In the matter of

Mr. Suresh Kabra
Mr. Dilip Kabra                                                  Appellants

Vs.
The Securities & Exchange Board of India     Respondent no. 1
Ms.Trusted Shares & Investments Ltd             Respondent no. 2
The Stock Exchange Mumbai                            Respondent no. 3

APPEARANCE

Mr. Suresh Kabra in person                              for Appellants

Ms Poonam A Bamba
Division Chief, SEBI                                         for Respondent No. 1

Mr. Prakash Saksaria
Advocate,

Mr. Girish B Kedia
Advocate                                                             for Respondent no. 2

Mr. Nihar Modi
Advocate

Mr. P.N.Modi
Advocate

Mr. Sagar Divekar
Advocate
Wadia Gandhi & Co.                                       for Respondent no. 3
 

Order dated 25.2.2000 made by Respondent No. 1 is under challenge in the present appeal.
 

The facts leading to issuance of the impugned order as emerging from the order are briefly stated herein below for proper appreciation of the issues involved in the appeal.
 

Respondent no. 2 is a member of Bombay Stock Exchange (Respondent no. 3, herein holding a valid registration certificate issued by the Securities and Exchange Board of India, (Respondent no. 1 herein). The appellants in their letter dated 26.3.1997 addressed to Respondent No.3, and copy endorsed to Respondent No. 1, had complained that they had delivered to Respondent No.2 five lakhs shares of one Rhutu Bearings and Estates (India) Ltd. against sale and the said Respondent was avoiding payment of the sale proceeds of the said shares. Respondent No. 1, in turn on receipt of the copy of the complaint, vide their letter dated 9.4.1997 requested Respondent No.3 to examine the matter and take expeditious steps to redress the grievances of the Appellants. A copy of this communication was endorsed to the Appellants also. The Respondent No.2 refuted the claim and denied the charges. They claimed that since the shares were not sold to them as alleged, there was no question of making payment to the Appellants. Respondent No.3 vide their letter dated 10.1.1998 informed Respondent No.1 that the matter was placed before the Investors Grievances Redressal Committee (IGRC) on 3.10.1997 and the Committee viewed that the matter involved a dispute, and therefore advised the Appellants to "refer the matter to Arbitration under the Rules, Bye-laws and Regulations of the Exchange". In view of the divergent versions on the issue coming from the parties involved, Respondent No.1 decided to conduct an enquiry in the matter. The enquiry officer appointed for the purpose, after concluding the enquiry stated that the scope of the enquiry cannot be extended to find out the facts regarding the merit of the Appellants' claims, as the Respondent was not the proper authority to adjudge the claims under dispute between a client and a broker. However, the enquiry officer concluded that Respondent No.2 had not issued contract notes to the Appellants as required and in that context he recommended suspension of the certificate of registration of the said Respondent for a period of two months. Thereafter, Chairman of Respondent No.1, considering the recommendations of the enquiry officer and the version of the parties involved, concluded that there was no evidence to show that Respondent No.2 had failed to issue contract notes. However, he held that the action of the said Respondent in putting their stamp on tile transfer deed and actively extending their co operation to the Appellants by resorting to arbitration, filing of FIR with the police against Mahesh Kothari, etc. raised suspicion as to the conduct of the Respondent in the ling. In that context it was decided by him to issue a warning to the said respondent to be careful in future and to refrain from involving in any activity which is un-business like and might lead to interference with the smooth functioning of the market and to strictly abide by the statutory requirements. By said order Respondent No.3 was directed to look into the role of Respondent .2 in affixing their stamp on the transfer deeds and raising bills etc. and submit a thereon. In the said order the conduct of the appellants during the enquiry has also been subjected to adverse criticism.

