Bye Laws of The Hyderabad Stock Exchange Ltd DEALINGS ON THE EXCHANGE. Business Days 1. (a) The Stock Exchange shall be open on all days except on public holidays under the Negotiable Instruments Act 1881 and such Exchange holidays not exceeding twenty in any calendar year as the Governing Board may declare in advance from time to time. Exception (b) Notwithstanding anything contained in sub-clause (a) the market shall be open for business during the Divali holidays on such "Moorat Day" and the days on which Dividend declared by Companies and Central Budget days as the President may fix. Alternation or Cancellation of Exchange Holidays 2. The Governing Board may from time to time alter or cancel any of the Exchange holidays fixed in accordance with these provisions. Closure of Market 3. The Governing Board may by a special resolution and for reasons to be recorded close the market on days other than or in addition to holidays; Provided that the market shall not be so closed at any time continuously for a period exceeding three days except with the approval of the SEBI; Provided further that when information regarding closure of the market is so conveyed as to reach the SEBI in the normal course within twentyfour hours the Governing Board may close the market as aforesaid continuously for any period exceeding three days without the approval of the SEBI till such time as the decision of the SEBI is communicated to the Exchange. Closure of Market by President 4. The President may at any time close the market for twentyfour hours. Trading Sessions on the Floor of the Exchange 5. Meetings of members for trading purposes to be called trading sessions shall be held on the floor of the Exchange on the days and during the hours prescribed in the relative Regulations or on such other days or during such other hours as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. 1 Altering Time of Trading Session 6. The Governing Board or the President may reduce, extend or otherwise alter the time of any trading session or sessions on the floor of the Exchange on any particular day. Over-the-counter Business 7. Members may enter into bargains off-the-floor (over-the- counter) before or after the hours of the trading sessions fixed in accordance with those provisions. Trading Sessions Outside Prescribed Hours and Street Trading Forbidden 8. Meetings of members for trading purposes, shall not be held either on or off the floor of the Exchange before or after the hours of the trading sessions fixed in accordance with these provisions and no calling out of prices, bids or offers or trading in the street at the entrances to or in the vicinity of the Stock Exchange shall be allowed. Who may be Admitted 9. A member shall be entitled to admission to the floor of the Exchange. The partner of a member or an authorised clerk or remisier appointed by a member may also be allowed admission with the permission of the Governing Board or President. Unless the Governing Board otherwise allows no other person shall be admitted to the floor of the Exchange. Who may no be Admitted 10. A member who has been suspended or expelled or declared a defaulter and his partners, authorised clerks and remisiers shall not be allowed admission to the floor of the Exchange. Visitors 11. A visitor may be allowed to visit the floor of the Exchange with the permission of the President or a member of the Governing Board or an officer of the Exchange. Admission to the Floor of the Exchange 12. No person shall be admitted to the floor of the Exchange unless he complies with the requirements prescribed in the relative Regulation or such other requirements as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. Admission During Good Behaviour 13. A person shall be admitted to the floor of the Exchange only during good behaviour and shall be bound to observe the Rules, Bye-laws and Regulations of the Exchange. The Governing Board may in its absolute discretion refuse admission to the floor to any person and may at any time suspend or terminate the right of admission of any such person without assigning any reason whatever. 2 Managements on the Floor of the Exchange 14. The management on the floor of the Exchange and the Regulation of the entrances thereto shall be in the charge of the employees of the Exchanges acting under the authority of the Secretary. Unit of Trading 15. (a) The unit of trading in each security shall be for such number or for such number or for such amount as the Governing Board may from time to time specify and unless so specified the unit of trading shall be in the lots prescribed in the relative Regulation or in such other lots as the Governing Board may from time to time prescribe in modification or substitution thereof. Odd Lots (b) All bargains shall be in multiples of the trading units unless an odd lot is stipulated when the bargain is made. Variations in Bids and Offers 16. Bids (or) offers shall be made at or in multiples of the minimum variations prescribed in the relative Regulation or such other variations as the Governing Board may from time to time prescribe in modification or substitution thereof. Quotations 17. The prices of securities dealt in on the Exchange shall be collected and recorded daily under the authority of the Secretary. No quotation shall be allowed for any bargain unless made in the regular course and unless business in a marketable amount of the security has been done by actual purchase and sale at that rate. Quotation of special or odd lots shall be marked as such. Marking When Expunged 18. A price having been marked shall not be expunged except by order of the Governing Board or the President who may after calling for the names of the members who made the bargain and making the necessary inquiries withdraw a quotation which is considered to be inconsistent with the market value of the security or not the result of a bonafide bargain. Daily Official List 19. A daily official list of prices shall be issued by the Exchange. 3 DEALINGS IN SECURITIES Permitted Dealings 20. Dealings in securities shall be permitted on the Exchange as provided in these Bye-laws and Regulations. Save as so provided no other dealings are allowed. Governing Board may Prohibit Dealings 21. The Governing Board may prohibit dealings in any security or securities for any cause : Provided that except in cases of proposed increase or reduction of capital or payment of calls or other monies or conversion or subdivision or consolidation of securities or reconstruction or reorganisation of the Company concerned or such or similar other circumstances dealings shall not be so prohibited at any time continuously for a period exceeding three days except with the approval of the SEBI: Provided further that when information regarding prohibition of dealings is so conveyed as to reach the SEBI in the normal course within twentyfour hours the Governing Board may prohibit dealings as aforesaid continuously for any period exceeding three days without the approval of the SEBI till such time as the decision of the SEBI is communicated to the Exchange. Government Securities 22. (a) Dealings are permitted in Government Securities which term for purposes of these Bye-laws and Regulations denotes securities issued by the Government of India, State Governments, Port Trusts, Municipalities and similar other bodies. Government Securities Deemed to be Admitted to Dealings from Date of Issue (b) Government Securities shall be deemed to be admitted to dealings on the Exchange from the date on which they are issued. Securities (other than Government Securities) Admitted to Dealings on the Exchange 23. Dealings are permitted in securities (other than Government Securities) which are from time to time admitted to dealings on the Exchange by the Governing Board in accordance with the provisions in that behalf prescribed in these Bye-laws and Regulations. 4 Dealings in Provisional Documents 24. The Governing Board may in its discretion and prior to granting admission to dealings on the Exchange permit dealings in Provisional Documents which term for purposes of these Bye-laws and Regulations denotes Coupons, Fractional Certificates, Letters of Renunciation or transferable Letter of Allotment, Acceptance or Application or options or other rights or interest in securities issued or to be issued by a Company or other similar documents in respect of a Company whose securities are admitted to dealings or in whose securities dealings are permitted on the Exchange. Dealings in Securities Dealt in on Other Stock Exchange 25. The Governing Board may in its discretion and subject to such conditions as it may deem proper permit dealings in any security or securities admitted to dealings on other Stock Exchanges or regularly dealt in on such Stock Exchanges. Specific Bargains 26. The Governing Board or the President may permit specific bargains to be made in the case of securities of public Companies or corporate bodies not admitted to dealings on the Exchange. Applications in respect of New Issues or Offer for Sale 27. Except when otherwise allowed by the Governing Board in any particular case and subject to compliance with such conditions as it may impose tenders or applications for subscription or purchase in respect of any floatation or new issue or offer for sale of any security shall not be submitted by or through members unless the issuer or offerer or the underwriter (or underwriters) or broker (or brokers) engaged by such issuer or offerer offers to all a fair and equal opportunity for subscription or purchase and the same terms as to brokerage to all the members of the Exchange and unless it is provided that all tenders and applications for subscription or purchase shall rank alike for allotment or sale irrespective of whether they be subject to brokerage or commission or not. Underwriting, Placing and Preliminary Arrangements 28. (a) Except when otherwise allowed by the Governing Board in any particular case and subject to compliance with such conditions as it may impose a member shall not enter into an underwriting contract nor shall he contract either as principal or agent to subscribe or purchase or to procure whether through the market or otherwise subscribers, or purchasers not shall he c=act or agree to act as broker or underwriter in connection with any flotation or issue of any security of a nominal value exceeding Rs. 5 lakhs unless the issuer conforms or agrees to conform to the listing requirements prescribed in these Bye-laws and Regulations and undertakes to apply for admission of such security to dealings on the Exchange. 5 Placing Distinguished from Dealings (b) Arrangements entered into either as principal or agent to subscribe or purchase or to procure whether through the market or otherwise subscribers or purchasers for a security as provided in sub-clause (a) shall be deemed to be "placings" as distinguished from "dealings" which term for the purpose of this provision denotes transactions after the grant of admission to dealings on the Exchange. Dealings Subject to admission not Permitted. (c) Dealings or arrangements for dealings "subject to admission to dealings" are not permitted. Placings not to be Negotiated (d) Except for specific bargains made with the permission of the Governing Board or the President as provided in these Bye-laws and Regulations securities which are placed may not be replaced or negotiated in any way before the grant of admission to dealings on the Exchange. Arbitrage 29. Subject to any prohibition the Governing Board may impose in respect of any security or securities arbitrage is allowed in a security in which dealings are permitted. For the purpose of this provision arbitrage denotes the business of buying or selling securities in one market with intention of reversing such transactions in another market in order to profit from price differences between such markets and which business is not casual but contains the element of continuity. Dealings in Prospective Dividends Void 30. Dealings in prospective dividends are not permitted and all contracts for the purchase and sale of prospective dividends shall be deemed void. Options in Securities Illegal 31. Options in securities are not permitted and all such dealings are illegal. Application for Admission to Dealings 32. Applications for admission of securities to dealings on the Exchange shall be made to the Exchange in the form prescribed in the relative Regulation or in such other form or forms as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. Notice of Application for Admission to Dealings 33. A notice of any application for admission to dealings on the Exchange shall be posted on the notice board of the Exchange for the information of members at least one week previous to its consideration by the Governing Board. 6 Grant or Refusal of Admission to Dealings 34. The Governing Board shall consider and may in its discretion approve subject to such terms as it deems proper or defer or reject any application for admission of the securities of a Company to dealings on the Exchange. Listing Conditions and Requirements 35. The Governing Board may not grant admission to dealings on the Exchange to the securities of a Company unless it complies with the listing conditions and requirements prescribed in the relative Regulation or such other conditions and requirements as the Governing Board may from time to time prescribe in addition thereto or in modification of substitution thereof in addition to the listing requirements prescribed in the Securities Contracts (Regulation) Rules 1957 which are incorporated in the aforesaid regulation. Provided that in any particular case the Governing Board may by a special resolution waive or dispense with the strict enforcement of the listing requirements prescribed in the Securities Contracts (Regulation) Rules 1957 to the extent the said Rules so provide and may also by a special resolution waive or dispense with the strict enforcement of any or all of the other listing conditions and requirements prescribed in the aforesaid regulation. Companies Registered Outside India 36. (a) Admission to dealings on the Exchange shall not be granted to the securities issued by a body corporate registered outside India unless : (i) there is adequate public interest in such securities in India; (ii) the body corporate maintains a place of business in India; and (iii) the body corporate agrees to maintain a register of members in India. Applicability of Listing Conditions and Requirements (b) In the case of a body corporate registered outside India the Governing Board may by a special resolution waive or dispense with the strict enforcement of any or all of the listing conditions and requirements prescribed in these Bye-laws and Regulations except those prescribed in sub-clause (a) provided that the securities of such body corporate are admitted to dealings on any Stock Exchange outside India or the Governing Board is satisfied otherwise. 7 Vendor's Securities 37. Admission to dealings on the Exchange shall not be granted to the securities issued by a Company to vendors and credited as fully or partly paid until six months after the date of issue. For the purpose of this provision securities issued as fully or partly paid to any person or persons or firm or corporation in consideration of the sale or transfer of property or business or in consideration of services rendered in the formation or promotion of the Company shall be deemed vendor's securities. Fees 38. Companies whose securities are granted admission to dealings on the Exchange shall pay such fees as the Governing Board may from time to time determine. Suspension of Admission to Dealings on the Exchange 39. Subject to the provisions of the Securities Contracts (Regulation) Act 1956 and the Securities Contracts (Regulation) Rules 1957 the Governing Board may suspend at any time the admission to dealings on the Exchange granted to any security for such period or periods as it may determine. At the expiration of the period of suspension the Governing Board may reinstate such security subject to such conditions as it deems fit. Withdrawal of Admission to Dealings on Redemption or Conversion 40. The Governing Board may if necessary withdraw admission to dealings granted to securities which are about to be exchanged or converted into other securities as a result of any scheme or reorganisation or reconstruction or which being redeemable or convertible securities are about to fall due for redemption or conversion. Withdrawal of Admission to Dealings on Liquidation or Merger 41. If any Company be placed in final or provisional liquidation or is about to be merged into or amalgamated with another Company the Governing Board may withdraw the admission to dealings on the Exchange granted to its securities. The Governing Board may accept such evidence as it deems suffi- cient of such liquidation, merger or amalgamation. Should the merger or amalgamation fail to take place or should any Company placed in provisional liquidation be reinstated and an application be made for readmission of the securities to dealings on the Exchange the Governing Board shall have the right of allowing, refusing or deferring such application. 8 Withdrawal of Admission to Dealings on the Exchange 42. Subject to the provisions of the Securities Contracts (Regulation) Act 1956 and the Securities Contracts (Regulation) Rules 1957 the Governing Board may by a special resolution and where deemed necessary after giving an opportunity to the Company to explain withdraw the admission to dealings on the Exchange granted to its securities either for breach of or non-compliance with any of the listing conditions or requirements or for any other reason whatsoever to be recorded in the minutes. Readmission to Dealings on the Exchange 43. The Governing Board in its discretion may by a special resolution readmit to dealings on the Exchange the securities of a Company whose admission to dealings has been previously withdrawn. BARGAINS Bargains, Transactions, Dealings and Contracts 44. For purposes of these Bye-laws and Regulations the terms "bargain", "transaction", "dealing", "contract" shall have one and the same meaning unless the context indicates otherwise. Cleared and Non-Cleared Securities 45. For purposes of bargains the securities in which dealings are permitted on the Exchange shall be distinguished as under: (i) Cleared Securities, i.e., securities admitted to dealings on the Exchange and placed by the Governing Board on the Cleared Securities List; and (ii) Non-cleared Securities, i.e., securities other than Cleared Securities. Conditions of Admissions to the Cleared Securities List 46. The Governing Board shall from time to time specify which securities admitted to dealings on the Exchange (except Government Securities, Shares of a Bank and securities that are not fully paid up) shall be included in the Cleared Securities List provided, however that no such securities of a Company shall be so included unless :- (i) there is adequate public interest in the Company : (ii) the Company is of sufficient magnitude and public importance ; and (iii) the Company has been incorporated for not less than three years or is a merger of Companies of which the principal merging Companies had been incorporated for not less than three years previous to date of merger. 9 Addition to or Suspension or Removal from the Cleared Securities List 47. The Governing Board may by a special resolution from time to time add a security to the Cleared Securities List and may in like manner at any time suspend or remove any security from the list. Bargains 48. Save as otherwise provided bargains in securities may be of the following kinds : (i) for "spot delivery", i.e., for delivery and payment on the same day as the date of the contract or on the next day; (ii) for "hand delivery", i.e., for delivery and payment within the time or on the date stipulated when entering into the bargain which time or date shall not be more than fourteen days following the date of the contract; (iii) for the " Clearing", i.e., for clearance and settlement through the Clearing House in the manner prescribed in these Bye-laws and Regulations; (iv) for "special delivery", i.e., for delivery and payment within any time exceeding fourteen days following the date of the contract as may be stipulated when entering into the bargain and permitted by the Governing Board or the President as provided in these Bye-laws and Regulations. Bargains for Spot Delivery, Hand Delivery and Special Delivery in all Securities 49. Bargains for spot delivery, hand delivery and special delivery may be made in any security in which dealings are permitted on the Exchange. Bargains for the Clearing in Non-Cleared Securities Void 50. Bargains for the Clearing shall only be made in Cleared Securities. All bargains for the Clearing in any other securities shall be deemed void. Bargains in Government Securities and Debentures 51. (a) Bargains in Government `Securities and in bearer and registered debentures admitted to dealings on the Exchange may be for spot delivery or for hand delivery or for special delivery. 10 Bargains in Government Securities and Debentures Deemed to be for Hand Delivery (b) Unless otherwise stipulated when entering into the bargain all bargains in Government Securities and in bearer and registered debentures admitted to dealings on the Exchange shall be deemed to be for hand delivery falling due for delivery and payment within the time or on the day or days prescribed in the relative Regulation or within such time or on such other day or days as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof provided that such time or day or days shall be not earlier than two business days and not more than fourteen days following the date of the contract. Bargains in Cleared Securities Deemed to be for Current Clearing 52. (a) Bargains in Cleared Securities may be for spot delivery or for hand delivery or for special delivery or for the Clearing but unless otherwise stipulated when entering into the bargain all bargains in Cleared Securities shall be deemed to be for the current Clearing. Provided however that when bargains in Cleared Securities are subject to any special stipulation or in other than the prescribed trading unit or multiples thereof such bargains shall be deemed to be for hand delivery. Clearing Days (b) The Governing Board shall fix in advance the first and the last business day of each Clearing and the various clearing days. The first business day of a Clearing shall not be more than two business days previous to and including the last business day of the preceding Clearing. Bargain Beyond Ensuing Clearing Void (c) No bargains in Cleared Securities made for a period beyond the current and ensuing Clearings shall be recognised and all such bargains shall be deemed void. Carry-Over Bargains Deemed to be at Making-up Price (d) Unless otherwise stipulated when entering into the bargain carry-over bargains in any Cleared Security shall be deemed to be at the making-up price fixed for the security for the current Clearing. Performance of Bargains in Cleared Securities (e) All bargains in Cleared Securities entered into during a Clearing that are outstanding at the close of business on the last business day shall be performed by delivery and payment on the days fixed for the purpose. 