not challenging.

5. He further submitted that the appellant is challenging
the following four violations:-

i. Misuse of clients’ funds;

ii. Funding of transactions of debit balance clients with
the funds of credit balance clients;

iii. Not maintaining Clients’ email IDs and phone
numbers; and

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iv. Violation of Rule 8(3)(f) of the SCRR .


6. Re (i): Misuse of clients’ fund , Mr. Kunal Katariya
submitted that Committee failed to appreciate that
requirements of enhanced supervision was put in place to
monitor the financial health of the trading member and to
ensure that the Trading Members of the Exchange always
have the wherewithal to repay all creditors at any point in
time. In case of the appellant, reporting under enhanced
supervision was verified across 43 days and the following
was observed:-

a. No instance of negative ”G” has been observed
across 43 days.

b. No instance of negative “I” has been observed
across 43 days.


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Securities Contract (Regulation) Rules, 1957

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c. Value of “J” is fully compliant on 42 of the 43
sample instances selected for verification.

d. On September 11, 2020, “J” has remained positive
due to technical fault/ clerical error which the
appellant has not been able to identify.

e. However, on the given day, the appellant had Rs.
43,45,122/- in own accounts /Exchange dues
accounts and also had a non-funded portion of
Bank Guarantee of Rs. 87,75,00,000/-, which is
granted by banks based on its financial capabilities
and which is lodged with the Exchanges and the
Exchanges have recourse to these all the time.

f. These are far in excess of the alleged positive “J” of
Rs. 14.41 Crores (now revised to Rs. 9.08 Crores).


7. He submitted that the above clearly substantiates that
the funds available with the appellant were far in excess of
the alleged positive “J” and, therefore, no adverse inference
may be drawn on account of this one instance. It was
submitted that only for a single day, there was occurrence
of positive “J” (Rs.9.05 crores) and, therefore, considering
the clean record of the appellant, it did not warrant levy of
monetary penalty of 1% of this amount and mere warning
would have been sufficient. He further submitted that the
doctrine of proportionality has been ignored. Drawing our
attention to the decision of this Tribunal in the Anand Rathi
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Share and Stock Broking Limited v. NSE , he submitted

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Appeal No.241 of 2020 decided on 24.04.2025 by Securities Appellate
Tribunal

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that penalty, being disproportionate, may be appropriately
reduced.

8. In reply, Mr. Shah for respondent, submitted that the
wordings of the Enhanced Supervision makes it clear that
the onus of making appropriate reporting lies upon the
trading member and it is liable to be penalized on any
instance of incorrect reporting. In the case herein, NSE has
observed that on September 11, 2020, the value of "J" had
a positive value of Rs.9.08 Crore. Appellant’s contention
that the funds available in its own account and non-funded
portion of bank guarantee were in excess of the observed
misuse is not acceptable since balances in appellant’s own
account could not be considered and the non-funded portion
of bank guarantee had already been considered while
computing the value of 'I' under Principle-2 of the Enhanced
Supervision Circular.

9. Re (ii): Funding of client transactions of debit balance
clients with the funds of credit balance funds , Mr. Katariya
submitted that allegation that the appellant had provided
further exposure to the clients beyond T+2+5 days in 9
instances pertaining to 5 clients which involved Rs. 2.21
Crores is factually incorrect. In case of 2 instances with
respect to client codes no. (2120) and (43029), he
submitted that BP Equities follows the process of posting
bills on settlement day. For a transaction of Rs. 0.01 Lakhs,
T+2+5 was getting completed on September 23, 2020, and
the trades took place on September 22, 2020. Further, for
the transaction of Rs. 14.59 Lakhs, T+2+5 was getting
completed on April 6, 2021 and the trades took place on
April 5, 2021, and no further exposure was allowed as the

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trade was already executed. Accordingly, these instances
have been excluded from the instances of violations.

10. With respect to violation relating to client code (SJ007),
it is alleged that the client was allowed exposure under the
Margin Trading Facility (MTF), and hence, the Member
should have posted the said bill in the separate MTF ledger
and not in the normal trading ledger of the client.
Mr. Katariya submitted that it is only a technical violation
due to inadvertently posting made in general ledger in place
of MTF register.

11. Mr. Katariya further submitted that in terms of
Circular, penalty of Rs. 50,000/- may be levied, where
violations are noted in 5% or more instances or the amount
involved in the violations exceeds Rs. 1 Crore. The instances
in the case of appellants are less than 5%. However, only in
one instance of a client, the amount involved is
Rs. 2,38,372.98/-.

12. In reply, Mr. Shah for NSE, submitted that undisputedly,
appellant granted further exposure beyond T+2+5 days
involving Rs. 2.21 Crore and hence liable for penalty. With
regard to the particular instance in case of client code
(SJ007), he submitted that the Exchange circular No.
NSE/COMP/35125, dated June 15, 2017, requires a stock
broker to maintain separate client-wise ledgers for funds
and securities of clients availing margin trading facility,
which the appellant failed to do. Therefore, the penalty
imposed in violation of the Circular is justified.