Respondent No. 1 had raised certain preliminary objections on the maintainability of the appeal. According to them the impugned order has been passed against Respondent No.2 and not against the Appellants and as such they are not aggrieved persons entitled to prefer an appeal under section 15T of the Act. In this connection it is pertinent to mention that the enquiry was carried out by Respondent No. 1 taking cognizance of the grievances filed with them by the Appellants, that the Appellants were a party before Respondent No. 1 and also they were heard in the enquiry. Having taken cognizance of the grievances of the Appellants and allowed them to actively participate in the proceedings to pursue their grievances, in case they felt aggrieved by the finding/decision of the Respondent, in all fairness they cannot be denied the right of appeal against the order. In the light of the facts and circumstances peculiar to the present case, it cannot be said that the Appellants are not entitled to prefer the present appeal. The Respondent had also submitted that the appeal is barred by limitation as it was filed after 30 days from the date of the order. This is not correct. Section 15T of the Act permits an aggrieved person to file an appeal within a period of 45 days from the date on which a copy of the order is received by him. In the present case, by the Respondent's own version, the order was sent to the Appellants on 1.3.2000 and the appeal was filed on 17.4.2000. Assuming that the order was served on the Appellants on 1.3.2000 itself the Appellants had time upto 14.4.2000 to file the appeal. Since 14^th, 15^th, and 16^th April were closed holidays for the Tribunal, filing of appeal on the 17^th April i.e. the next working day following the due date, cannot be considered as delayed filing so as to be hit by the statutory limitation. Respondent No.2 had also raised certain preliminary objections in paras 1 to 10 of their reply. Most of them are in the nature of observations or submissions relatable to the merits of the case and not in the nature of objections as such having any direct bearing on the legal factum of the maintainability of the appeal. I have carefully considered these objections also. But I do not find them sound enough to persuade me to view that the appeal is not maintainable.

Since the preliminary objections do not sustain, I propose to proceed with the merits of the appeal.
 

Shri. Suresh Kabra, appearing in person and also representing Shri Dilip Kabra the co appellant submitted that they had sold 5 lakhs shares of Rhutu Bearings and Estates (India) Limited to respondent no. 2 on 1.8.1996 @ Rs. 20 per share and respondent no. 2 in turn delivered those shares to the counter party broker one Shri. Mahesh Kothari. According to Shri. Kabra the appellants have the acknowledgements from Respondent no.2 in regard to the said delivery of shares. He also submitted that Respondent No.2 had raised two bills on the said Mahesh Kothari for Rs. 1 crore towards these 5 lakhs shares. Shri Kabra also submitted that Shri Mahesh Kothari had issued contract notes to Respondent No.2 confirming the transaction. But Respondent No.2 did not issue the requisite contract notes, and bills in regard to the said transaction to the Appellants. According to Shri Kabra Respondent No. 2 did not even report the transaction to Respondent No.3 which they were bound to do under the regulations and by not doing so they contravened the statutory requirements and deserved to be punished. Since Respondent No.2 did not make payment to the Appellants despite repeated requests, they approached the Investor Service Cell of Respondent No.3. Sliri Kabra said that Respondent No. 2 cannot disown the receipt of the shares, in view of the fact that they had endorsed the shares by affixing their stamp on the share transfer forms, that they had raised bills against Shri Kothari, that since Kothari did not pay the sale price the said Respondent had approached the Investors Service Cell and that they had resorted to in house arbitration against the said Mahesh Kothari and also filed an appeal against the arbitration order, before the Full Bench of the Arbitration Committee. They failed in the arbitration for want of effective prosecution of the matter from their side. Shri Kabra had cited the relevant dates and materials / correspondence in support of his contentions as stated in the Appeal Memorandum. He was emphatic in his submission that the Appellants had sold the shares to Respondent No.2 and Respondent No.2 had acknowledged the same and their further conduct also established beyond doubt the fact of the transaction. The Appellants' representation to Respondent No.3 seeking payment and action against Respondent No.2 was referred to IGRC. The said IGRC felt that since it was riot possible to reconcile the matter, as parties materially differed, the Appellants were advised to take recourse to arbitration. Shri Kabra submitted that the Committee consisted only one member acid not two as required, and the single member did not appreciate the full facts of the case and recommended arbitration though it was not a subject matter fit for arbitration. There was no dispute between the parties to refer the matter to arbitration as Respondent No.2 had already admitted receipt of the shares. An artificial dispute was raised so as to justify reference to ration to help the said Respondent. Shri Kabra submitted that issuing contract notes against the receipt of shares was the duty of Respondent No.2. Reporting the transaction to BOLT was also the duty of the Respondent. Having accepted shares making payment to the seller was also the duty of the respondent. But the respondent did not comply with any of this requirement. Even after bringing the conduct of the respondent to the notice of respondent no. 1 and Respondent No.3 they did not take any punitive action against the Respondent. Shri Kabra alleged that Respondent No. 3 was protecting Respondent No. 2 and Respondent No. 1 was guided by the version of Respondent No.3. He stated that Respondent No. 1 had directed Respondent No.3 to look into the conduct of the Respondent and take action against them, as far back in 1998. However, Respondent No. 3 did not heed to this advise. Because of the inaction of Respondent No.3 in the matter Respondent No. 1 had again asked Respondent No.3 vide the impugned order to look into the conduct of Respondent No.2 and report the matter to them. According to Shri Kabra, the Appellants' submissions both written and oral, before the officers of Respondent No. 1 and Respondent No.3 have been ignored and viewed the matter in such way so as to favour Respondent No.2. He denied the contention of Respondent No.2 that they were not parties to the transaction, that it was a direct transaction between the Appellants and Shri Mahesh Kothari.
 