11 Bargains in Non-Cleared Securities (other than Government Securities and Debentures) 53. (a) Bargains in Non-Cleared Securities (other than Government Securities and bearer and registered debentures) admitted to dealings on the Exchange may be for spot delivery or for hand delivery or for special delivery. Bargains Deemed to be for Hand Delivery (b) Unless otherwise stipulated when entering into the bargain all bargains in Non-Cleared Securities (other than Government Securities and bearer and registered debentures) admitted to dealings on the Exchange shall be deemed to be for hand delivery falling due for delivery and payment within the time or on the day or days prescribed in the relative Regulation or within such time or such other day or days as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof provided that such time or day or days shall be not earlier than two business days and not more than fourteen day following the date of the contract. Bargains in Provisional Documents 54. Bargains in Provisional shall be made and settled as determined from time to time in each case by the Governing Board. Bargains in Non-Cleared Securities Other than Provisional Documents and Securities Admitted to Dealings on the Exchange 55. Bargains in Non-Cleared Securities other than Provisional Documents and securities admitted to dealings on the Exchange shall be made and settled in accordance with the provisions relating to Non-Cleared Securities (other than Government Securities and Debentures) admitted to dealings on the Exchange in the manner and to the extent and subject to such modifications as may be from time to time specified by the Governing Board. Bargains for Special Delivery 56. Bargains for special delivery may be entered into with the permission of the Governing Board or the President in case of new issues or when securities are sent for renewal, subdivision, consolidation, conversion, exchange or registrations or when securities are lodged for collection of interest, dividend, bonus or rights or when securities have to be received from abroad or when securities cannot be delivered for any other reason within fourteen days following the date of the contract. The Governing Board or the President may give such permission generally or members may make application for such permission in the form prescribed in the relative Regulation or in such other form as the Governing Board may from time to time prescribe in modification or substitution thereof. 12 Specific Bargains 57. (a) Specific bargains may be entered into with the permission of the Governing Board or the President and applications for such permission shall be made in the form prescribed in the relative Regulation or in such other form as the Governing Board may from time to time prescribe in modification or substitution thereof. Specific Bargains Deemed to be for Spot Delivery (b) All specific bargains entered into subject to these provisions shall be deemed to be for spot delivery. Bargains Due on Other Than Business Days 58. All bargains other than for the Clearing which fall due on a day other than a business day shall mature on the succeeding business day unless otherwise agreed. Extension or Postponement of Contracts by the Governing Board 59. Notwithstanding anything to the contrary contained in these Bye-laws and Regulations the Governing Board may by a special resolution and for reasons to be recorded from time to time extend or postpone the time for performance of contracts in any security or securities whenever in its opinion such action is called for in the public interest or by just and equitable principles of trade or when circumstances beyond the control of either or both of the contracting parties make such action desirable : Provided that except with the approval of the SEBI the time for performance of contracts shall not be so extended or postponed at any time for a period exceeding the period of one Clearing in the case of Cleared Securities and for a period exceeding fourteen days in the first instance and thereafter for a period exceeding seven days in the case of Non-Cleared Securities. Extension or Postponement of Contracts by the President 60. Notwithstanding anything to the contrary contained in these Bye-laws and Regulations the President may in his discretion extend or postpone in any particular case the time for the performance of a contract in any Cleared Security or Securities from any one Clearing to the ensuing Clearing and in any Non-Cleared Security or Securities by a period not exceeding fourteen days. Alteration of Clearing and Clearing Days 61. The Governing Board may by a special resolution and for reasons to be recorded at any time curtail, extend, alter or postpone from time to time to any other date or dates the entire Clearing or any or all of the various clearing days in respect of any or all of the Cleared Securities: 13 Provided that except with the approval of the SEBI such extension or postponement shall not be at any time for a period exceeding the period of one Clearing: Provided further that if in the case of Cleared Securities the Pay-in Day notified for any Clearing is extended or postponed by a period beyond one week the Governing Board shall fix a contango payable by the purchaser to the seller for such securities on the basis of the cantango of the preceding Clearing. BARGAINS SUBJECT TO MARGIN REQUIREMENTS Margin Requirements 62. Bargains in any security or securities shall be subject to the margin requirements prescribed in the relative Regulation or such other requirements as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. Form of Margin Deposit 63. The margin to be furnished by a member under these Bye-laws and Regulations shall be provided by a deposit of cash or in securities subject to such terms and conditions as the Governing Board may from time to time impose. Deposits of cash shall not carry interest and the securities deposited by a member valued at the ruling market price shall exceed the margin amount for the time being covered by them by such percentage as the Governing Board may from time to time prescribed. Value of Margin Deposit to be Maintained 64. The member depositing margin in the form of securities shall always maintain the value thereof at not less than the margin amount for the time being covered by them by providing further security to the satisfaction of the Governing Board which shall always determine the said value and whose valuation shall conclusively fix the amount of any deficiency to be made up from time to time. Margin Deposit to be held by the Clearing House or Stock Exchange 65. The margin deposits shall be held by the Clearing House or Exchange and when they are in the form of Securities shall be transferred to the name of the Clearing House of Exchange. All margin deposits shall be held without any right whatever on the part of the depositing member or those in his right to call in question the exercise of such discretion. Letter of declaration 66. A member depositing margin under the provisions of these Bye-laws and Regulations shall when required to do so sign a Letter of Declaration in the form prescribed in the relative Regulation or in such other form or forms as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. 14 Lieu on Margin Deposits 67. The monies, and securities deposited by a member by way of margin under the provisions of these Bye-laws and Regulations shall be subject to a first and paramount lion for any sum due to the Exchange or to the Clearing House by him or by The partnership of which he may be a member and for the due fulfilment of his engagements, obligations and liabilities or of the partnerships of which he may be a member arising out of or incidental to any bargains, dealings, transactions and contracts made subject to the Rules, Bye-laws and Regulations of the Exchange or anything done in pursuance thereof. Suspension on Failure to Deposit Margin 68. A member failing to deposit margin as provided in these Bye-laws and Regulations shall be required by the Governing Board or the President to suspend his business forth with. A notice of such suspension shall be immediately posted on the notice board of the Exchange and the suspension shall continue until the margin required is duly deposited. Evasion of Margin Requirements Forbidden 69. A member shall not directly or indirectly enter into any arrangement or adopt any procedure for the purpose of evading or assisting in the evasion of the margin requirements prescribed under these Bye-laws and Regulations. BARGAINS SUBJECT TO EMERGENCIES. Bargains in Securities Subject to Emergencies 70. All bargains in securities shall be deemed subject to the provisions relating to emergencies contained in these Bye-laws and Regulations. Measures to meet Emergencies 71. If in the opinion of the Governing Board an emergency exists or has arisen or is likely to occur or if in its opinion the conditions are such as to make free trading in securities extremely difficult the Governing Board may by a special resolution take such action as it deems fit for stabilising the market. Without in any way limiting or derogating from the generality of this provision the Governing Board may proceed in such cases in the manner herein after provided. 15 Corner 72. (a) Whenever the Governing Board is of the opinion that a corner has been created in any security or securities or that a single interest or group has acquired such control of any security or securities that the same cannot be obtained for delivery on existing contracts except at price or on terms arbitrarily dictated by such interest or group the Governing Board may by a special resolution prohibit further dealings in such security or securities while allowing dealings for closing out or liquidation of existing contracts in such security or securities subject to such restrictions as it may determine notwithstanding anything to the contrary contained in these Bye-laws and Regulations. Provided that further dealings shall not be so prohibited at any time continuously for a period exceeding three days except with the approval of the SEBI: Provided further that when information regarding prohibition of dealings is so conveyed as to reach the SEBI in the normal course within twentyfour hours the Governing Board any prohibit dealings as aforesaid continuously for any period exceeding three days without the approval of the SEBI till such time as the decision of the SEBI is communicated to the Exchange. Suspension of Buying-in (b) If the due date of delivery and payment fall during the pendency of the emergency the Governing Board may by a special resolution suspend buying-in of the security or securities in which further dealings are prohibited under sub-clause (a) and in that event the process of Tickets as prescribed in these Bye-laws and Regulations or such other process as the Governing Board may determine shall apply to all existing contracts in such security or securities. Suspension of Buying-in to Continue Till Emergency Abates (c) The Governing Board may from time to time by a special resolution suspend buying-in till the emergency abates whereafter further dealings in such security or securities may be allowed for spot or hand delivery subject to such restrictions as the Governing Board deems fit to impose : Provided always that if any such security be a Cleared Security it shall be removed from the Cleared Securities list and shall not be readmitted to the Cleared Securities list till there is a proper distribution. 16 Crises 73. (a) In a crisis or in the case of panic or bear raid or of reckless heavy sales or when it appears that prices are unduly depressed or that a crisis is at hand or that a fair or normal market does not exist the Governing Board may by a special resolution for such period or periods as it may from time to time determine which period or periods shall not except with the approval of the Central Government at any time continuously exceed three days. (i) Prohibit short selling in any security or securities; and/or (ii) fix minimum prices below which sale or purchase of any security or securities shall not be made and/or (iii) close the market in whole or in part ; and/or (iv) prohibit further dealings in any security or securities while allowing dealings for closing out or liquidation of existing contracts in such security or securities subject to such restrictions as it may from time to time determine notwithstanding anything to the contrary contained in these Bye-laws and Regulations : Provided that when information regarding prohibition of short selling or fixing of minimum prices or closure of the market or prohibition of further dealings is so conveyed as to reach the Central Government in the normal course within twentyfour hours the Governing Board may prohibit short selling or fix minimum prices or close the market or prohibit further dealings as aforesaid for any period exceeding three days without the approval of the Central Government is communicated to the Exchange. Suspension of Selling-out (b) If the due date of delivery and payment fall within a period during which further dealings are prohibited in any security or securities or the market continues to be closed in whole or in part as provided in sub-clause (a) the Governing Board has shall suspend selling-out in respect of all existing contracts in the security or securities in question till the market reopens. However the buyer shall be entitled to enforce delivery. In the event of the security or securities in question being on the Cleared Securities List the following additional provisions shall take effect namely :- (i) The Governing Board shall during the suspension of selling out extend the time for payment from Clearing to Clearing till such time as the market reopens and the liabilities of intermediaries shall continue during the suspension of selling out. The buying member shall be entitled to enforce delivery in any of such Clearings and for that purpose the 17 Process of Tickets as prescribed in these Bye-laws and Regulations or such other process as the Governing Board may prescribe shall apply. If the buying member after calling for delivery fails to take up and pay for such securities on the due date he shall be liable to pay a penalty of 2 per cent irrespective of any other liability. (ii) The Governing Board shall fix the making up prices for such security or securities in each Clearing and the cantango for carrying over such security or securities from Clearing to Clearing on the basis of the ruling market rate of interest and the contango of the previous Clearing. For the first Clearing the making up prices shall be slightly higher than the prices of such securities prevailing in the market prior to the suspension of business. For each subsequent Clearing the Governing Board may reduce the making up prices as it may deem fit in the case of each security but in no case such reduction shall exceed 5 per cent of the previous making up prices. All contracts remaining unsettled at the end of each Clearing shall be carried over to the following Clearing at such making up prices. All accounts shall be adjusted at such making up prices and difference shall be payable on the Pay-in-Day so fixed or extended for the Clearing. (iii) If a member be declared a defaulter during the closure all other members having dealings with him shall determine all outstanding contracts by closing out against him at the prices fixed by the Governing Board on the day of the reopening of the market for dealings either for the Clearing or otherwise. (iv) If a constituent fails to pay on the Pay-in Day the differences due by him to his member broker the latter shall determine all outstanding contracts by closing out against the constituent in the open market on or after its reopening for dealings either for the Clearing or otherwise. Such closing out may be subject to stipulation for delivery in the course of the Clearing and any balance due on such closing out shall be immediately payable by such constituent to his member broker. (v) If a member be declared a defaulter or fail to pay the difference due by him to his constituent on the day following the Settling Day the constituent may on or after the reopening of the market either for the Clearing or otherwise determine all outstanding contracts by closing them out in the open market against the defaulting member after giving him a notice in writing to that effect at any time during the period he continues to be in default. Such closing out may be subject to a stipulation for delivery in the course of the Clearing and any balance due on such closing out shall be immediately payable by the defaulting member to his constituent. 18 COMPARISON OF BARGAINS Comparison of Contracts. 74. It shall be the duty of members with a view to preventing mistakes to compare each contract on the business day following the one on which the bargain is made. But nothing in this provision shall be constructed to justify a refusal by a party to compare a bargain at his office during reasonable hours on the day on which it is made if so desired by the other party. Duty to Compare 75. It shall be the duty of either party to a contract to investigate each transaction which has not been compared in due time to time. Methods of Comparison 76. Comparison of contracts shall be made according as the Governing Board directs either by the method of signing the entries in the transaction or contract books or by the method of comparison or Conformation Memos in accordance with the provision prescribed in the relative Regulation or by such other method or methods as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. Procedure for Comparison 77. The procedure to be followed for comparison of contracts and the regulation of all matters connected therewith shall be in accordance with the provisions contained in that behalf in the relative Regulation or such other provisions as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. Failure to Compare 78. If a member fails to compare his contracts as provided in these Bye-laws and Regulations and if a difference which would have been discovered on such comparison is subsequently discovered the defaulting member shall not be entitled to call for performance of the contract except as it appears in the books of the other party to the transaction. Discrepancies in Bargains 79. If during comparison a dispute arises as to whether a bargain has been entered into or not or if a difference in the respective contracts of the parties be discovered and if such dispute or difference be not immediately adjusted by mutual agreement the party intending to make a claim against the other must forthwith close out the transaction in the open market by purchase or sale as the case may be so as to determine the amount of damages to be claimed and the dispute or difference shall then be referred to the Arbitration Committee for its adjudication. 19 PROCEDURE FOR SETTLEMENT OF BARGAINS Settlement by Hand Delivery 80. All bargains in securities other than for the Clearing shall be settled outside the Clearing House by delivery and payment between the contracting parties in accordance with the provisions in that behalf contained in the relative Regulations or such other provisions as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. Cross Delivery 81. The selling member who has sold securities under the provisions of these Bye-laws and Regulations is entitled at his discretion to deliver the same to the buyer who is his direct contracting party in respect of such securities or to any other buyer who is entitled under these Bye-laws and Regulations to receive from him delivery of securities of a like kind. Settlement Through the Clearing House 82. All bargains for the Clearing in Cleared Securities shall be settled through the Clearing House by the process of making up prices prescribed in the relative Regulation or by such other process or processes as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. The Bye-laws and Regulations relating to the Clearing House shall be deemed to form a part of any settlement process so prescribed. Delivery and Payment in Cleared Securities through the Clearing House 83. Delivery and payment in respect of all bargains for the Clearing in Cleared Securities shall be made through the Clearing House : Provided however that any member who holds for account of his different constituents contracts both for sale and purchase in the same Clearing that offset each other shall be entitled to offset such contracts and in that case he shall be entitled to give and take delivery outside the Clearing House. Delivery and Payment in Cleared Securities when outside the Clearing House 84. It shall be competent to the Governing Board to order that delivery and/or payment in respect of all bargains entered into or to be entered into in any Cleared Security on Securities shall be effected outside the Clearing House. 