13. Re (iii): non-maintenance of Clients’ email IDs and
phone numbers , Mr. Katariya submitted that this is a venial
violation, since the mismatches were found pertaining to

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126 mobile numbers and 124 email Ids only out of 38,000
clients. Moreover, the appellant was getting the records
made in the back office and updated in the UCC database.

14. In reply, Mr. Shah for respondent, submitted that
these violations are not venial in nature, and in fact these
portray serious lapses on the part of the appellant to
maintain client information. The ground that the findings
pertains to only 0.3% of its client base, is untenable and the
penalty imposed as per the Circular is justified.

15. Re (iv) : Violation of Rule 8(3)(f) of the SCRR, it was
also informed that recently NSE has withdrawn action
against all companies in which violation of said Regulation
8(3)(f) was noted.

16. We have carefully perused the facts of the case and
rival submissions of the parties.

17. Re (iv) : Violation of Rule 8(3)(f) of the SCRR , we
note that subsequent to the filing of the appeal, the
respondent has already reviewed the action and revoked the
penalty of Rs. 5 Lakh for violation of Rule 8(3)(f).

18. Re (i): Misuse of clients’ fund - As per the NSE
circular dated November 6, 2017, in case of use of client
funds/securities/commodities for other than specified
purposes, penalty of Rs. 5 Lakhs or 1% of the fund so used,
whichever is higher, has been provided.

19. Learned advocate for the appellant submitted that the
above provisions are only indicative and, penalty is not to be
mandatorily charged but to be decided on a case to case
basis. The same NSE circulars states that penalty/

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disciplinary actions are indicative in nature and specific
activity of violation could be dealt with on a case to case
basis depending upon seriousness of the violations. We note
that inspection carried out by the SEBI finds violation only
on one day during the inspection period.

20. We find merit in the appellant’s submission that the
appellant is not a repeat offender. Our attention was drawn
to Anand Rathi (supra) where based on the facts of the
case, penalty was reduced from Rs. 59.90 Lakhs to Rs. 20
Lakhs. Considering that the appellant has not made any
such violation throughout inspection period except for one
day, in the facts of this case, penalty of Rs. 9,08,500/- is
reduced to Rs. 1 Lakh.

21. Re (ii): Funding of transactions of debit balance
clients with the funds of credit balance funds - The
circular provides for levy of penalty, if non-compliance is
noted in more than 5% instances or the amount involved
exceeds Rs. 1 Crore. In such case, the penalty of Rs.
50,000/- is imposed. In the appellant’s case, we note that
no amount-wise details have been given in the impugned
order with regard to the alleged 9 instances of violations
pertaining to 5 clients in violation of Rs. 2.21 Crores.

22. The appellant has submitted details of amount involved
in various instances to the Respondent, though there has
been no mention in the impugned order about these
amounts. In its reply to SEBI vide letter dated February 28,
2022 appellant has given summary of use of clients’ funds in
violation of the circular, which shows that in the case of
client code (SJ007), there were 3 instances, the total client
funding involved was Rs. 38,39,623.51/. Further, in case of

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another client with code (43029), the total fund involved is
Rs. 1,73,01,907/. Thus, even if appellant’s submission of
inadvertent posting in general ledger in place of MTF ledger
is considered in respect of code (SJ007), the abuse of
client’s fund in other instances, exceeds an aggregate
amount of Rs 1 crore, which makes the appellant liable for
penalty.

23. Keeping in view the above, the penalty imposed on
this ground is upheld.

24. Re (iii): non-maintenance of Clients email IDs
and phone numbers . We are informed that the appellant
is maintaining email IDs and phone numbers of 38,000
clients and only in case of 118 instances such details were
not maintained, which is a venial violation. In our
considered view, the appellant is required to maintain the
basic data in respect to clients to ensure integrity of the
securities market. The circular provides for a nominal
penalty of Rs. 1000 per client in whose case details of
email/mobile number have not been maintained and
respondent has imposed the prescribed penalty only for
such 118 violations. The appellant as a trading member
plays an important role in maintaining integrity of securities
market and is required to maintain the required details or
ensure correctness of data. The reasoning that the data is
maintained by the back office does not absolve the appellant
from its responsibility. In view of this, the penalty on this
ground is upheld.

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25. In view of the aforesaid, the following:

ORDER

i. Appeal is allowed in part .

ii. The penalty of Rs. 9,08,500/- imposed for the
violation of misuse of clients’ fund is reduced to
Rs. 1 Lakh.

iii. Penalty for violation of Rule 8(3)(f) of Securities
Contract (Regulation) Rules, 1957 is set aside.

iv. The remaining portion of the order is undisturbed.

v. Pending interlocutory application(s), if any, stands
disposed of.

vi. No costs.




Justice P. S. Dinesh Kumar
Presiding Officer


Ms. Meera Swarup
Technical Member


Dr. Dheeraj Bhatnagar
Technical Member
01.09.2026
PTM

Digitally signed
by MRS PRAMILA
Date: 2026.09.01
16:37:33 +05'30'
MRS
PRAMILA