Referring to the enquiry conducted by Respondent No. 1 Shri Kabra submitted that inspite of the fact that the inquiry was initiated on the basis of the complaint filed by the Appellants, the enquiry officer did not give them any opportunity to present their view point in the matter. Even though the inquiry report was considered by the Chairman, SEBI and the Appellants were also to explain their viewpoint, copy of the enquiry report was not supplied to them, thereby effective representation was denied ignoring the rules of natural justice. The Appellants were hoping that they will be given ample opportunity to present their version before closing the enquiry proceedings. But to their dismay, the impugned order was issued without affording sufficient opportunities to explain their case. Shri Kabra submitted that he had raised several points to be considered by Respondent No. 1 in the inquiry, but none of them has been dealt with in the order. On the contrary the Appellants have been blamed for non-submission of information called for by Respondent No. 1 and criticised for not co-operating with them in the inquiry. Both these charges are baseless, he said. According to him the Appellants had in no way obstructed the proceedings so as to delay the inquiry that whatever particulars required for the purpose of the inquiry were readily furnished. Since some of the particulars called for were not even remotely connected with the subject matter of the inquiry, which was confined to the conduct of Respondent No.2, the Appellants sought the views of Respondent No.1 as to the very purpose of calling for such information, as for compliance of such a request more time was required and that would have caused further delay in concluding the enquiry. Respondent No. 1 never explained the purpose, but insisted on demanding those particulars, which had no relevance at all to the matter under inquiry. The Appellants had fully complied with the order of the Bombay High Court in the writ petition filed by them. He submitted that there was no basis at all for Respondent No.1 to suspect the genuineness of the transactions in the light of the material facts placed before them. Further, Respondent No.1, merely issued a warning to Respondent No.2 ignoring the enquiry officer's recommendation based on evidence, for suspending the registration certificate. He re-iterated that the inquiry was conducted in a partisan manner denying the Appellants, the minutes of the proceedings and inspection of the documents relied on, and also ignoring their request for a full hearing to substantiate their grievances. The order does not refer to any of the submissions made by the Appellants but quotes lavishly the version put forth by Respondent No.2 and Respondent No.3. Shri Kabra submitted that though Respondent No.2 had not only failed and neglected to discharge their duties and obligations as a registered broker to pay the sale proceeds to the client, but also indulged in flagrant violation of the Rules, Regulations and Bye-laws in not reporting the transactions to the Exchange, in not recording the transactions on BOLT, and in not issuing the requisite contract notes/bills to the Appellants. Despite these omissions and commissions having brought to the notice of Respondent No.1 and Respondent No.3, they did not take any action worth mentioning against the said Respondent. He cited the provisions of section I5F of the Act, providing monetary penalties to meet with such defaults by brokers and submitted that Respondent No.1 did not want to penalise Respondent No.2 by resorting to adjudication proceedings under the said section I5F.
 