20 Alteration of Making up Prices 85. When the pricess of making up prices is in force the Governing Board may in the event of a member being declared a defaulter or in exceptional circumstances which shall be fully set out in the minutes alter the making up prices at which all accounts in Cleared Securities are required to be temporarily adjusted and payment made or received. When the making up prices are so altered all accounts shall be readjusted and payment shall be made or received at the altered making up prices. In case of default however such re-adjustment of accounts shall be only between the parties having transactions with the defaulter. Change in Settlement Procedure 86. It shall be competent to the Governing Board to order at any time that all contracts entered into or to be entered into in any security or securities shall be settled by any suitable process through the Clearing House instead of by hand delivery and vice versa. Process of Tickets 87. When buying in or selling out has been suspended and/or delivery postponed or in any other circumstances when the Governing Board in its discretion so determines it shall be competent to Governing Board to order that all bargains in any Cleared or Non-Cleared Security or Securities shall be settled by the Process of Tickets in accordance with the provisions in that behalf contained in the relative Regulation or such other provisions as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. In that event delivery and payment shall be made through or outside the Clearing House as the Governing Board directs. Settlement Bye-laws and Regulations Form part of Contracts 88. The Bye-laws and Regulations from time to time in force relating to any procedure for settlement of bargains and to the Clearing House and Clearance of bargains through the Clearing House and the resolutions, notices, directions, and decisions of the Governing Board or the President, thereunder for the time being in force and posted on the notice board of the Exchange shall be a part of the terms and conditions of every contract in any Cleared or Non-Cleared Security or Securities. Contracts Subject to Change in Settlement Procedure 89. The Governing Board may at any time resolve and through a notice in that behalf posted on the notice board of the Exchange bring into effect in respect of any bargains entered into or to be entered into in any Cleared or Non-Cleared Security or Securities any substitution of or any additions to, deletions from or variations, alterations or amendments in any settlement procedure or in any clearing process or in the time of the forms prescribed therefore. 21 Change in Scheduled Time 90. The scheduled time and hour to be observed in connection with the clearing and settlement of bargains in Cleared and Non-Cleared Securities shall be as prescribed in the relative Regulation or such other time and hour as the Governing Board may from time to time notify in modification or substitution thereof. CLEARING HOUSE Functions of Clearing House 91. The Exchange shall maintain a Clearing House which shall be under the control of the Governing Board. The Clearing House shall act as the common agent of the members for clearing contracts between members and for delivering securities to and receiving securities from members and for receiving or paying any amounts payable to or payable by such members in connection with any of the contracts and to do all things necessary or proper for carrying out the foregoing purposes. Liability of Clearing House 92. The Clearing House shall not be deemed to guarantee the title, ownership, genuineness, regularity or validity of any security transfer deed or any other document passing through the Clearing House and the only obligation of the Clearing House in this matter shall be to facilitate the delivery and payment in respect of securities, transfer deeds and any other documents between members. Liability of the Exchange 93. No liability shall attach either to the Exchange or the Governing Board or any Member of the Governing Board by reason of anything done or omitted to be done by the Clearing house in the Course of its operations nor shall the Exchange or the Governing Board or any. Member of the Governing Board be liable to answer any way for the title, ownership, genuineness, regularity or valicity of any securities, transfer deeds or any other documents passing through the Clearing House nor shall any liability attach to the Exchange, the Governing Board or any Member of the Governing Board in any way in respect of such securities, transfer deeds and any other documents. Liability of Member 94. No liability shall attach to any member of the Exchange for any delay on the part of the Clearing House in the course of its operations. 22 Clearing Particulars 95. The Exchange shall submit to the SEBI as soon as may be after each Clearing all or any of the following particulars as the SEBI may from time to time require namely :- (i) the total number of each category of security carried over from one Clearing to another; (ii) the total number of each category of security contracts in respect of which have been squared up during the course of each Clearing ; and (iii) the total number of each category of security actually delivered at each Clearing. The Exchange shall arrange for the publication of all or any of the above particulars according as the SEBI from time to time directs. Clearing House to Deliver Securities at Discretion 96. (a) The Clearing House is entitled at its discretion to deliver securities which it has received from a member (or to instruct a member to give direct delivery of securities which he has to deliver) under these Bye-laws and Regulations to another member who is entitled under these Bye-laws and Regulations to receive delivery of securities of a like kind. Privity of Contracts (b) Members giving and receiving delivery as provided in sub-clause (a) shall be deemed notwithstanding that no direct contract exists between them to have made a contract with each other as sellers and buyers. However the rights and liabilities of such members in relation to their immediate contracting parties shall not be deemed to be affected thereby except that the selling member who is the immediate contracting party of the receiving member shall be (unless he be himself the delivering member) released from all responsibility in regard to the title, ownership, genuineness. regularity and validity of the documents received by the receiving members and in regard to the loss and damages arising therefrom which shall be dealt with in accordance with the Bye-laws and Regulations relating to Documents and Registration. Release of Intermediaries 97. If a member delivers securities outside the Clearing House except when so provided in these Bye-laws and Regulations or so directed by the Governing Board members making and accepting such delivery shall release all intermediate parties from all liabilities. The delivered shall alone remain responsible to the receiver. 23 Governing Board Trustees 98. All sums of money paid into the Clearing House and all credits appearing in the books of the Clearing house on account of any member entitled thereto shall be held by the Governing Board on behalf of the Exchange as agents and in trusts for such member. The making of such payment or credit entry shall be deemed and taken to be a payment of credit to such member. No other member shall be entitled to levy any attachment or execution thereon and neither the Exchange nor any member thereof nor any other person shall subject to any law for the time being in force be deemed to have any right, title or interest in or to any such money or credit. Authority to Pledge 99. (a) The Governing Board shall have the right to borrow money against and pledge for the payment thereof all or any part of the securities held by the Clearing House for the account of any member who fails to take up and pay for such securities on the pay-in Day. Amount of Loan (b) The amount for which securities may be pledged as provided in sub-clause (a) shall not exceed their value at the ruling market price and it shall be paid to the members who delivered such securities to the Clearing House in accordance with these Bye-laws and Regulations. Selling-out (c) The securities not taken up and paid for shall be sold out by the Governing Board in accordance with the Bye- laws and Regulations relating to closing. No lien on Constituent's Securities 100. When a member is declared a defaulter neither the Exchange nor the creditors of the defaulter shall be entitled to any lien on the securities delivered by him to the Clearing House on account of his constituents. A constituent shall on offering proof considered satisfactory by the Governing Board or the president that such securities were do delivered on his behalf be entitled to receive such securities from the Clearing House subject to payment or deduction of the amount if any due by him to the defaulter. Sub-Division of Certificates, Split Receipts and certified Transfer Deeds 101. In respect of securities so specifically designated by the Governing Board the Clearing House may act for its members in procuring sub-divided certificates or provisional documents or split receipts or certified transfer deeds and may in such cases also issue its own split Receipts an where the Company agrees certify the transfer deeds. 24 Sub-Division 102. When the delivering member has a certificate or a provisional document of a larger denomination than the amount of securities to be delivered or only one certificate representing securities conveyed by two or more transfer deeds the certificates or provisional documents may be deposited with the Clearing House. Thereupon the Clearing House shall at the depositor's risk forward them to the office of the Company and either certify the transfer deeds to that effect or procure the sub-divided certificates or provisional documents or split receipts or certified transfer deeds from the Company. Clearing House Split Receipts 103. (a) In respect of securities so specifically designated the Clearing House may on a member depositing a certificate or provisional document of large denomination issue its own Clearing House Split Receipts in the form contained in the relative Regulation or in such form or forms as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. Title to Clearing House Split Receipts (b) Title to the Clearing House Split Receipts is transferable with the same effect as in the case of original certificates or provisional documents. Exchange of Clearing House Split Receipts (c) The Clearing House shall deliver the new certificates or provisional documents or split receipts or certified transfer deeds issued by the Company or presentation and surrender of the Clearing House Slip Receipts duly discharged by the members to whom they have been issued. Procedure to be prescribed by the Governing Board 104. The Governing Board shall from time to time prescribe the fees to be paid and the procedure to be followed for sub-division of documents, certification or transfer deeds and issue of Clearing House Split Receipts. No Responsibility in regard to Sub-Division and Certification 105. The Exchange, the Governing Board, the Clearing House and their officials shall not be liable or responsible for the due or accurate performance of any duties in connection with the issue of split receipts or certification of transfers nor for the certification of documents presented to them for sub-division or certification nor for any duties in 25 connection with the transmission of certificates or other documents to the Company nor for any loss arising from the certification of forged transfers or from issue of Clearing House Split Receipts or certification or transfers against forged certificates or forged documents nor for the execution, mis-execution of the duties in question. Clearance by Members Only 106. Members only shall be entitled to clear and settle contracts through the Clearing House. Delivery and Payment through Clearing Member Banks 107. The Clearing House shall maintain a list of Banks, Trust Companies and other firms approved by the Governing Board (hereinafter called Clearing Member Banks) which may act for members and their constituents in giving and taking deliveries of securities transfer deeds and any other documents and in making and accepting payment for the same in the manner prescribed in these Bye-laws and Regulations. Clearing Member Banks to observe Bye-laws and Regulations 108. Clearing Member Banks must agree to abide by the Bye-laws and Regulations relating to delivery, payment and the clearing and settlement of transactions through or as directed by the Clearing House and the resolutions, orders notices directions and decisions of the Governing Board or the President thereunder. Inclusion in or Removal from Approved List 109. The Governing Board may at its sole discretion from time to time add names to the List of Clearing Member Banks and remove names therefrom. Notices and Directions 110. All members and Clearing Member Banks shall comply with the instructions, resolutions, orders, notices, directions and decisions of the Governing Board in all matters connected with the operations of the Clearing House. Clearing House Procedure to be Prescribed by the Governing Board 111. The procedure to be followed by members and Clearing Member Banks for transaction of all business necessary to be transacted in all matters connected with the operations of the Clearing House and the fees, fines and penalties to be paid shall be in accordance with the provisions prescribed in the relative Regulation or such other provision as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. 26 Prescribed Banks 112. The Governing Board may from time to time prescribe the bank or banks with whom all members shall maintain an account for the purpose of clearing operations. Clearing Forms to be Prescribed 113. All Clearing Forms (which term shall include Clearance Lists, Delivery and Receive Orders, Statement Sheets, Balance Sheets, Claim Notes, Vouchers and other forms and documents) used for the purpose of the Clearing House shall be in the form prescribed in the relative Regulation or in such other form or forms as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. Penalty 114. The Governing Board or the President may from time to time prescribe the penalty to be imposed in every case of failure by any member to comply with the Bye-laws and Regulations relating to the Clearing House and the clearance and settlement of transactions through the Clearing House and the resolutions, orders, notices, directions and decisions of the Governing Board or the President thereunder or for any error or omission or illegible entry in filling up any forms or other documents required by the Clearing House in the course of its operations or for any delay in submitting any such forms or documents to the Clearing House. False or Misleading Statements 115. The Governing Board may fine, suspend or expel and President may fine or suspend a member who makes any false or misleading statement in the Clearing Forms required to be submitted in confirmity with the Bye-laws and Regulations or any resolutions, order, notices, directions and decisions of the Governing Board or the President thereunder. Charges for Clearing 116. The Governing Board shall from time to time prescribe the scale of clearing charges for the clearance an settlement of transactions through the Clearing House. Clearing House Bills 117. The Clearing House shall periodically render bills for the charges, fees, fines and other dues payable by members to the Exchange as well as the changes, fines and other dues payable on account of the business cleared and settled through the Clearing House and debit the amount payable by members to their accounts. All such bills shall be paid within a week of the date on which they are rendered. 27 INTEREST, DIVIDEND, RIGHTS AND CALLS Buyer and Seller 118. For purposes of the these Bye-laws and Regulations unless the context indicates otherwise the terms "buyer" includes the buying constituent and the buying member acting as his broker and agent and denotes the buying member when he is dealing on his own account as a principal. Similarly unless the context indicates otherwise the term "seller" includes the selling constituent and the selling member acting as his broker and agent and denotes the selling member when he is dealing on his own account as a principal. Interest, Dividends and Rights 119. The buyer shall be entitled to receive all vouchers, coupons, dividends, cash bonus, bonus issues, rights and other privileges which may appertain to securities bought cum voucher, cum coupon, dividend, cum cash bonus, cum bonus, cum rights, etc. and the seller shall be entitled to receive all vouchers coupons, dividends, cash bonus, bonus issues, rights and other privileges which may appertain to securities sold ex-coupon, ex-dividend, ex-cash bonus, ex-bonus, ex-rights, etc. Bargains in Government Securities and Debentures not to Include Accrued Interest 120. (a) Bargains in Government Securities and bearer or registered debentures shall be deemed not to include the accrued interest in the price and such bargains shall be subject to the accrued interest being accounted for between buyer and seller. Provided that when interest has not been paid by the issuer on any bearer or registered debentures within thirty days from the due date or such other shorter period from the due date as the Governing Board may determine bargains in such debentures shall be deemed to include the accrued interest in the price and the seller shall not be entitled to claim from the buyer interest either for the current period or for the earlier period remaining unpaid unless it is expressly stipulated otherwise when entering into the bargain. Payment of Accrued Interest (b) When the accrued interest is not deemed to be included in the bargain price the seller shall be entitled to receive from the buyer the interest accrued to the day of payment less the amount of income-tax including surcharge if any deductible at source. 28 Accrued Interest When Not Payable (c) When the seller fails to deliver the securities on the due date of delivery interest shall cease and the buyer shall not be liable to pay the accrued interest after the date on which the delivery should have been made. Accrued Interest or Interest at Bank Rate (d) When the buyer fails to pay for the securities on the date on which the contract falls due the seller shall be entitled to claim either the interest accrued upto the date on which the payment is actually made or interest at the Bank Rate for the days between the day on which payment should have been made and the day on which the payment is actually made whichever of the two is higher. Government Securities and Bearer Securities when Cum and Ex Voucher or Coupon 121. Bargains in Government Securities and bearer securities shall be ex voucher and ex coupon when so stipulated at the time of the bargain. In the absence of any such stipulation such bargains shall be deemed ex voucher and ex coupon from the date on which the interest becomes payable. Members when Liable for Vouchers and Coupons 122. In respect of cum voucher and cum coupon bargains in Government Securities and bearer securities the buyer shall be entitled to receive from the seller Government Securities with the interest due for the period undrawn and bearer securities with the coupon sheets attached. When such securities are delivered after collecting the interest for the period or without the vouchers or without the coupons due for encashment the full amount of income-tax deducted on the vouchers or coupons shall be paid by the seller to the buyer in lieu of the missing vouchers or coupons. Bargains When Cum and Ex Dividend, or Cash Bonus 123. (a) All bargains in Non-Cleared Securities (other than Government Securities and Debentures) shall be ex dividend or ex cash bonus from the date following the date of declaration of dividend or cash bonus by the Company or from the date on which the Transfer Books of the Company reopen after the closure for the purpose of dividend or cash bonus or from the date on which the dividend or cash bonus is payable whichever is later and all bargains in Cleared Securities shall be ex dividend or ex cash bonus from the first day of the Clearing commencing from or following such date: provided that the Governing Board or the President may fix and notify any other date from which bargains shall be ex dividend or ex cash bonus. All bargains before such date shall be deemed to be cum dividend or cum cash bonus. 29 Delay When Information Not Available (b) If information regarding the dividend or cash bonus be not available to the Exchange for the security to become ex dividend or ex cash bonus as provided in sub-clause (a) all bargains in Non-Cleared Securities (other than Government Securities and debentures) shall be ex dividend or ex cash bonus from the date following the date on which the dividend or cash bonus known and all bargains in Cleared Securities shall be ex dividend or ex cash bonus from the first day of the Clearing commencing from or following such date. Members Responsible for Adjustment in respect of Ex Dividend or Ex Cash Bonus Bargains 124. On receipt of official information by the Exchange cancelling or altering the declaration of a dividend or cash bonus all ex dividend or ex cash bonus bargains entered into before such date shall be subject to modification. If the declaration of a dividend or cash bonus be cancelled the ex dividend or ex cash bonus price shall be increased by the amount of the dividend or cash bonus and if there be a decrease or increased in the dividend or cash bonus declared the ex dividend or ex cash bonus price shall be increased or decreased by a corresponding amount. The difference in respect of ex dividend or ex cash bonus bargains entered into and settled before such date shall be immediately adjusted between the buyer and the seller and the members shall be personally responsible between themselves and to their constituents for effecting such adjustment. Ex dividend or ex cash bonus bargains which have been entered into but not settled before such date shall be completed on the footing of the revised prices. When Bargains Cease to be Ex Dividend or Ex Cash Bonus 125. On receipt of official intimation by the Exchange cancelling the declaration of a dividend or cash bonus all bargains thereafter shall be entered into as if the security had not become ex dividend or ex cash bonus. Deduction from Cum Dividend or Cum Cash Bonus Purchase Price 126. (a) In respect of a cum dividend or cum cash bonus transaction the buyer may deduct from the purchase price the dividend or cash bonus recommended or declared to him by the seller or by the Clearing House on the seller's behalf less than five days before the date of closure of the Transfer Books for the purpose of dividend or cash bonus in the case of Companies whose registered offices are situated in India and less than fourteen days before such date in the case of Companies whose registered offices are situated outside India. 