It may be stated that Shri Kabra, after the learned Counsel for Respondent No.2 completed his oral submissions, made a request to furnish them copies of all papers and inspection of documents relied on by them in their reply before Respondent No. 1 at the time of hearing of the Appellants' complaint. The Respondent did not agree to this. Except the interse correspondence in the matter there was no application before the Tribunal seeking any direction in the matter. In any case it was a belated request.
 

Ms Poonam A Bamba, appearing for Respondent No. 1 submitted that the Respondent had taken prompt action on receipt of the complaint. She referred to the sequence of events explained in the impugned order and material facts stated in the written reply filed by Respondent No. 1. She submitted that even though the complaints was addressed to Respondent No. 3 and only a copy was market routinely to them, the Respondent took cognizance of the same and took initiative to redress the grievances stated therein. According to her while the Respondent was anxious to examine the grievances and was acting in the matter quickly, the Appellants on the other hand were delaying the proceedings on various grounds. She denied the allegation that the Respondent had conducted inquiry without giving adequate opportunity to the Appellants. According to her the Appellants were more keen in creating false records by entering into avoidable and unnecessary correspondence. The Appellants were also found suppressive of facts before the authorities. Although the Appellants knew very well that the Respondent had taken cognizance of their complaint and had initiated enquiry, they rushed to the Bombay High Court with a Writ Petition suggesting that the Respondent had not acted upon on their complaint. The purpose of filing such a Writ Petition was only for delaying the enquiry proceedings. According to her in the said Writ Petition the fact of the pending enquiry proceedings before the Respondent was suppressed. Further inspire of the High Court's order dated 7.12.1999 directing the Appellants to cooperate with the inquiry and produce all the necessary documents and information called for by the Respondent including the Appellants source of title to the shares of Rhutu Bearings & Estates (India) Ltd, the Appellants did not co-operate, but opted to question the need for asking for the details and the relevance of the same for the purpose for the enquiry. She stated that the Appellants were assuming the role of a super regulatory authority, commanding and guiding the course of inquiry and demanding clarifications and explanations from Respondent No. 1, instead of the requisite information so as to enable the Respondent to examine the grievances. She cited the following extract from the Appellants' letter dated 17.1.2000 addressed to the Respondent in response to their request for information, as an example to substantiate her submission: -

The learned Counsel, Shri Girish B Kedia, appearing for Respondent No.2 submitted that the Appellants had not sold the shares through the Respondent at any point of time and they had not received any brokerage in this regard. He submitted that since there was no client broker relationship between the Appellants and the Respondent, there was no question of issuing any contract note. Respondent No. 3 had carried out an independent enquiry on the Appellants' complaint and nothing has been established in support of the allegations. He submitted that the Appellants' sole intention in agitating the matter before Respondent No. 1 was to harass the Respondent and to prolong the harassment by dragging on the enquiry by raising frivolous issues. Defying the directions of Respondent No. 1 to furnish information relevant to the enquiry was intended to achieve the said objective. According to the learned Counsel, the Respondent had transactions with a company called JAICO and the Appellants being the Directors of the said JAICO developed good relations with them. The Appellants approached the Respondent on or about 2, d August, 1996 and represented that they had concluded a deal with one Deepak Pathak of M/s. Mahesh Kothari, a member of Respondent No.3 and that Mahesli Kothari was insisting on for affixing the stamp of a broker on the transfer deed of the shares delivered by them and also requested to issue bills against the said broker to meet with the requirements of the said broker for record purpose. The Respondent was told that this would fasten any financial or other liability on them. Believing it to be true and in view of the existing goodwill established through JAICO, the Respondent obliged the Appellants little realising that this goodwill measure would be used to harass them. But the Appellants' transaction with Mahesh Kothari did not come through due to certain disputes between them, and that with a view to help the Appellants and at their behest and request, without owning any responsibility in the alleged deal, the Respondent filed an arbitration proceeding against the said Mahesh Kothari. The arbitration proceedings ended up holding that there was no claim, which was recoverable. Again at the instance of the Appellants and on their persuasion, the Respondent solely with a view to help them filed an appeal against the arbitration order which was also dismissed. The Respondent vide letter dated 30^th November 1996 informed the Appellants, of the position and requested them to follow up the matter on their own. It goes to prove that the Appellants were fully aware of the facts and only when they came to know that Mahesh Kothari was not ready to pay them, they started the process of harassing the Respondent. He submitted that a complaint in this regard was filed with Respondent No.3 only on 26.3.1997, making allegations against the Respondent. It is unimaginable that a party would have kept quiet for 9 months to recover an amount of Rs. 1 crore from the broker, to whom they claimed to have sold the shares. According to the learned Counsel tile Appellants with ill designed motives adopted the course of pressurising the Respondent seeking payment of Rs. 1 crore. With a view to achieve this objective, the Appellants lodged false complaint against the Respondent with Respondent No.3 and Respondent No.1 and with a view to pressurise even these two institutions, started making allegations against them. He re-iterated the version that the Respondent in good faith, on the representations made by the Appellants, assisted them by placing their rubber stamp on the reverse side of the Transfer deeds and raising two bills on the said Mahesh Kothari at the behest of the Appellants. The Respondent also took some steps against Mahesh Kothari purely to assist the Appellants without owning any responsibility or liability of any nature qua the alleged transaction by filing arbitration proceedings and police complaint. According to the learned Counsel, the complaint against the Respondent was initiated solely with a view to pressurise and blackmail them for the recovery of huge amount which was not due or payable by the Respondent. The learned Counsel submitted that the Appellants were not bonafide owners of the shares involved in the transaction, that the alleged deal was not entered on the BOLT system of the Exchange, that Appellants deliberately and intentionally withheld from Respondent No.1, the information as to the source of the title to the shares stated to have been sold by them. The Respondent having no deal or transaction with the Appellants or with the said Mahesh Kothari was not required to issue any contract note and that is why they did not issue any contract note to the Appellants. He further pointed out that the Appellants, one of whom was a sub broker, are directors of a corporate member of National Stock Exchange. Therefore, they should be well versed with the procedure relating to transactions on the Exchanges. In a normal transaction contract note is required to be issued within 48 hours of the transaction with the broker. Since there was no transaction in the instant case by or through the Respondent no contract note was issued and the Appellants also did not demand the same for the said reason. The learned Counsel submitted that the transaction under reference could be a financial deal between the Appellants and the said Mahesh Kothari as could be safely concluded from the data furnished in Exhibit 2 to the reply filed by the Respondent. He further stated that 5 lakhs shares of Rhutu Bearing and Estates (India) Ltd. being 9.5% of the total issued capital that company and 26% of the public issue, the transaction needed to be report to Respondent No. 1. Since it was not done, it can be safely concluded that there was no genuine transaction between the Appellants and the said Kothari and the deal appeared to be in the nature of some kind of a collateral transaction. Tile learned Counsel denied the Appellants' version of having delivered 5 lakhs shares of Rhutu Bearings & Estates (India) Ltd., to the Respondent. He also denied tha.t the said shares were delivered vide Delivery Memo No.451 and 452, as alleged and also denied acknowledgement of receipt of those shares. The learned Counsel also denied the Appellants version of raising bill Nos. 159 and 160 dated 2.8.1996 pursuant to sale as alleged, as those bills were raised at the behest of the Appellants in the circumstances already explained and not against any sale. He further submitted that the Appellants had deliberately not arrayed Mahesh Kothari as a party to the appeal though he had participated in the enquiry before Respondent No. 1 and was also a key player in the transaction, with a view to suppress facts before the Tribunal. He also cited the full bench order of the Arbitration Committee endorsing the views of Mahesh Kothari, that the shares were received on the basis of placement by one Deepak Pathak who is an employee of his Baroda Branch. The version also suggested that the Appellants had done the deal directly with Mahesh Kothari. He stated that the Appellants never wrote to the Respondent asking for contract notes or bills, but only preferred to write to Respondent No.1 and Respondent No.3 regularly hurling allegations. The fact that they had not approached Respondent No.2 seeking contract notes indicates that the Appellants had not sold shares to them.
 