30 When the dividend or cash bonus is not known the buyer may provisionally deduct from the purchase price the amount of dividend or cash bonus paid in respect of the corresponding preceding period by the Company or such other amount as the Governing Board or the President may fix and notify in that behalf. Members Responsible for Adjustment in respect of Cum Dividend or Cum Cash Bonus Bargains (b) If securities in respect of which the amount of dividend or cash bonus has been deducted from the cum dividend or cum cash bonus price by the buyer are lodged for registration with the Company before the date of closure of the Transfer Books of the Company for the purpose of dividend or cash bonus or if the actual dividend or cash bonus subsequently declared or paid by the Company be different from the amount deducted from the cum dividend cum cash bonus purchase price the dividend or cash bonus or the difference (as the case may be) shall be immediately adjusted between the buyer and the seller and the members shall be personally responsible between themselves and to their constituents for effecting such adjustment. Claim Within Four Months 127. All claims in respect of vouchers, coupons, interest, dividend or cash bonus shall be adjusted as provided herein four months from the date of payment of the interest dividend or cash bonus and members shall not be personally responsible between themselves or to their constituents there after. Bargains in Cleared Securities When Cum and Ex Bonus or Rights 128. All bargains in Cleared Securities shall be ex bonus or ex rights from such date as the Governing Board or the President may fix and notify in that behalf. All transactions before that date shall be deemed to be cum bonus and cum rights. Bargains in Non-Cleared Securities when cum and Ex Bonus or Rights 129. (a) All bargains in Non-Cleared Securities (other than Government Securities and debenture) shall be ex bonus or ex rights from the date of declaration of bonus issue or rights by the Company or the receipt of statutory sanction therefore where necessary or from the date on which the transfer books of the Company reopen after the closure for the purpose of bonus issue or rights whichever is later: provided that the Governing Board or the President may fix and notify any other date from which bargains shall be ex bonus or ex rights. All transactions before such date shall be deemed to be cum bonus or cum rights. 31 When Ex Bonus or Rights if Information Not Available (b) If information regarding the bonus issue or rights be not available to the Exchange for the security to become ex bonus or ex rights as provided in sub-clause (a) all bargains in Non-Cleared Securities (other than Government Securities and debentures) shall be ex bonus or ex rights from the date following the date on which such information becomes available to the Exchange. Temporary Settlement 130. (a) In respect of a cum bonus or cum rights transaction when the securities are delivered to the buyer by the seller or by the Clearing House on the seller's behalf on the date of closure of the Transfer Books for the purpose of bonus issue or rights the buyer may deduct from the purchase price an amount equivalent to the proportionate value of the bonus issue or rights to which he is entitled or such other amount as the Governing Board or the President may fix and notify in that behalf and retain such amount with himself as a deposit in the case of Non-Cleared Securities or deposit it with the Clearing House in the case of cleared securities. The buyer may also make such deduction and in respect of both Cleared and Non-Cleared Securities he shall deposit the amount with the Clearing House when the securities are delivered to him during the period of five days preceding the date of closure of the Transfer Books for the purpose of bonus issue or rights in the case of Companies whose registered offices are situated in India and during the period of fourteen days preceding such date in the case of Companies whose registered offices are situated outside India. Payment of Deposit (b) The amount retained as a deposit by the buyer or deposited with the Clearing House representing the balance due on the contract as provided in sub-clause (a) shall be paid to the seller when he delivers the bonus issue or rights at any time on or before the date fixed by the Governing Board or the President for the purpose. Buying-in (c) If the seller fails to deliver the bonus issue or rights within the prescribed time the buyer shall be entitled to buy-in against him in accordance with the Bye-law and Regulations relating to closing-out. 32 Letters of Renunciation 131. Bonus issues and rights shall be settled by letter of renunciation when such letter are issued by the Company. When proper letters of renunciation are delivered or tendered to the buyer on or before the fifth day preceding the date fixed for the receipt of applications by the Company or before such other date as the Governing Board or the President may fix and notify in that behalf the seller shall be relieved of all further liability in respect of such bonus issues or rights. A member shall not be bound to accept letters of renunciation not tendered within the prescribed time. Non-Delivery of Letters of Renunciation 132. If the settlement of claims to bonus issue or rights be not made by letters or renunciation by reason of the failure of the seller to deliver such letters within the prescribed time the seller shall be responsible for obtaining the bonus issues or rights and the buyer shall not be under any obligation to pay for the rights in advance. The seller also be responsible to the buyer for the Extra expense of transfer if any. Application for Rights 133. (a) In respect of a cum rights transaction when the buyer is entitled to the new securities issued in respect of old the buyer shall unless otherwise ordered by the Governing Board or the President specially claim them in writing from the seller on or before the fifth day preceding the date fixed for the receipt of applications by the Company. Seller's Liability and Duty (b) Notwithstanding what is contained in sub-clause (a) if the seller be in possession of the new securities he shall be responsible for them to the buyer if claimed by the buyer on the date following the last day fixed for the receipt of applications by the Company. Should the seller not be in possession of the new securities he shall be bound to render every assistance to the buyer in tracing them. Ex Right Transactions 134. When letters of renunciation are not issued by the Company all transactions in respect of rights shall be on Ex-right basis. 33 Members When Liable for Dividend or Rights 135. (a) In respect of cum dividend, cum cash bonus, cum bonus or cum rights bargains members shall be personally responsible for the dividend, cash bonus, bonus issue or rights on the securities only when such securities are delivered to the buyer by the seller or by the Clearing House on the seller's behalf less than five days before the date of closure of the Transfer Books for the purpose of dividend cash bonus, bonus issue or rights. Rights and Obligations of Buying and Selling Constituents and Transferors (b) Members shall not be liable between themselves or to their constituents for dividend cash bonus, bonus issue or rights save as provided in sub-clause (a) but nothing contained therein shall affect the rights and obligations of the buying and selling constituents (which terms shall where the buying members and/or selling members have dealt on their own account as principals include such members) between themselves as principals or the liability of the transferors in respect of such dividend, cash bonus, bonus issue or rights. Payment of Calls by Sellers Where Obligatory 136. If securities have been purchased on condition that they should be paid up in respect of as particular call (with interest or other charges if any) and the selling constituent has not paid the same the buyer may claim from the seller the call money so payable and shall be entitled to set off such call money against the price. Payment of Calls by Seller Where Optional 137. (a) A seller of partly paid securities may previous to delivery pay any call made on the securities though the last day fixed for payment of such call may not have expired. The seller shall be entitled to claim the call money so paid from the buyer and may add the same to the purchase price. Seller to Bear Extra Stamp Duty (b) When the seller has paid a call before the expiry of the last day fixed for payment the extra stamp duty to be paid as result thereof shall be borne by the seller and the buyer may deduct the same from the purchase price. 34 Payment of Calls by Buying Constituent 138. The buying constituent shall pay every call or contribution which becomes payable after delivery of the certificate and transfer. However he shall not be obliged to pay such call or contribution if the Company refuses to register the transfer on account of lien. In any other case if the buying constituent fails to make such payment and the selling constituent is compelled to pay the same the selling constituent shall be entitled to recover the same from the buying constituent notwithstanding that the buying constituent applied to the Company to transfer the shares and that the directors of the Company refused to transfer. Member Not liable for Calls 139. Save as provided in these Bye-laws and Regulations no member shall in respect of any bargain made by him on behalf of a constituent and as broker only be deemed personally liable or responsible in any way to any party for the payment of calls made by a Company. Company in Liquidation 140. If a Company be wound up at the date of the contract or between the date of the contract and the due date of delivery the buyer shall nevertheless pay to the seller the purchase money and the seller shall be entitled to recover from the buyer any contribution or call required to be paid even though the liquidator refuses to consent to the transfer. If the buyer or his nominee cannot get the securities transferred to his name the seller shall if required to do so by the buyer and at the buyer's cost arrange for the assignment of the transferor's title to and the rights in the securities to the buyer or him nominee and for the execution of an irrevocable power of Attorney in favour of the buyer or his nominee to enable him to recover any return of capital and dividend becoming payable after the date of the contract in respect of the securities bought. Delivery of Equivalent Securities 141. In respect of a contract in securities which shall become or are exchangeable for new or other securities under a scheme of reconstruction or reorganisation the seller shall deliver to the buyer according as the Governing Board directs either the securities contracted for or the equivalent in securities and/or cash and/or other property receivable under such scheme or reconstruction or reorganisation. 35 DELIVERY OF SECURITIES Place of Delivery and Payment 142. The delivery of all documents and papers and the payment in respect of all contracts to which these Bye-laws and Regulations apply shall be within two furlongs of the premises of the Stock Exchange Hyderabad and the parties shall be bound and deemed to give and take delivery in Hyderabad. Which Documents Good Delivery 143. The documents specified in the relative Regulations or such other documents as the Governing Board may from time to time specify in addition thereto or in modification or substitution thereof shall constitute good delivery when tendered in fulfilment of contracts to which these Bye-laws and Regulations apply. Delivery in Prescribed Lots and Renewal Fees 144. The lots in which documents are to be delivered in settlement of contracts and the renewal fees payable by the seller to the buyer for renewal of documents shall be determined in accordance with the provisions contained in that behalf in the relative Regulation or such other provisions as the Government Board may from time to time prescribe in addition thereto or in modification or substitution thereof. Transfer Stamp and Registration Fees 145. Unless otherwise directed by the Government Board transfer stamp duties payable to Government and fees charged by Companies for registering transfers of securities and known as transfer fees shall be paid by the buyer but where transfer deeds have been given in lots other than the prescribed lots the extra stamp duties, transfer fees and consolidation charges to be paid as a result, thereof shall be paid by the seller to the buyer. Delivery in Part 146. The buyer is entitled to refuse and may not pay for securities unless the documents tendered in performance of a bargain are regular, genuine and valid but he shall accept such portion of the securities as may be in order provided it is in lots of trading unit and may buy-in the undelivered portion in accordance with the Bye-laws and Regulations relating to closing out. 36 Closing out in Refusal to Accept on Delivery 147. When documents which are regular, genuine and valid are duly tendered in performance of a bargain and not accepted by the buyer the seller shall be entitled to sell out the same against him in accordance with the Bye-laws and Regulations relating to closing out. Disputed Documents 148. (a) When documents tendered for delivery in settlement of contracts are considered by the buyer to be defective in their title, ownership, genuineness, regularity or validity or not in order for any other reason and the objection is not accepted by the seller the documents shall be returned by the buyer to the seller and disputes relating thereto decide by arbitration in accordance with the provisions in that behalf contained in the relative Regulation or such other provisions as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. Delivery When Complete (b) If the disputed documents are held by the arbitrations to be in order the buyer shall accept them as good delivery and failing such acceptance the seller shall be entitled to sell out the same against the buyer in accordance with the Bye-laws and Regulations relating to closing out. Delivery when Not Complete (c) If the disputed documents are held to be defective by the arbitrators delivery shall not be complete and when such documents have been delivered through the Clearing House the seller shall immediately (irrespective of whether he intends to proceed in appeal or not) refund to the buyer their value at the contract price. The seller shall then remove the defect or in the alternative deliver to the buyer other regular, genuine and valid documents in place of the defective documents within seven days of the decision of the arbitrators or when an appeal has been preferred within seven days of the decision in the appeal or within such further period or periods as may be from time to time allowed by the Governing Board or the President. 37 Buying-in (d) If the seller fails to remove the defect or in the alternative deliver to the buyer other regular, genuine and valid documents in place of the defective documents within the period prescribed in sub-clause (c) the buyer shall be entitled to buy in such securities against the seller in accordance with the Bye-laws and Regulations relating to closing out. Delivery of Partly Paid Securities 149. In all transactions for partly paid securities entered into subject to the stipulation that the buyer shall have the securities registered in the name of the transferee the procedure to be followed for delivery and registration shall be in accordance with the provision in that behalf contained in the relative Regulation or such other provisions as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. If registration on delivery be not completed in the manner prescribed the seller shall be entitled to sell out the securities against the buyer in accordance with Bye-laws and Regulations relating to closing out. DOCUMENTS AND REGISTRATION Documents when Deemed to be Defective 150. For purposes of these Bye-laws and Regulations documents shall be deemed defective if there is a defect in their title, ownership, genuineness, regularity or validity or if they are under an lien on account of any debt or liability of the transfer or if they are subject to any attachment or injunction or other legal proceedings or order of Court or other statutory authority for which the seller may be held responsible and the defect shall be deemed to be removed when the title is cleared and/or the ownership, genuineness and validity of the documents established and/or the irregularity rectified and/or the documents released from lien, attachment, injunction or other legal proceedings or order of Court or other statutory authority. Members when Not liable for Defective Government and Bearer Securities 151. Members acting as brokers shall not be in any manner personally responsible for defective documents delivered in respect of contracts in Government Securities and bearer securities to which these Bye-laws and Regulations apply when the documents do not pass through their hands at the time delivery is effected but are delivered direct by the selling constituent, or his agent to the buying constituent 38 or his agent. But nothing herein contained shall affect the rights and obligations of the buying and selling constituents between themselves as principals in any action at law or in any other proceedings and the buying and selling members shall be bound to render every assistance to the buying constituent in any action at law or other proceedings be may take against the selling constituent who receives payment against delivery of the defective documents. Members when Liable for Defective Government and Bearer Securities 152. In respect of Government Securities and bearer securities delivered in fulfilment of contracts to which these Bye-laws and Regulations apply the selling member acting as a broker who receive payment against delivery of the defective documents shall be personally responsible for them to the buyer to whom the same are delivered provided the documents pass through the hands of the selling member or his agent when delivery is affected and provided further the buyer gives intimation in writing to the selling member within twentyone days of the date on which the documents or delivered to him by the selling member or by the Clearing House on the selling member's behalf and establishes to the satisfaction of the Arbitration Committee (from whose decision an appeal shall lie to the Governing Board) that the documents are defective. Original Selling Member When Liable for Defective Securities (other than Government and Bearer Securities) 153. (a) In respect of securities other than Government Securities and bearer securities delivered in fulfilment of contracts to which these Bye-laws and Regulations apply the original selling member i.e., the member who is the first to deliver defective documents in the market on or after or less than five days before the date of the closure of the Transfer Books of the Company for the purpose of interest, dividend, bonus, rights or any other benefit accruing to the shareholders or for the purpose of the Annual General Meeting of the Company acting as a broker who receives payment against delivery of defective documents shall be personally responsible for them to the buyer to whom the same are delivered or any subsequent buyer provided one of the following conditions is fulfilled namely : 39 (i) the documents are lodged with the Company for registration at any time prior to the date of closure of the Transfer Books of the Company (for the same purpose as aforesaid) subsequent to the fourth day following the date on which the documents are delivered by original selling member or by the Clearing House on the original selling member's behalf and the buyer or any subsequent buyer gives intimation in writing to the original selling member as soon as it comes to his knowledge that the Company refuses to register the transfer on the ground that the documents are defective ; or (ii) the documents are lodged with the Company for registration on or before the twentyfirst day after the date on which the documents are delivered by the original selling member or by the Clearing House on the original selling member's behalf or should the Transfer Books of the Company be closed on such twentyfirst day the documents are lodged for registration on or before the second working day after the date which the Transfer Books reopen and the buyer or any subsequent buyer gives intimation in writing to the original selling member as soon as it comes to his knowledge that the Company refuses to register the transfer on the ground that the documents are defective ; or (iii) the buyer or any subsequent buyer gives intimation in writing to the original selling member at any time prior to the date of closure of the Transfer Books of the Company (for the same purpose as aforesaid) subsequent to the fourth day following the date on which the documents are delivered by the original selling member's behalf or at any time within twentyone days of the date on which the documents are so delivered whichever of the two period is longer and establishment to the satisfaction of the Arbitration Committee (from whose decision an appeal shall lie to the Governing Board) that the documents are defective. Subsequent Selling Member when Liable for Defective Securities (Other than Government and Bearer Securities) (b) In respect of securities other than Government Securities and bearer securities delivered in fulfilment of contracts to which these Bye-laws and Regulations apply of the original selling member who is responsible for defective documents as provided in sub-clause (a) fails to meet his liability any of the subsequent selling members acting as a broker who receives payment against delivery of such documents shall be personally responsible for them to the buyer to whom the same are delivered or any subsequent buyer provided one of the following two conditions is fulfilled namely :- 40 (i) the documents are lodged with the Company for registration on or before the twentyfirst day after the date on which the documents are delivered by such subsequent selling member or by the Clearing House on such subsequent selling member's behalf or should the Transfer Books of the Company be closed on such twenty first day the documents are lodged for registration on or before the second working day after the date on which the Transfer Books reopen and the buyer or any subsequent buyer gives intimation in writing to such subsequent selling member as soon as it comes to his knowledge that the Company refuses to register the transfer on the ground that the document are defective ; or (ii) the buyer or any subsequent buyer gives intimation in writing to such subsequent selling member within twentyone days of the date on which the documents are delivered by such subsequent selling member or by the Clearing House on such subsequent selling member's behalf and establishes to the satisfaction of the Arbitration Committee (from whose decision an appeal shall lie to the Governing Board that the documents are defective. Members when Not Liable 154. If the documents be not lodged within the prescribed period or if intimation in writing that the documents are defective be not given by buyer to the original and subsequent selling members as provided in the Bye-law and Regulations then except in the case of fraud or bad faith on their part such selling members shall not be personally liable for the defective documents either to the buying members or to the constituents of the buying members and the liability of such selling members to the buyers as also the liability of the buying members to their constituents shall cease in all respects. Liability in Event of Unforeseen Circumstances 155. In circumstances not specifically covered by these Bye-law and Regulations the Governing Board may determine the liability of the parties on equitable considerations. Rights and Liabilities of Buying and Selling Constituents 156. Nothing contained in these Bye-laws and Regulations shall affect the rights and obligations of the buying and selling constituents (which terms shall when the buying members and/or selling members have dealt on their own account as principals include such members) between themselves as principals in any action at law or in any other proceedings and the buying and selling members shall be bound to render every assistance to the buying constituents in any action at law or other proceedings they may take against the selling constituents who receive payment against delivery of the defective documents. 41 Liability of Selling Constituents to Selling Members 157. The selling constituents who receive payment against delivery of defective documents shall be liable for the same in all respects and when selling members are personally responsible for such documents under the provisions of these Bye-laws and Regulations they shall be fully indemnified by such constituents as against acting on behalf of principals. Rectification or Replacement of Defective Documents 158. The selling member responsible for the defective documents shall within fifteen days from the date of the intimation of the objection remove the defect of in the alternative deliver to the buyer other regular, genuine and valid documents in their place : Provided however that the Governing Board in its discretion and subject to such conditions as it deems fit to impose may by a special resolution from time to time enlarge the aforesaid period of fifteen days in special circumstances and in particular it may so do in the manner following that is: (i) when the documents are suspected or alleged to be forged or reported or alleged to be stolen or have passed into police custody for purposes of investigation the time may be enlarged till the fact that the documents are forged or stolen property is conclusively established to the satisfaction of the Governing Board or proved in a court of law; (ii) when an attachment, injunction or similar other order of court or other statutory authority has been served on the issuer of the security restraining it from transferring the documents the time may be enlarged till an application for setting aside such order has been finally rejected by the proper authority; (iii) when the security is by or pursuant to some special law ostensibly placed under any disability not applicable to all other securities of the same issue and the documents are not transferred on the ground of such ostensible disability or when the issuer of the security or the agent of such issuer declines for any reason peculiar to that security as compared with other securities of the same issue to transfer the documents the time may be enlarged till the legal point has been decided by the proper authority. In such and similar cases when the time is enlarger the selling member shall be bound to comply with such conditions as the Governing Board may impose and shall also place such amount (if any) in deposit with the Exchange as the Governing Board on the application of the buyer or of its own accord directs. 42 Refund of Moneys 159. If the selling member responsible for the defective documents fails to remove the defect or in the alternative to deliver to the buyer other regular, genuine and valid documents in their place as provided in these Bye-laws and Regulations the buyer shall be entitled to claim from the selling member refund of their value at the then ruling market price. Documents to be Returned and Power of Attorney to be Executed on Refund. 160. When claiming the refund the buyer shall return to the selling member the defective documents if they have not been impounded and shall procure for the selling member and at the selling member's expense an irrevocable power of attorney executed by the transferee in favour of the selling member or his nominee entitling the selling member or his nominee to institute any suit or legal proceedings on behalf and in the name of the transferee and to litigate the dispute and to have the objection to the title or documents cleared and to obtain the return of the documents in question if they have not been already returned to him and also to sign and execute all transfer deeds and other writings and do all such other acts and things as may be necessary for effectually transferring the documents to the selling member or his nominee if they be subsequently registered by the issuer of the security in the name of the transferee. Rectification or Replacement After Refund 161. A refund of moneys relating to defective documents shall not operate as cancellation of the contract. The selling member shall within thirty days from the date of such refund or within such further time as the Governing Board or the President may from time to time allow either remove the defect or in the alternative deliver to the buyer other regular, genuine and valid documents in place of the defective documents and the buyer shall be bound to accept such rectified or substitute documents in fulfilment of the original contract and return to the selling member the moneys refunded to him. 43 Responsibility of Selling Member for Dividend, Bonus and Rights 162. If the selling member fails to rectify or replace the defective documents and deliver them to the buyer at least five days before the date of closure of the Transfer Books of the Company for the purpose of interest, dividend, bonus rights or any other benefit accruing to the shareholders of the Company the selling member shall be responsible to the buyer for the interest, dividend, bonus, rights or other benefit declared by the Company and for the income-tax deduction certificates if any in respect of the interest, dividend or cash bonus or for the equivalent in cash of the amount of income-tax if any deducted at source. The selling member shall also be responsible to the buyer for the extra expense of transfer if any. Buying-in 163. If the selling member fails to make refund of moneys or to remove the defect or replace the defective documents within the prescribed period the buyer shall be entitled to buy-in the securities against him in accordance with the Bye-laws and Regulations relating to closing out. Apportionment of Loss and Damages 164. If the selling member, responsible for the defective documents fails to refund the moneys and/or to hand over the interest, dividend, bonus. rights or other benefit declared by the Company and the income-tax deduction certificate if any or the equivalent in cash of the amount of income-tax if any deducted at source and/or to pay the damages if any arising from buying-in as provided in these Bye-laws and Regulations he shall be liable to be declared a defaulter. In the event of the defective documents having passed through the Clearing House the Clearing House shall assess such loss and damages pro rata against the original contracting parties with whom such defaulter had outstanding sale transactions in such securities as shown in his Clearing Forms. Each such party shall pay the amount of loss and damages to the buyer through the Clearing House on receipt of notice of the amount of such assessment. If a contracting party fails to pay his share of the pro rata loss and damages he shall be declared a defaulter and thereupon the procedure to be followed shall be the same as if he were the selling member who has been declared a defaulter. This procedure shall be repeated as many times as may be necessary in relation to each succeeding party in interest until the loss and damages are fully recovered. 44 :45: Sale Not Conditional on Transfer 165. A sale of securities is not conditional on the Company transferring the securities to the name of the buyer. On the sale of securities the only obligation on the seller is to tender documents that are not defective and he shall not be deemed to guarantee that the Company will transfer the securities to the name of the buyer nor shall he incur any liability by reason of the refusal of the Company to do so. Fresh Transfer on Refusal of Company 166. When a Company objects to a transferee and refuses to register a transfer on the ground of such objection the transferor shall on request and on the original transfer being presented to him for cancellation of his signature sign a fresh transfer. Dispute after Registration 167. When a transfer has been accepted by the Company and the certificate or an official receipt in the form of a pucca Transfer Receipt or Transmission Receipt or such other receipt in favour of the transferee has been issued by the Company neither the buying member nor the selling member shall be personally responsible to the buying constituent or the transferee for any subsequent dispute as to the title, ownership, genuiness, regularity and validity of the documents unless bad faith or fraud be proved against such member. But nothing herein contained shall affect the liability of the transferor or of the selling constituent who has received payment against delivery of securities in any action at law or in any other proceedings. The provisions shall apply only to the rights and obligations of members. CLOSING-OUT OF CONTRACTS Closing-out 168. (a) A contract in securities made subject to the Rules, Bye-laws and Regulations of the Exchange may be closed out by buying-in or selling-out against a member on his failure to comply with any of the provisions relating to delivery, payment and settlement of bargains or on any failure to fulfil the terms and conditions subject to which the bargain has been made. Closing-out When Effected (b) Without prejudice to the generality of the provision contained in sub-clause (a) closing-in may be effected in cases specified in the relative Regulation or in such other cases as the Governing Board may from time to time specify in addition thereto or in modification or substitution thereof. 45 Application for Closing-out 169. (a) A member shall be entitled to make an application to the Exchange for closing-out against the party in default either on the day of failure or any day thereafter but not later than the fifteenth day following the date of such failure. Forfeiture of Right of Recourse (b) If closing-out be not effected within the period prescribed in sub-clause (a) the damages against the party in default shall be determined on the basis of the closing prices ruling on the date of closing and the party entitled to closing- out and the party in default shall forfeit all further right of recourse against each other unless it appears that the party entitled to closing-out has not exercised his right on the written request of the other. Closing-out after Prescribe Period (c) If closing-out be not effected within the period prescribed in sub-clause (a) and the member entitled to close-out buys-in or sellsout at a later date and satisfies the Arbitration Committee that it was impossible to close-out earlier than he did the Arbitration Committee may allow damages on the footing of the rates at which the securities where bought-in or sold-out or at such other rates as the Arbitration Committee may deem proper. Closing-out of Contracts with Defaulting Member 170. If a member be declared a defaulter all members having dealings with him in any security shall determine all outstanding contracts by closing-out or at him in accordance with the Bye-laws and Regulations relating to default. CLOSING OUT OF CONTRACTS WITH DEFAULTER MEMBER : 170A Notwithstanding anything stated in Bye-law 170, where a member is declared a defaulter on or subsequent to the date on which the Settlement Guarantee Fund becomes operational, the provisions of Bye-law 170 shall be inapplicable and in such case all members having dealings with him in any security shall, if so required, determine all outstanding contracts by closing out, settlement, adjustment, and/or cancellation in accordance with the provisions of Bye-law 417. 46 Closing-out of Contracts with Deceased Member 171. On the dealt of a member having transaction outstanding in the market in any security the Governing Board may at its discretion give permission to his heirs or legal representatives to settle such transaction according to the terms thereof. In the event of such permission not being applied for or granted members shall be notified accordingly and they shall forth with determine all outstanding contracts by closing-out against the deceased member either in the open market or as principals at prices then current in the market. The loss if any on such closing-out shall be claimed from the heirs or legal representatives of the deceased member and the profit if any shall be paid to them after obtaining the sanction of the Governing Board. If the heirs or legal representatives of the deceased member fail to pay the amount claimed from them it shall be as if such deceased member had been declared a defaulter and in that event the Bye-laws and Regulations relating to default shall apply. Closing-out Against Defaulting or Deceased member or Constituent 172. A member may effect closing-out against a member who has been declared a defaulter or a deceased member or a defaulting or deceased constituent either by himself buying-in or selling-out the securities in the open market or by buying or selling such securities on his own account as a principal provided that the price is fair and justified by the condition of the market. " Provided that the provisions of this Bye-law, relating to closing out against a defaulting member shall not apply to a member who has been declared a defaulter on or after the date on which the Settlement Guarantee Fund becomes operational ". Closing-out Member's Responsibility 173. Save as otherwise provided closing-out or selling-out shall be effected under the authority of the Secretary but the member at whose instance the buying-in or selling-out is done shall be responsible for the contract made on his behalf. No liability or responsibility shall attach to the Exchange or its employees for any contract made in pursuance of any application for closing-out. Notice of Closing-out 174. On an application for closing-out being made by a member and on payment of such fees in respect thereof as the Governing Board may from time to time prescribe a notice in writing of the proposed buying-in or selling-out shall be given by the Exchange to the member against whom the closing-out is to be effected and the securities shall then be bought-in or sold-out the following day. 47 Re-Transmission of Notice 175. (a) Where necessary notices of closing-out bearing serial numbers shall be issued by the Exchange in lots of trading unit. Such notices shall be passed in the Setting Room from member to member against whom the closing-out is proposed to be effected and the passing of such notices shall commence on such day and at such hour as may be fixed in that behalf by a notice on the notice board of the Exchange. Each intermediate member in succession to whom the notice of closing-out is transmitted shall endorse thereon the name of his party and pass it on to him after taking a note of his name and the relative serial number of the notice. Such notices shall be so circulated until they reach the original member against whom the closing-out is proposed to be effected or upto such time as may be fixed by the President or in his absence by the Secretary. Automatic Closing-out (b) The closing-out of a contract pursuant to the provision contained in sub-clause (a) shall be for the account and liability of each succeeding party to whom the notice is transmitted and such closing-out shall automatically close-out at the buying-in or selling-out rate all contracts with respect to which such retransmitted notice has been passed. Closing-out of Bargains Settled Through the Clearing House or by Process of Ticket 176. (a) In respect of bargains settled through the Clearing House or by the process of Tickets closing-out shall be effected on the advice of the Clearing House or the Issuer of Tickets as the case may be. In such cases on notice of closing-out shall be given to the member against whom the closing-out is to be affected but a notice shall be posted on the notice board of the Exchange showing the total quantity of each kind of security to be bought-in or sold-out. Closing-out Without Notice (b) Without prejudice to the generality of the provisions contained in sub-clause (a) closing-out without notice may be effected in cases specified in the relative Regulation or in such other cases as the Governing Board may from time to time specify in addition thereto or in modification or substitution thereof. 48 Closing-out in Case Off-Setting Contracts (c) When a member holding for the account of his different constituents contracts both for sale and purchase in the same Clearing that offset each other has offset such contracts the closing-out of such contracts against the defaulting constituent may be effected by the member directly instead of through the clearing House. In such cases a member may either himself buy-in or sell-out the securities in the open market or may buy the securities from or sell the securities to the defaulting constituent on his own account as a principal provided that the price is fair and justified by the condition of the market. Tender Before Closing-out 177. If the member against whom closing-out is to be effected tenders compliance in accordance with the provisions of the Bye-laws and Regulations relating to delivery, payment and settlement of contracts or the terms and conditions subject to which the bargain has been made at any time before the securities have been actually bought-in or sold-out (as the case may be) the member entitled to close-out shall accept the same and fulfil his obligations. Closing-out How Effected 178. (a) Save as otherwise provided in these Bye-laws and Regulations closing-out by buying-in or selling-out shall be effected in the open market but when securities of the same kind are to be bought-in as well as sold-out closing-out may be effected by adjusting the one against the other at the average closing-out rate for such securities recorded on that day or when there has been no such closing-out at the opening market rate on that day. In the case of a defaulter or whenever the Governing Board or the President so directs closing-out maybe effected not in the open market but by inviting tenders or by any other method which the Governing Board or the President deems desirable. Bids and Offers (b) Members other than those against whom the closing-out is effected may make a bid or offer during such closing- out. The Governing Board, or the President shall be at liberty in its or his sole discretion to refuse any bid or offer given. 49 178.(c) Close out procedure for short deliveries pertaining to ________________________________________________________ the Settlement: _______________ The close out price will be the highest price recorded in that scrip on the Exchange in the Settlement in which the concerned contract was entered into and upto the date of auction/close out. OR 20% above the official closing price on the Exchange on the day on which auction offers are called for (and in the event of there being no such closing on that day, then the official closing price on the immediately proceeding trading day on which there was an official closing price). whichever is higher". In addition, the following conditions are also to be complied with: 1) In no case the auction would be held more than once unless the same is approved by a Special Resolution of the Governing Board. The outstanding position at the end of the first auction cycle shall be automatically closed out. 2) In no case the auction shall be held beyond a period of one week from the pay-in day of the settlement in which the concerned contract had been entered into. Postponement by President 179. When during closing-out there is no seller or buyer of securities at a price which on a reference the President deems reasonable or when on a reference to the President it appears to him that such securities are not obtainable or salable in the open market the closing-out shall be postponed to the following day and shall be so postponed from day to day until a seller or buyer be found and such deferment shall not relieve the party in default of any resulting damages. Non-Cleared Securities When Not Bought-in 180. When in spite of continuous efforts Non-Cleared Security cannot be bought-in and when the Governing Board is satisfied that such security cannot be obtained except at an arbitrary price the Governing Board may by a special resolution determine a price (which shall not be less than the highest price touched at any during the preceding six months) at which the outstanding contract in such Non-Cleared Security shall be deemed to be closed-out. Thereupon the defaulting party shall pay to the party entitled to buy-in the difference between the contract price and the closing-out price. 