Shri Nihar Mody, learned counsel appearing for Respondent No. 3 explained the role of the Respondent and submitted that the Exchange is governed by a set of Rules, Regulations and Bye-Laws having statutory force. The Rules / Regulations / Bye-Laws provide for matters relating to brokers interest, broker and non broker dealings, etc. in detail, Rules governing member broker-client relationship are clear. In respect of disputes whether between brokers or between broker and investor, there is a recognised settlement mechanism by way of arbitration. Learned Counsel submitted that the senior functionaries of the Exchange viz. General Manager, Executive Director, IGRC and the investor Services Cell had duly considered the Appellants' complaint and came to the conclusion that the disputes between the Appellants and Respondent No.2 are the subject matter for arbitration under the Exchange rules. The Appellants version that there was no dispute between them and Respondent No.2 was not correct as is evident from the facts stated by the parties. While Appellants were claiming a sum of Rs. 1 crore from Respondent No.2, that Respondent was denying the said claim. It cannot be said that this is not a dispute. In terms of bye-law 248 of the Exchange all claims whether admitted or not can be an issue for arbitration. He submitted that even if there was no dispute as claimed by the Appellants, still all claims are referable to arbitration under the said bye law 248. The purpose of bye law 248 is to settle quickly the disputes and difference between the parties transacting business through the Exchange. This provision is well made use of by the parties. He further submitted that the Exchange is not the arbitrator. Arbitrators are appointed by the disputants from a lengthy panel available for the purpose. The Exchange appoints only the 3 rd Arbitrator, as the arbitration board should be of members in even number. The panel includes not only members of the Exchange but also dignitaries like retired High Court Judges. He pointed out that the Appellants had already resorted to arbitration and they had nominated their arbitrator and the proceedings have also been commenced, before the Committee consisting of 3 members, which included a retired High Court Judge, nominated by the Exchange. From the composition of the arbitration Committee it could be seen that it is an impartial set up. Further, there is also a provision to move the full Bench, by way of an appeal, in case the Committee's decision is not acceptable to any of the disputants. Despite the advise of the Exchange to seek settlement of the dispute by way of arbitration, the Appellants filed a Writ Petition in the Bombay High Court knowing very well that in the normal course the High Court will not interfere in the matter as an alternate remedy was available to settle the matter. Further, the Appellants cannot be unaware of the legal position approaching Respondent No. 1 or the Tribunal, they are not likely to get the sum of of Rs. 1 crore allegedly due from Respondent No.2. But still they were harping more on their complaint before Respondent No. 1 than pursuing the arbitration matter. Referring to that part of the impugned order requiring the Respondent to look into the role of Respondent No. 2 in affixing their stamp on the reverse side of the transfer deeds and raising bills etc., and demanding a report on the same, the learned Counsel submitted that any further enquiry by the Respondent on the subject at this juncture would be of no use as Respondent No. 1 had already taken cognizance of action of Respondent No.2 and warned them. He submitted that since the instruction had become redundant the same be struck off. The learned Counsel further submitted that since the dispute is now pending before the arbitrators, it may not be proper for the Respondent to deal with or comment on the merits or demerits of the dispute between the parties. He denied the allegations made by the Appellants against the Respondent and its functionaries.
 

I have carefully examined the rival contentions put forth by the parties in their pleadings and oral submissions. However, for the purpose of disposing the present appeal, 1 do not consider it necessary to discuss all those contentions, allegations and counters thereto, threadbare for the reason stated hereunder:
 

The Appellants vide their letter dated 26.3.1997 addressed to the General manager, Investor Grievance Cell of Respondent No.3 had made the following complaint/ demand against Respondent No.2. Since the scope of the request, the nature of action demanded and the tenor of the submission made are considered relevant in this context, the text of the said letter, as provided with the appeal, is extracted below.
 