50 Postponement by the Governing Board 181. The Governing Board may defer closing-out in any particular case if in its opinion a fair market to close-out is not available or if it is satisfied that the securities are out of the control of the seller for payment of calls or the receipt of interest dividends, bonus or rights or if it determines that the default is due to the existence of a special situation but no such deferment shall relieve the party in default of any resulting damages or free the intermediate parties of their liabilities. Suspension or Postponement of Closing-out 182. The Governing Board may be a special resolution and for reasons to be recorded suspend or postpone buying-in or selling-out in respect of any security or securities and from time to time extend or postpone the period of such extension or postponement when circumstances appear in its view to make such suspension or postponement desirable in the general interest. The liability of intermediaries in respect of contracts in such securities settled through the Clearing House shall continue during the period of such suspension or postponement. Provided that except with the approval of the SEBI buying-in or selling-out shall not be suspended or postponed at any time for a period exceeding the period of one Clearing in the case of Cleared Securities and for a period exceeding fourteen days in the first instance and thereafter for a period not exceeding seven days in case of Non-Cleared Securities. Securities Bought in but Undelivered 183. Securities brought-in and not delivered on the next business day may be again brought-in for immediate delivery without further notice and any loss and damages resulting therefrom shall be paid by the member causing such further buying-in. Securities Sold-out but not Paid For 184. Securities sold-out and not paid for on the next business day may be again sold-out for immediate payment without further notice and any loss and damage resulting therefrom shall be paid by the member causing such further selling-out. Closing-out at the Instance of a Member 185. (a) The member at whose instance closing-out is effected shall give intimation to the member in default within two days of the closing-out and claim the loss and damages if any arising therefrom. 51 Claims in Case of Retransmitted Notices of Closing-out (b) When notices of closing-out have been transmitted from member to member as provided in these Bye-laws and Regulations intimation of the closing-out and the claim for damages shall be immediately given by each party to the succeeding party in whose name the notice of closing-out has been endorsed. Statement of money differences and damages if any shall also be rendered immediately and the claim duly settled. Defaulting Party Entitled to Profit (c) The party against whom the closing-out is effected shall notwithstanding that he is in default be entitled to the difference or profit which may arise from the closing-out against him. Loss on Closing-out on Advice of Clearing House on Account of Discrepancy 186. If there be a loss when closing-out is effected on the advice of the Clearing House as a result of any discrepancy in the Clearing House Forms lodged with the Clearing House by a member it shall be paid forthwith to the Clearing House by the member responsible for the discrepancy. Difference arising from Closing-out 187. (a) When closing-out is effected on the advice of the Clearing House on account of a member failing to give or take delivery of all or any of the securities according to the Clearing Forms lodged by him with the Clearing House the resulting difference (if any) due by such member shall be paid by him forthwith to the Clearing House and the difference (if any) due to such member shall be credited to his account by the Clearing House. Closing-out Against Defaulter (b) When closing-out is effected as provided in sub-clause (a) and the member concerned is declared a defaulter the difference arising from closing-out shall be recovered from or distributed amongst the parties with whom such defaulter had transactions in accordance with the Bye- laws and Regulations relating to default. " Provided that the provisions of this Clause shall not apply to a member who has been declared as defaulter on or after the date on which the Settlement Guarantee Fund becomes operational ". 52 Charges for Closing-out 188. When closing-out is effected on the advice of the Clearing House the Member against whom the closing-out takes place shall pay to the Clearing House or Exchange commission at such rate as the Governing Board may from time to time prescribe. Penalty for Failure to Give or Take Delivery 189. When closing-out is effected on the advice of the Clearing House on account of a member failing to give or take delivery of all or any of the securities according to the Clearing Forms lodged by him with the Clearing House the Governing Board may in its discretion impose on such member a penalty not exceeding 2 per cent of the market value of such securities. Such penalty shall be in addition to any loss such member may suffer on account of such closing-out and shall be addition to the commission chargeable in that behalf. Default in Closing-out Loss and Damage Not paid 190. If any member against whom a transaction is closed-out under the provisions of these Bye-laws and Regulations fails to make payment of the money difference between the contract price or the making-up price (as the case may be) and the closing-out price and of the damages if any within twenty-four hours of receiving notice thereof he shall be declared a defaulter. DEALINGS BY MEMBERS Members Only Parties to Bargains 191. The Exchange does not recognise as parties to any bargain in the market any parties other than its own members and every member is directly and primarily liable to every other member with whom he effects a bargain for its due fulfilment in accordance with the Rules, Bye-laws and Regulations of the Exchange whether such bargain be for account of the member effecting it or for account of a principal. All Bargains Subject to Rules, Bye-laws and Regulations 192. All bargains in securities in which dealings are permitted shall all cases be deemed made subject to the Rules, Bye-laws and Regulations of the Exchange which shall be a part of the terms and conditions of all such bargains and they shall be subject to the exercise by the Governing Board and the President of the powers with respect thereto vested in it or by the Rules, Bye-laws and Regulations of the Exchange. 53 Inviolability of Bargains 193. (a) An application to annual a bargain on the Stock Exchange shall not be entertained by the Governing Board except upon a specific allegation of fraud or willful misrepresentation or upon prima facie evidence of such material mistake in the bargain as in the judgement of the Governing Board renders the case fit for its adjudication. Annulment by Special Resolution (b) The annulment of a bargain under sub-clause (a) shall be only by a special resolution of the Governing Board and a resolution so passed shall be final and shall come into force forthwith. Bargains by Members 194. Members carrying on business on the Exchange other than representative members shall be entitled to make bargains in the market in their own name. Bargains by Representative Members 195. Representative members may make bargains in the market but only on behalf of the members by whom they are so appointed. Put-Through Business 196. When a member employees another member as an intermediary to put through the transaction of a non-member such intermediary shall report the transaction to the member employing him at the same price as he dealt in the market and the employing member shall report the same price to the non-member in respect of the transaction done for him. Business Placed Between Non-Members 197. When a member has an order to buy and an order to sell the same kind of security he may complete the transaction between the non-members concerned and he may at his discretion deliver the securities which he receives from the selling constituent either to the buying constituent who is the direct contracting party in respect of such securities or to any other buyer who is entitled under these Bye-laws and Regulations to receive from him delivery of securities of a like kind. Carry-over Transactions 198. Carry-over transactions may be put through between two non- members but whether so put through or nor the seller shall be entitled to claim a return of the identical securities delivered by him. 54 Member as Principal 199. When executing an order a member may buy or sell securities for his own account as a principal provided he has obtained the consent or authority of his constituent thereto if such constituent be a person other than member of a Stock Exchange recognised under the Securities Contracts (Regulation) Act 1956 and provided that the price is fair and justified by the condition of the market : Provided further that where the member has secured the consent or authority of such constituent otherwise than in writing he shall secure written confirmation by such constituent of such consent or authority within three days from the date of the contract : Provided further that no such written consent or authority of such constituent shall be necessary for closing-out any outstanding contract entered into by such constituent in accordance with the provisions of these Bye-laws and Regulations. Havalas 200. When a member has been given instructions by another member or by a non-member to receive or give delivery of securities from or to another member or non-member and all the parties agree so to give or take delivery (as the case may be) a member may enter into Havala Contracts in accordance with such instructions. Such contracts shall operate as performance of the transaction in respect of which such Havala Contracts have been entered into and they shall have the same force and effect as any ordinary contract of sale or purchase. Havalas for Constituents 201. Havala contracts confirmed by both members on behalf of a constituent at the rate agreed by signing the relevant entries in their transaction or contract books or by exchanging Confirmation Memos shall not be cancelled or modified by any subsequent default of the constituent but each shall be responsible to the other for due fulfilment of the contracts. 55 Modification of Havalas for Constituents 202. (a) Havala contracts on behalf of a constituent may be entered into subject to a specific stipulation that the prices shall be modified on the subsequent default of the constituent. In the event of such default the prices binding on both the parties shall be the opening prices current in the market on the date on which the contract falls due for fulfilment which in the case of Cleared Securities shall be the Settling Day and in respect of Havala contracts in Cleared Securities such modification may be made by one party serving on the other a notice in writing at any time before payment is made by the Clearing House on the Settling Day. Debits and Credits to be Offset (b) When Havala contracts have been modified as provided in sub-clause (a) the resulting credit (if any) at the foot of the constituent's account with the other member shall be offset against one another upto an amount not exceeding the difference between the modified Havala price and the respective contract prices. The member holding the credit shall on behalf of the constituent make such payment in adjustment to the other member and the constituent shall be entitled to claim only the balance remaining if any. Constituent's Responsibility for Havala in case of Member's Default 203. Where a member accepts Havala on behalf of his constituent it shall be unless otherwise agreed upon by them in writing at the risk and on account of the constituent who shall be deemed to indemnity the member accepting such Havala against any loss suffered by either of them by reason of the default of the other, In the event of such default the amount in adjustment to be received from or paid to the constituent by a member shall be determined at the altered making-up prices when the Havala is in respect of Cleared Securities and the opening prices current in the market on the day following the date of default when the Havala is in respect of Non- Cleared Securities. Havala Among Members 204. Contracts for Havala among members themselves in Securities shall be at the making-up price only. In the event of default Havala contracts in respect of Cleared Securities shall be deemed to have been at the altered making-up price and in respect of Non-Cleared Securities at the opening market price immediately after the declaration of default. 56 BROKERAGE AND CONTRACT NOTES Brokerage 205. Save as otherwise provided brokerage shall be charged and collected by members upon the execution of all order for non-members in respect of purchase or sale or carry-over of securities Members are entitled to charge brokerage at rates not exceeding the official scale prescribed in the relative Regulation or such other scale as the Governing Board may from time to time prescribe in modification or substitution thereof. Brokerage in case of Compulsory Carry-out 206. A member is entitled to change brokerage at rates not exceeding one-eight of the official scale when a transaction is required to be compulsory carried-over from Clearing to Clearing in accordance with the provisions of these Bye-laws and Regulations. Brokerage on Calls 207. A member buying securities on which calls have been prepaid by the seller may charge brokerage on the purchase price with the amount of such calls added. Brokerage on Put-Through Bargains 208. A member employing another member to put through the transactions of a non-member may pay the intermediary a share of the brokerage charged to the non-member. Brokerage on Bargains Between Non-Members 209. A member may charge brokerage to more than one constituent on a transaction carried through directly between two non-members. Brokerage on Arbitrage Transactions 210. A member shall charge brokerage to a non-member's arbitrage account. Underwriting Commission and Brokerage on New Issues and Offers for Sale 211. Unless otherwise determined by the Governing Board a member may in his discretion charge such brokerage or commission for underwriting or placing or acting as a broker or entering into any preliminary arrangement in respect of any floatation or new issue or offer for sale of any security as he may agree upon with issuer or offerer or with the principal underwriting or brokers engaged by such issuer or offerer. 57 Brokerage on Applications 212. Unless otherwise determined by the Governing Board brokerage or commission on all tenders or applications by or through members for submission or purchase in respect of any floatation or new issue or offer for sale of any security shall be on the terms offered by the issuer or offerer or by the underwriters or brokers engaged by such issuer or offerer. Rebate not allowed 213. No allowance, rebate, return or division of brokerage or commission of any nature or character shall be made by a member to any constituents in respect of any bargain or to any applicant whose tender or application for subscription or purchase has been submitted by or through him or to any other person except as hereinafter provided. No Special or Unusual Advantage. 214. For purposes of these provisions a member shall not at as a principal or enter into any agreement or arrangement with a non-member whereby special and unusual rates are given with intent to give special or unusual advantage to such non-member for the purpose of securing his custom or business. No Brokerage in Cases of Charity. 215. A member may relinquish his brokerage in cases of charity. Brokerage for members of Other Stock Exchange 216. A member may share brokerage with members of other Stock Exchange in respect of whom business is permitted under the provisions of the Rules, Bye-laws and Regulations of the Exchange. Brokerage Provisions not applicable to Dealings Between Members 217. Provisions relating to brokerage contained herein do not apply or lay down any restrictions as to dealings between members. With whom Brokerage may be Shared 218. (a) A member may Share brokerage as provided in sub-clause (b) with a remisier, authorised clerk or employee in his own exclusive employment. He may similarly share brokerage with any other person introducing a constituent provided such person : 58 (i) is not one for or with whom members are forbidden to do business under the Rules, Bye-laws and Regulations of the Exchange ; (ii) is not a remisier, authorised clerk or employee in the employment of another member ; (iii) does not advertise in the public press or in any other manner that he is acting as a broker ; (iv) does not act as a broker within a distance of fifteen miles of the premises of the Exchange ; (v) does not pass contracts in his own name or issue price lists or pamphlets or circulars in respect of business in securities or working within a distance of fifteen miles of the premises of the Exchange. (vi) does not issue price lists or pamphlets or circulars in respect of business in securities to other than his own constituents if acting as a broker beyond the distance of fifteen miles of the premises of the Exchange. Percentage Share of Brokerage (b) A member may pay his remisier or authorised clerk a share not exceeding 50 per cent and any other employee or other person sharing brokerage as provided in sub-clause (a) a share not exceeding 40 per cent of the brokerage charged to the constituent introduced by him. Rebate or Return Disallowed (c) A remisier, authorised clerk, employee or other person sharing brokerage shall not make any allowance, rebate or return of such brokerage directly or indirectly to the constituent introduced by him or to any other person or agent. Indemnity (d) In the absence of an agreement in writing to the contrary a remisier, authorised clerk, employee or other person sharing brokerage shall be deemed to have agreed to give a full and complete indemnity to the member with whom he shares brokerage for any loss which such member may sustain by the default of the constituent (provided such constituent is not a member of the Exchange) introduced by him in fulfilling his obligations. Default by Constituent (e) In the event of any default by a constituent the amount due shall be paid forthwith to the member by the remisier, authorised clerk, employee or other person introducing the defaulting constituent. 59 Liability of Remisier, Authorised Clerk, Employee, or Other Person (f) If the remisier, authorised clerk, employee or other person sharing brokerage fails to pay the amount due by the defaulting constituent introduced by him then at his risk and cost the member shall be entitled to take such proceedings against the defaulting constituent and/or make such settlement or compromise with him as he in his discretion deems advisable. The acceptance of a promissory note from the defaulting constituent for the whole or part of the amount due from him shall not release the remisier, authorised clerk, employee or other person sharing brokerage from his liability to pay the member the original amount due from the defaulting constituent nor shall any settlement or compromise with the defaulting constituent diminish the liability of the remisier, authorised clerk, employee or other person original amount due from the defaulting constituent and the costs and expenses incurred in the course of realisation. Arbitration (g) Any dispute between a member and a remisier, authorised clerk, employee or other person sharing brokerage with him in respect of any matter to which sub-clause (d), (e) and (f) apply shall be referred to arbitration and decided in accordance with the Bye-laws and Regulations relating to arbitration of disputes other between members. All other disputes between them shall also be referred to arbitration in the same manner but if the remisier, authorised clerk, employee or other person sharing brokerage so desires such disputes may with the permission of the Governing Board or the President referred to arbitration and decided in accordance with the Bye-laws and Regulations relating to arbitration of disputes between members. Contract Notes 219. The contract notes rendered by members to non-members shall state that the contract is subject to the Rules, Bye-laws and Regulations and usages of the Exchange and subject to arbitration as provided in the Rules, Bye-laws and Regulations of the Exchange and subject to the jurisdiction of the courts in Hyderabad. The contract notes shall not contain any provision inconsistent with the Rules, Bye-laws and Regulations of the Exchange. The names of the patterns or sole proprietor of the firm shall be printed on the contract notes. The contract notes shall also be in such form as will provide that the words "Member of the Stock Exchange, Hyderabad" shall immediately follow the signature. 