"Re: Dues pending by your Member Broker Clg.No.797 Rs.1, 00, 00, 000/- (Rupees One crore) sale of 500000 Rhutu Bearing.

2. Disciplinary Action Committee, B.S.E.

The complaint inter alia seeks mainly two reliefs - return of the price of the shares and suspension or expulsion of Respondent No. 2, from the Exchange. Having stated the relief required and suggested the course of action to be followed by Respondent No. 3, the Appellants routinely forwarded a copy of the complaint to Respondent No. 1 also " to take strong action against the broker for refusing to give contract note/bills/payment".
 

It is on record that Respondent No. 3 had acted on the Appellants' complaint. The complaint was considered by various functionaries of Respondent No.3, such as General Manager, Executive Director, Investor Services Cell and Investor Grievances Redressal Committee, and concluded that the matter can be settled only through arbitration, as an amicable dispute resolution was elusive in view of the conflicting stand taken by the parties IGRC, which comprised a retired Judge of the High Court, recorded a finding on 3.10.1997 to the effect that the parties materially differed in regard to facts of the case. As it was not possible to reconcile the matter, the Appellants were advised to go in for arbitration. The Appellants' contention is that there was no dispute to refer to an arbitration and the suggestion to refer the matter to arbitration was only to favour Respondent No.2. In this context it is noted that the Appellants had raised a claim against Respondent No.2. The Respondent No.2 in turn had denied the claim. Therefore, it cannot be said that there as no dispute existing between them. It is also worth noting that the scope of bye law 248(a) of the Exchange is vide- enough to bring under arbitration all claims, whether admitted or not, between a member and a non-member as well. The Committee's decision was in the nature of an advice and not a command, for consideration by the Appellants. However, it is seen that the Appellants, though in the first instance disagreed with the views of the Committee, belatedly accepted the same and filed an application for arbitration on 30^th July 1999. The requisite arbitration committee has also been constituted with three members consisting of a nominee each of the disputants and a nominee of Respondent No.3. The nominee of Respondent No.3, 1 am told, is a retired High Court Judge. From the copy of the arbitration application filed by the Appellants annexed to the appeal it is seen that the application contains exhaustively the Appellants' version of the case such as the nature of the transaction, the conduct of the Respondents, the role of Mahesh Kothari in the matter, the sequence of correspondence and developments, the attitude of the functionaries and also relief against Respondent No.2.
 

During the course of the proceedings, the Tribunal was informed that the arbitration proceedings are still pending before the Committee. The Tribunal was also informed by the Respondents that the arbitration proceedings are not unduly ragged on as alleged. On a perusal of the arbitration application referred to above it is felt that correct factual position having a bearing on the grievances of the Appellants would emerge in the process of arbitration, as both the parties would be in a position to adduce evidence and substantiate their view point with full facts. The crucial question that need be answered in the wake of the complaint is that whether there was a genuine trade transaction between the Appellants and the Respondent No.2. The answer to this would decide, as to whether there was any contravention of the statutory requirement. The pending arbitration, the way I understand, may throw adequate light on the said question. I feel that the arbitration itself should serve to some extent as a fact-finding enquiry to the satisfaction of both the parties.
 

It is seen from the impugned order that Respondent No. 1 had come to the conclusion that there was no proof or substance to substantiate the genuineness of the transaction and therefore it was not possible to agree with the findings of the inquiry officer that Respondent No.2 had failed to issue contract notes to the Appellants in respect of the impugned shares so as to warrant imposition of the penalty of suspension or cancellation of the certificate of registration. There is a finding in the order that Respondent No.2 "not only put his stamp on the transfer deed but had been actively extending its cooperation in helping the interests of the Appellants by filing arbitration proceedings against Mr. Mahesh Kothari and subsequently an FIR for non-receipt of the remaining shares and that a part of the impugned shares are still with the said broker.
 