60 Contracts by Members as Agents 220. The contract notes rendered by members to non-members in respect of bargains made for and on behalf of such non-member's account may be in the form prescribed in the relative Regulation or in such other form or forms as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. Such contracts notes shall state that brokerage at rates not exceeding the official scale of Brokerage has been charged and allowed for in the price. Contracts by Members as Principals 221. (a) The contract notes rendered by members to non-members when buying for themselves as principals the securities of their constituents or selling as principals of these Bye-laws and Regulations may be in form prescribed in the relative Regulation or in such other form or forms as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. Such contract notes shall disclose that the member is acting as a principal. Written Consent or Authority Necessary (b) Members shall not enter into contracts as principal with persons other than members of Stock Exchange recognised under the Securities Contracts (Regulation) Act 1956 unless they have secured the consent or authority of such persons and when such consent or authority is otherwise than in writing they shall secure written confirmation by such persons of such consent or authority within three days the date of the contract : Provided however that no such written consent or authority shall be necessary for closing-out any outstanding contracts entered into by such persons in accordance with these Bye-laws and Regulations. Carry-Over Contracts 222. The contract notes rendered by members to non-members in respect of carry-over transaction may be in one of the forms prescribed in the relative Regulation or in such other form or forms as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. Signing of Contracts Notes 223. A contract note shall be signed by the member or by his partner or constituted attorney. 61 Contracts Notes Issued By Firms 224. In the case of a firm recognised under the Rules, Bye-laws and Regulations of the Exchange every contract note shall be issued in the name of an individual partner, or sole proprietor of the firm. Contract Notes Issued by Representative Member 225. A representative member working with another member shall be entitled to issue to his constituents contracts in his own name, if he is entitled to carry on business in his own name: RIGHTS AND LIABILITIES OF MEMBERS AND CONSTITUENTS Regulation of Transactions between Clients and Brokers 225A. Not with standing anything to the contrary contained in these Bye-laws, the following shall regulate the transactions between Clients and Brokers 01. It shall be compulsory for all Members brokers to keep the money of the clients in a separate account and their own money in a separate account. No payment for transactions in which the Member broker is taking a position as a principal will be allowed to be made from the client's account. The above principles and circumstances under which transfer form client's account to Member broker's account would be allowed are enumerated below. 62 A. Member Broker to keep Accounts : Every member broker shall keep such books of accounts, as will be necessary, to show and distinguish in connection with his business as a member - (i) Moneys received from or on account of and moneys paid to or on accounts of each of his clients and; (ii) the moneys received and the moneys paid on Member's own account. B. Obligation to pay money into "Clients Accounts". Every member broker who holds or receives money on account of a client shall forthwith pay such money to current or deposit account at bank to be kept in the name of the member in the title of which the word "clients" shall appear (hereinafter referred to as "Clients Account". Member broker may keep one consolidated client's account for all the clients or accounts in the name of each client, as he thinks fit; Provided that when a Member broker receives a cheque or draft representing in part money belonging to the client and in part money due to the Member, he shall pay the whole of such cheque or draft into the clients account and effect subsequent transfer as laid down below in para (i) (ii) C. What moneys to be Paid into "Clients Account". No money shall be paid into clients account other than - i. money held or received on account of clients ; ii. such money belonging to the member as may be necessary for the purpose of opening or maintaining the account ; iii. money for replacement of any sum which may by mistake or accident have been drawn from the account in contravention of para D given below : iv. a cheque or draft received by the Member representing in part money belonging to the client and in part money due to the Member. ------------ * Published vide Govt. of India Gazette dated 22-7-95 & Govt. of A.P. dated 18-1-96. D. What moneys to be withdrawn from "Clients Account". 63 No money shall be drawn from clients account other then - i. money properly required for payment to or on behalf of clients or for or towards payment of a debt due to the from clients or money drawn on client's authority, or money in respect of which there is a liability of clients to the Member, provided that money so drawn shall not in any case exceed the total of the money so held for the time being for such each client ; ii. such money belonging to the member as may have been paid into the client account under para 1. C (ii) or I C (iv) given above ; iii. money which way by mistake or accident have been paid into such account in contravention of para C above. E. Right to lien, set-off etc., not affected Nothing in this para 1 shall deprive a Member broker of any recourse or right, whether by way of lien, setoff, counter-claim charge or otherwise against moneys standing to the credit of clients account. 02. It shall be compulsory for all Member brokers to keep separate accounts for client's securities and to keep such books of accounts, as may be necessary, to distinguish such securities form his/their own securities. Such accounts for client's securities shall, inter-alia, provide for the following :- a. Securities received for sale or kept pending delivery in the market; b. Securities fully paid for, pending delivery to clients; c. Securities received for transfer or sent for transfer by the Member, in the name of client or his nominee (s); d. Securities that are fully paid for and are held in custody by the Member as security/margin etc. Proper authorisation from client for the same shall be obtained by Member; e. Fully paid for client's securities registered in the name of Member, if any, towards margin requirements etc.; f. Securities given on Vyaj-badla. Members shall obtain authorisation from clients for the same. 03. Member brokers shall make payment to their clients or deliver the securities purchased within two working days of payout unless the client has requested otherwise. Stock Exchange shall issue a Press Release immediately after the payout. 64 04. Member brokers shall issue the contract note for purchase/sale of securities to a client within 24 hours of the execution of the contract. 05. In case of purchases on behalf of clients, Member brokers shall be at liberty to close out the transactions by selling the securities, in case the client fails to make the full payment to the Member broker for the execution of the contract within two days of contract note having been delivered for cash shares and seven days for specified shares or before pay-in day (as fixed by Stock Exchange for the concerned settlement period), whichever is earlier; unless the client already has an equivalent credit with the Member. The loss incurred in this regard, if any, will be met from the margin money of that client, if any of will be recovered from the client. 06. In case of sales on behalf of clients, Member brokers shall be at liberty to close out the contract by effecting purchases if the client fails to deliver the securities sold with valid transfer documents within 48 hours of the Contract note having been delivered or before delivery day (as fixed by Stock Exchange Authorities for the concerned settlement period), whichever is earlier. Loss on the transaction, if any, will be deductable from the margin money of that client, if any or will be recovered from the client. All Contracts Subjects to Rules, Bye-laws and Regulations 226. (a) All Contracts made by a member for or with a non-member for the purchase or sale of securities in which dealings are permitted on the Exchange shall in all cases be deemed made subject to the Rules, Bye-laws and Regulations and Usages of the Exchange which shall be a part of the terms and conditions of all such contracts and they shall be subject to the exercise by the Governing Board and President of the powers with respect thereto vested in it or him by the Rules, Bye-laws and Regulations of the Exchange. Performance of Contracts in Hyderabad (b) The delivery of all documents and papers and the payment in relation to all contracts referred to in sub-clause (a) shall be within the city of Hyderabad and except when delivery is taken and given and payment made and received from and to the Clearing House through Clearing House Banks as provided in these Bye-laws and Regulations the parties to all contracts shall be bound to take and give delivery and make and receive payment at the office of the member concerned situated within two furlongs from the Stock Exchange premises in the city of Hyderabad. 65 Contracts Subject to Hyderabad Jurisdiction (c) In case of all claims (whether admitted or not), differences and disputes arising out of or in relation to all contracts referred to in sub-clause (a) the parties concerned shall be deemed to have agreed and acknowledged that such contracts have been entered into and are to be performed within the city of Hyderabad, that they are subject to arbitration in accordance with the provisions relating to arbitration other than between members contained in these Bye-laws and Regulation and that they are subject to the jurisdiction of the Courts in Hyderabad. Broker's Lien 227. (a) Whenever and so often as a constituent is indebted to a member all securities and other assets from time to time lodged with the member by such constituent or held by the member for and on behalf of such constituent and any cash lying to the credit of such constituent with the member shall be subject to the lien of such member for any general balance of account or margin or other moneys that may be due at any time by such constituent single or jointly with another or others to such member in respect of any business done subject to the Rules, By-laws and Regulations of the Exchange and shall be deemed a general security for payment to such member of all such moneys (including interest, commission, brokerage, and other expense) as may be due by such constituent in such manner. Right to Sell (b) A member entitled to lien or security as provided in sub- clause (a) shall be at liberty to sell, pledge or borrow money against such securities and assets in such manner and on such terms and at such time as he may deem advisable and may pay to himself or to any such money due to him by or due by him on behalf of such constituent in respect of business done subject to the Rules, Bye-laws and Regulations of the Exchange. Constituent to Indemnity 228. Every member entering into any contract for the purchase or sale of any security or doing any act in relation thereto on the instruction of any constituent and on such constituent's account or request shall be entitled to be indemnified by such constituent as an agent acting on behalf of his principal. 66 Contracts by Members as Principals 229. A member shall not enter into any contract for the purchase or sale of securities as a principal with any constituent (other than a member of a Stock Exchange recognised under the Securities Contracts (Regulation) Act 1956) unless he has secured the consent or authority of such constituent and discloses in the note, memorandum or agreement of purchase or sale that he is acting as a principal : Provided that where the member has secured the consent or authority of such constituent otherwise than in writing he shall secure written confirmation by such constituent of such consent or authority within three days from the date of the contract : Provided further that no such consent or authority of such constituent shall be necessary for closing out any outstanding contract entered into by such constituent in accordance with these Bye-laws and Regulation if the member discloses in the note, memorandum or agreement of purchase or sale in respect of such closing-out that he is acting as a principal. Members and Bound to Accept Instructions and Orders 230. A member shall not be bound to accept all or any of the instructions or orders of constituents for purchase, sale, havala or carryover of securities. He may in his absolute and uncontrolled discretion decline to accept any such instruction or orders for execution wholly or in part and shall not be bound to assign any reason therefor. Provided that when a member is not prepared to carry out such instruction or orders either wholly or in part he shall immediately inform his constituent to that effect. Margin 231. A member shall have the right to demand from his constituent the margin deposit he has to provide under the Bye-law and Regulations in respect of the business done by him for such constituent. A member shall also have the right to demand an initial margin in cash and/or securities from his constituent before executing an order and/or to stipulate that the constituent shall make a margin deposit or furnish additional margin according to changes in market prices. The constituent shall when from time to time called upon to do so forthwith provide a margin deposit and/or furnish additional margin as required under these Bye-laws and Regulations in respect of the business done for him by and/or agreed upon by him with the member concerned. 67 Constituent in Default 232. (a) A member shall not transact business directly or indirectly or execute an order for a constituent who to his knowledge is in default to another member unless such constituent shall have made a satisfactory arrangement with the member who is his creditor. Deposit of Defaulting Constituent's Moneys and Securities Pending Arbitration (b) On the application of a creditor member who refers or has referred to arbitration his claim against the defaulting constituent as provided in these Bye-laws and Regulations the Secretary shall issue orders against any member or member restraining him or them from paying or delivering to the defaulting constituent any moneys or securities upto an amount or value not exceeding the creditor member's claim payable or deliverable by him or them to the defaulting constituent in respect of transactions entered into subject to the Rules, Bye-laws and Regulations of the Exchange. On receipt of such orders the member or members concerned shall forthwith deposit and the defaulting constituent shall be deemed to have authorised the member or members concerned so to deposit with the Exchange such moneys and securities after satisfying his or their own dues if any arising out of transaction made subject to the Rules, Bye-laws and Regulations of the Exchange. Such deposit shall release the depositing member or members from all further liability and obligation to the defaulting constituent in respect of the moneys and securities deposited by him or them. The application of the creditor member pursuant to which the moneys and securities are deposited with the Exchange shall be deemed to form a part of the aforesaid reference to arbitration of his claim against the defaulting constituent. The moneys and securities deposited shall be deposited of in terms of the award in arbitration and pending a decree shall be deposited of in the Court when filing the award unless the creditor member and the defaulting constituent mutually agree otherwise. Delivery by Constituent 233. (a) In respect of a member selling securities on behalf securities from a constituent whether residing in the city of Hyderabad or outside the date on which he receives delivery of such documents from the selling constituent direct or from his bankers or agents in Hyderabad shall be deemed to be the date of delivery by the selling constituent. 68 Delivery by Non-resident Constituent (b) If the constituent resides outside the City of Hyderabad and requests the member to take delivery of the documents outside the city of Hyderabad and the member complies with the constituent's request the documents shall be deemed to have been delivered only when the documents are actually received in the city of Hyderabad notwithstanding that the constituent may deliver the documents to some branch office or agent of the member or of the member's bank. If sent by post the documents shall be deemed to have been delivered on the day when the documents reach the member in the city of Hyderabad. Delivery to Constituent 234. (a) In respect of a member buying securities on behalf of our selling his securities to a constituent whether residing in the city of Hyderabad or outside the date on which he delivers such documents to the buying constituent direct or to his bankers or agents in Hyderabad or draws a bill on the buying constituent through a Bank or sends an advice by post stating that the documents are ready for delivery shall be deemed to be the date of delivery to the buying constituent. Delivery to Non-resident Constituent (b) If the constituent does not reside within the city of Hyderabad and requests the member to give him delivery of the documents outside the city of Hyderabad and the member complies with the constituent's request the delivery shall be deemed to be complete as soon as the member delivers the documents to his own or the constituent's bankers or agents in the city of Hyderabad. Such banker or agent shall be deemed to receive the documents for and on behalf of the constituent. The contracts shall be deemed to be performed on the due date if the member has within the due date delivered the documents to or drawn against them through the banker or agent in the city of Hyderabad or posted the same in the city of Hyderabad addressed to the constituent or advised the constituent by post that the documents are ready for delivery. Constituent to Deliver Securities Sold 235. A constituent whether residing in the city of Hyderabad or outside shall delivery to the member in the city of Hyderabad by the due date any security which the member has sold for him or bought from him. The documents delivered must be valid, regular and in proper form and the delivery of any security sold for a constituent which the member is liable to deliver must be made in the office of the member situated within two furlongs from the Stock Exchange premises in the city of Hyderabad in time to enable the members to comply with the provisions in these Bye-laws and Regulations relating to such delivery. 69 Constituents to make Payment 236. A constituent whether residing in the city of Hyderabad or outside shall pay to the member in the office of the member in the city of Hyderabad by the due date all sums which the constituent is bound to pay and when a member is liable to pay such sums on behalf of the constituent the payment must be made in the office of the member situated within two furlongs from the Stock Exchange premises in the city of Hyderabad atleast one business day previous to the date on which the member is required to make payment in compliance with the provisions in these Bye-laws and Regulations relating to such payment. Constituent's Failure to Delivery or to Pay 237. A constituent who fails to give delivery or make payment in accordance with these provisions shall forthwith pay any loss or damages which the member may sustain as a result or on account of such failure. Member When to Close-out Constituent's Account 238. (a) On the failure of a constituent to pay the loss or damages sustained on closing-out effected against him by the member or to pay differences in due time in conformity with the provisions of the Bye-laws and Regulations the member may close-out his account either forthwith or business day following. Closure of Market During Default (b) If the market be closed at the time of or subsequent to default the member may close-out against the defaulting constituent on or after the re-opening of the market for dealings in such security or securities either for the Clearing or for hand delivery. In the case of Cleared Securities the closing-out may be subject to a stipulation for delivery in the course of the Clearing. Notice of and Payment on Closing-out (c) When the defaulting constituent's account is closed-out as provided in sub-clause (a) and (b) the member shall immediately send notice of such closing-out to his constituent and any balance due on such closing-out shall be immediately payable by the defaulting constituent to the member. Death of Constituent 239. A member may forthwith or at the earliest practicable date close-out all open transactions on account of a constituent who has died and the balance due on such closing-out shall be payable on the ensuing due date of payment in respect of such contracts. 70 Closing-out in Case of Bankrupt 240. A member may forthwith or at the earliest practicable date close-out all open transaction on account of a constituent who becomes bankrupt or insolvent or makes or attempts to make a composition with his creditors or with any of them or who shall have given any admission or intimation or indication of the fact that he will be unable to fulfil his obligations and the balance on such closing-out shall be payable on the ensuing due date of payment in respect of such contracts. Closing-out of Constituent's Account How Effected 241. When closing-out the account of a constituent under the provisions of these Bye-laws and Regulations a member may assume or take over such transactions to his own account as a principal at prices which are fair and justified by the condition of the market or he may close-out in the open market and any expense incurred or any loss arising therefrom shall be borne by the constituent. When the closing-out has been effected as a principal the contract note in respect of such closing-out shall disclose that the member is acting as a principal. Member Not Liable to Attend to Registration of Transfer 242. A member shall not be deemed to be under any obligation to attend to the transfer of securities and the registration thereof in the name of the constituent. If he attends to such work in the ordinary course or at the request or desire or by the consent of the constituent he shall be deemed to be the agent of the constituent in the matter and shall not be responsible for loss in transit or for the company's refusal to transfer nor be under any other liability or obligation other than that specifically imposed by these Bye-laws and Regulations. The stamp duty, the transfer fees and other charges payable to the Company, the fee for attending to the registration of securities and all incidental expenses such as postage incurred by the member shall be borne by the constituent. Registration of Securities When in Name of Member or Nominee 243. When the time available to the constituents of a member is not sufficient for them to complete transfers and lodge the securities for registration before the closing of the transfer books and where the seller is not liable for the interest, dividend, cash bonus, bonus or rights which the Company may have announced or declared the member may register the securities in his or his nominee's name and recover the transfer fee, stamp duty and other charges from the buying constituent. The members shall give immediate intimation thereof to the buying Constituent and shall stand indemnified for the consequences of any delay in delivery caused by such action. 