Such conduct in course of its dealings, suggest that the said broker had not only been helping the complainant to settle their deal with Mr. Mahesh Kothari but also had been actively cooperating in the deal, which raises suspicion as to the conduct of the said broker in respect of the dealing. However, since the complainant have not substantiated genuineness of the transaction 1 cannot conclude in respect of the defaults of the said broker in issuing the contract notes and impose the penalty as recommended by the enquiry officer. However, as observed hereinabove, 1 find that the conduct of the said broker in respect of the impugned transactions have been unbusiness like and his indulgence in such transactions might lead to interference in the fair and smooth functioning of the market. Therefore, I find that a warning be issued to a said broker",
 

On the question relating to non issuance of contract notes by Respondent No-: 2 it has been repeatedly stated in the impugned order that it "has not been beyond doubt for want of information required to be supplied by the Appellants that the transactions were sale/purchase transactions between the ants and the Respondent No.2".
 

It has also been repeatedly stated in the order that Appellants did not furnish the information called for, and the attitude of the Appellants was unhelpful in the enquiry to reach at a conclusion as to whether there was a genuine transaction between the parties requiring issuance of contract notes as required under the Regulations. However, it is seen from the order that the Respondent has already directed Respondent No.3 to "look into the role of the said broker in affixing its stamps on the reverse of the transfer deeds and raising bills-etc. and submit the report on the same" (emphasis supplied). It is evident from the said direction that the Respondent No. 1 wanted to examine the matter further and the enquiry was still on. If they had no such intention they would not have called for such a report. During the course of the argument the learned Counsel for Respondent No.3 referring to the direction had submitted that the said direction became redundant in view of the fact that Respondent No.1 had already considered the matter and warned Respondent No.2. On a closer scrutiny of the order it could be seen that the warning in the light of the submission made by the said Respondent was with reference to stamping the Transfer deeds and filing arbitration and FIR against Mahesh Kothari. The impugned order seeks more details from Respondent No.3 on matters such as having a direct bearing on the transaction itself unless there is an intention to re-open or re-examine the issue, they would not have asked for such a report from Respondent No.3. Respondent No.3 had also admitted in their written reply to the appeal that "The exchange has commenced work on preparing a report as per SEBI's said order and will submit the same to Securities and Exchange Board of India". Therefore it is safe to assume that the Respondent No.1 had not completed the enquiry and the impugned order was made without considering the full facts, as the report from Respondent No.3 was yet to be received.
 

The conduct of the Appellants, particularly questioning the wisdom of Respondent No.1 asking for information and the tenor of the correspondence cannot be appreciated. The fact that the Respondent No. 1 of their own had taken up the Appellants' grievances, though it was addressed to Respondent No.3 indicates fairness on their part and also the anxiety to protect the interests of the Appellants. The Appellants cannot and should not assume the role of a super authority and. dictate terms to Respondent No. 1 which is a statutory authority mandated with the onerous task of protecting the interests of investors. All those concerned are expected to assist them in their efforts to protect the investors' interests rather than creating hurdles in their efforts. In the instant case it was in the interest of the Appellants that the information was called for by the Respondent No. 1. Since the impugned order is found deficient for the reasons stated above its is felt that the same need consideration after getting the said report and information. Since Respondent No.3 have already submitted that the report is under preparation for submission they are directed to furnish the same to Respondent No. 1 without any undue delay. However, if they feel that the outcome of the arbitration would enable them to furnish more useful information, they are at liberty to wait for the disposal of the arbitration as the whole purpose of the Respondent calling for the report is to have factually correct information, to enable them to reach at a correct conclusion. Since the Appellants have not furnished full information called for by the Respondent No. 1 they are directed to furnish the same within the time frame which the said Respondent will communicate. Respondent No.1 on receipt of the said report and information will consider the same and make suitable order. In case the Appellants do not furnish the information called for and/or fail to co-operate in the enquiry, or the report from Respondent No.3 is unduly delayed, Respondent No.1 is at liberty to make such order, as is deemed fit in the light of the facts and circumstances of the case. Since the matter requires to be remanded for the reasons stated above, the impugned order requires to be set aside. I do so.
 

The appeal is therefore allowed by way of remand.