71 Closing-out by Constituent on Failure to Perform a Contract 244. If a member fails to complete the performance of a contract by delivery or payment in accordance with the provisions of these Bye-laws and Regulations the constituent shall after giving notice in writing to the member close-out such contract through any other member of the Exchange forthwith or business day following from the date of default and any loss or damage sustained as a result of such closing-out shall be immediately payable by the defaulting member to the constituent. If closing-out be not effected as provided herein the damages between the parties shall be determined on the basis of the closing prices ruling on the next working day following the date of default and the constituent and the member shall forfeit all further right of recourse against each other. Constituent When to Close-out Account 245. (a) If a member be declared a defaulter or fail to pay the loss or damages sustained on closing-out effected against him by the constituent or to pay differences due by him to his constituent on the day following the Settling Day such constituent may by giving notice in writing close-out through any member of the Exchange all outstanding contracts either forthwith or at any time thereafter in his discretion during the time such member is in default. Closure of Market During Default (b) If the market be closed at the time of or subsequent to default the constituent may close-out against the defaulting member on or after the reopening of the market for dealing in such security of securities either for the Clearing or for hand delivery. In the case of Cleared Securities the closing-out may be subject to a stipulation for delivery in the course of the Clearing. Notice of and Payment on Closing-out (c) When the defaulting member's account is closed-out as provided in sub-clause (a) and (b) the constituent shall immediately send notice of such closing-out to the member and any balance due on such closing-out shall be payable immediately by the defaulting member to his constituent. No Lien on Constituent's Securities 246. If a member be declared a defaulter after delivering securities to the Clearing House on account of his constituent, the constituent shall be entitled to claim and on offering proof considered satisfactory by the Governing Board or the President receive from the Clearing House according as the Governing Board or the President directs either such securities or the value thereof at the altered making-up price subject to payment or deduction of the amount if any due by him to the defaulter. 72 Complaint by Constituent 247. When a complaint has been lodged by a constituent with the Governing Board that any member has failed to implement his stock-broking transactions the Governing Board shall investigate the complaint and if it is satisfied that the complaint is justified the Governing Board may suspend the member for such period or periods or take such other disciplinary action as it deems fit. 73 4.10 (e) ARBITRATION OTHER THAN BETWEEN MEMBERS ______________________________________ Reference to Arbitration 248. (a) All claims (whether admitted or not), difference and disputes between a member and non member or non-members (the terms "non member" and "non members" shall include a remisier, authorised clerk, a sub-broker who is registered with SEBI as affiliated with that member or employee or any other person with whom the member shares brokerage) arising out of or in relation to dealings, transactions and contracts made subject to the Rules, Bye-laws and Regulations of the Exchange or with reference to anything incidental thereto or in pursuance thereof or relating to their construction, fulfillment or validity or in relation to the rights, obligations and liabilities of remisiers, authorised clerks, sub-brokers, constituents, employees or any other persons with whom the member shares brokerage in relation to such dealings, transactions and contracts shall be referred to and decided by arbitration as provided in the Rules, Bye-laws and Regulations of the Exchange. Contract Constitutes Arbitration Agreement (b) An acceptance whether express or implied of a contract subject to arbitration as provided in sub-clause (a) and with this provision for arbitration incorporated therein shall constitute and shall be deemed to constitute an agreement between the member and the non-member or non-members concerned that all claims (whether admitted or not), differences and disputes of the nature referred to in sub-clause (a) in respect of all dealings, transactions and contracts of a date prior or subsequent to the date of the contract shall be submitted to and decided by arbitration as provided in the Rules, Bye-laws and Regulations of the Exchange and that in respect thereof any question whether such dealings, transactions and contracts have been entered into or not shall also be submitted to and decided by arbitration as provided in the Rules, Bye-laws and Regulations of the Exchange. 74 248 (c) If any claim (whether admitted or not), difference or dispute arises between a sub-broker who is registered with SEBI as affiliated with a member and his constituent arising out of or in relation to dealings, transactions and contracts between the constituent and the sub-broker made subject to the Rules, Bye-laws and Regulations of the Exchange or with reference to anything incidental thereto or in pursuance thereof or relating to their construction fulfillment or validity or in relation to the rights, obligations and liabilities of the constituent, the sub-broker or the member in connection therewith, then such claim, difference or dispute shall be brought to the notice of the member by the constituent in writing within six months from the date of the claim, difference or dispute arising and the same shall as far as possible be settled with the help of the member failing which it shall be brought to the notice of the Exchange for resolution. If a claim, dispute or difference persists, the same shall be referred to and decided by arbitration as provided in the Rules, Bye-laws and Regulations. Appointment of Arbitrators 249.(i)(a) All claims, differences and disputes which are required to be referred to arbitration under these Bye-laws and Regulations shall be referred to arbitration of a sole arbitrator or of three arbitrators to be appointed by the Executive Director or by the parties from the Panel of Arbitrators constituted by the Governing Board, in the manner provided in these Bye-laws and Regulations. The Executive Director shall appoint a sole arbitrator and preferably appoint a non-member as sole arbitrator. (b) In an arbitral tribunal of three arbitrators, each party shall appoint one arbitrator and the third Arbitrator will be appointed by Executive Director. Those proposed arbitrators shall be from the panel of arbitrators constituted by the Governing Board. If any of the parties fail to appoint arbitrator within 10 days of the day he is asked to appoint arbitrator the Executive Director shall appoint such arbitrators in the manner provided in these Bye-laws and the request of the non - member for appointment of non-member arbitrator from the panel of arbitrators prepared by the Governing Board shall be conceded to. All the Bye-laws providing arbitration by a single arbitrator shall apply mutatis-mutandis to arbitration by three members. 75 (ii) While making an application for reference to arbitration, the claimant shall state the names of 3 proposed arbitrators from amongst the panel of arbitrators prepared as per Bye-law 262(b) and at least one of the 3 proposed arbitrators shall be a non-member. (iii) The names of the proposed arbitrators shall be forwarded by the Exchange's Arbitration Department to the respondent or all the respondents (as the case may be). (iv) (a) If there is only one respondent, the respondent may consent to any one of the proposed arbitra- tors being appointed as the arbitrator by delivering to the Exchange's Arbitration Department, within ten days of the respondent having received from the Exchange the names of the proposed arbitrators (or such extended time as the Executive Director may on the application of the respondent allow), in writing in a form prescribed by the Exchange signed by the respondent signifying his consent, failing which the claimant and the respondent shall be deemed to have failed to have agreed as to the person to be appointed as the arbitrator. (b) If there are two or more respondents then each respondent may consent to the appointment of any one or more of the proposed arbitrators as the arbitrator by delivering to the Exchange's Arbitration Department, within ten days of the respondent having received from the Exchange the names of the proposed arbitrators (or such extended time as the Executive Director may on the application of the concerned respondent allow), in writing in a form prescribed by the Exchange signed by that respondent signifying his agreement to one or more of the proposed arbitrators being appointed as the arbitrator. If the claimant and all the respondents agree to any one of the proposed arbitrators being appointed as the arbitrator, such person shall act as the arbitrator. If the claimant and all the respondents agree to more than one of the proposed arbitrators being appointed as the arbitrator, the Exchange's Executive Director shall name one of such persons to act as the arbitrator. If the claimant and all the respondents do not agree to at least one of the proposed arbitrators being appointed as the arbitrator, the claimant and the respondents shall be deemed to have failed to have agreed as to the person to be appointed as the arbitrator. 76 Executive Director - authority to designate 249A. The Executive Director of The Exchange for the purpose of Arbitration Bye-laws shall also include any official of the Exchange not below the rank of Deputy General Manager designated by the Executive Director from time to time for the specific function entrusted to him under these Bye-laws. Appointment of Arbitrator by Executive Director 250. (1) On payment in advance of the minimum fees of an arbitrator prescribed under these Bye-laws and Regulations by any party to a claim, difference or dispute, the Executive Director shall appoint an arbitrator; (a) if the parties have failed to agree as to the person to be appointed as the arbitrator (b) if the arbitrator dies or fails, refuses or neglects to act or becomes incapable of acting as an arbitrator before an award is made by him. (2) An arbitrator to be appointed under clause (1) shall be from the panel of arbitrators prepared by the Governing Board as per bye-law 262(b) and shall be a non member in case one of the parties desires the appointment of a non member as arbitrator. (3) While appointing arbitrator it shall be ensured that the arbitrator is independent and impartial not interested in any of the parties or the claim dispute or difference referred to in arbitration. Commencement of Arbitration 251. (a) There shall be an officer of the Exchange designated as Secretary of arbitration. All applications for reference shall be in such form as the Exchange may prescribe and shall be accompanied by as many copies thereof as there are respondents and the same number of copies of the statements of claim, documents relied upon, such as contract, bills, ledger accounts, acknowledgement of delivery and receipt of shares etc., accompanied by a accurate list thereof shall be received by the Secretary when presented in person and/or transmitted by post and the receipt shall be duly acknowledged. The date on which the application 77 for reference is received shall be the date of making reference to arbitration. The Secretary shall scrutinise the application and the accompaniments thereof and shall verify whether the applicant has paid the required charges and fees prescribed by the Exchange and when he finds that the application is complete in all respects, he shall assign Reference number and register the application in the register of references. Thereafter he shall issue notices to the respondent/s accompanied by copies of the application and the documents, and a list of the names of the proposed arbitrators submitted by the applicant and shall call upon the respondent/s to convey his/their choice from the three proposed arbitrators or otherwise within 7 days of the receipt of notice. (b) In case the Secretary finds that the application for reference is not in order and is not accompanied by the copies of the application and the documents and/or required fees and charges are not paid and the claimant fails to comply within the reasonable time allowed by the Secretary, the Secretary may reject the application and the applicant shall be informed of the fact of rejection with reasons thereof. (c) In case the applicant is aggrieved by rejection of his application by the Secretary, he may apply to the Executive Director within seven days of receipt of the intimation of rejection and the Executive Director may, on being satisfied on hearing the applicant or otherwise that there was reasonable cause for the applicant not complying. On the applicant doing the needful, set aside the rejection and restore the application. Thereafter the secretary shall take further steps indicated in clause (a). (d) The secretary shall complete the scrutiny of the papers, issuing of notices to the respondents and all other secretarial work preliminary to the arbitrator entering on the reference, within 15 days, as far as possible, of the receipt of application fro reference to arbitration. 78 (e) After the parties agree upon the sole arbitrator or the arbitrator is appointed as per the Bye-laws, the Secretary shall place the arbitration application and the connected papers before the arbitrator, the due notice of the date thereof shall be given to the parties and the arbitrator may accept the appointment and enter on the reference. If, for any reason, the arbitrator either does not accept the appointment or neglects to enter on the reference, the appointment of the arbitrator shall be terminated and appointment of another arbitrator as per Rules, Bye-laws and Regulations of the Exchange shall be made. (f) In the absence of the Secretary the Executive Director of the Exchange may direct any other employee to perform the duties of the Secretary. Limitation 252. (1) Claims against defaulter members: (a) No claim which has arisen or has become due before a member has been declared defaulter as per the Rules, Bye-laws and Regulations of the Exchange, shall be entertained against him by the arbitrators after the expiry of six months from the day the member is declared defaulter. (b) No claim which has arisen after a member has been declared defaulter as per the Rules, Bye-laws & Regulations of the Exchange shall be entertained against him by the arbitrators after the expiry of six months from the day the claim arises or becomes due. (c) Whether the claim falls within the period of limitation provided in Clause (a) and (b) shall be decided by the arbitrator and in case he finds that it does not fall within the period specified therein, he shall dismiss the application for reference to arbitration. He may admit the application after the prescribed period if the applicant satisfies him that there is sufficient cause for not making the application within such period as provided in section 5 of the Limitation Act, 1963. (2) Application of the Limitation Act, 1963 (i) Subject to Clauses 1(a) to (c) all the provisions of the Limitations Act, 1963 or other law relating to limitation as may be in force in India from time to time shall apply to arbitration under these Bye-laws as they apply to the proceedings in the Court. 79 (ii) For the purposes of Sub-Clause (a) & Limitation Act 1963 an arbitration is deemed to have commenced on the date on which the Application for arbitration is received by the Exchange. (iii) Time taken on arbitration proceedings may be excluded. But in excluding such time the tests laid down in different cases must be applied and satisfied. The entire period during which the award remained in custody of court should be excluded under Section 15 of the Limitation for the purpose of registration of award. Umpire When to Hear Reference 253. { Deleted } Arbitrator to make Award Expeditiously 254. (a) The arbitrator shall make his award within four months after entering on the reference or after having been called upon to act by notice in writing from any party. (b) The arbitrator after the hearing is concluded shall expeditiously make the award and in case the award is not made within 15 days of the completion of the hearing, reasons for the delay shall be recorded while making the award. (c) In case the award is not made within 30 days of the conclusion of the hearing, any one of the parties to the arbitration shall have the right to move the Executive Director to cancel the appointment of the arbitrator. After hearing the parties and the arbitrator, in case the Executive Director is satisfied that there is no good reason for the delay in making the award, he may cancel the appointment of arbitrator. In the event of cancellation of appointment of the arbitrator the Executive Director shall appoint another arbitrator as per the Bye-laws and the newly appointed arbitrator shall hear the reference denovo unless the parties agrees otherwise. Arbitrator's Award 255. (1) Every award shall be made in writing and shall be signed by the arbitrator. (2) The award shall state the reasons upon which it is based, unless - (a) the parties have agreed that no reasons are to be given; or 80 (b) the award is on terms agreed between the parties. (3) The award shall state its date and the place of arbitration and the award shall be deemed to have been made at that place. Publication of Award 256. After the award is made, a signed copy of the award shall be delivered to each party. Award Binding on Parties and their Representatives 257. The parties to the reference shall in all things abide by and forthwith carry into effect the award of the arbitrators which shall be final and binding on the parties and their respective representatives notwithstanding the death of or legal disability :81: occurring to any party before or after the making of the award and such death or legal disability shall not operate as a revocation of the reference of award. Correction and Interpretation of Award 258. (1) Within 15 days of the receipt of the arbitral award; (a) Any party to an arbitration agreement, with notice to the other party, may request the arbitral tribunal to correct any computational error, any arithmetical error of a similar nature occurring in the award; (b) A party with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award. (2) If the arbitral tribunal considers the request made under clause (1) to be justified, it shall make the correction or give the interpretation and the interpretation shall form part of the award. (3) The arbitral tribunal may on its own correct the errors of the type indicated in sub clause (a) of clause (1) within 10 days of making the award. An intimation of such correction shall be given to the parties in case the correction is made after delivering an uncorrected copy of the award to the parties and corrected copies of the award shall be given to the parties. 81 (4) A party with notice to the other party may request the arbitral tribunal within 15 days of receipt of the award, to make an additional award as to claims presented in the arbitral proceedings, but omitted from the arbitral award. (5) If the arbitral tribunal considers the request made under clause (4) to be justified, it shall make the additional arbitral award within 7 days of the receipt of such request. Appeal and Enforcement of the Award 259. (i) A party to a reference who is dis-satisfied with an award of an arbitrator(s) may appeal to an Appeal Bench against such award within 15 days of receipt of the award. (ii) When the time for preferring an appeal has expired and no appeal has been preferred or the appeal has been preferred and the award has been passed in the appeal, and when the time for making an application to set aside the award under Section 34 of the Arbitration and Conciliation Act, 1996 has expired, or such application having been made, it has been refused, the final award shall be enforceable in the same manner as if it were a decree of the Court. Setting aside of Award and Fresh Reference 260. (1) An arbitration award may be set aside by the court on an application made under Section 34 of the Arbitration and Conciliation Act, 1996 on the grounds mentioned in that section. (2) Whenever an award made under these Bye-laws and Regulations is set aside by the court, the matter shall be again referred to arbitration as provided in these Bye-laws and Regulations and the claims, differences and disputes shall be decided by arbitration only. Extension of time for making Award 261. The Executive Director may if deemed fit whether the time for making the award has expired or not and whether the award has been made or not for the reason to be recorded extend from time to time, the time for making the award by a period not exceeding one month at a time from the due date or extended due date of the award. 82 Appointment of Arbitrators from Panel of Arbitrators Consisting of Members and Non Members 262. (a) The arbitrator appointed under these Bye-laws and Regulations in respect of an arbitration other than between members shall in all cases at the time of appointment be a member of the Exchange included in the panel or from amongst persons nominated by the Governing Board to the panel of Arbitrators under clause (b) provided that if the non-member party to an arbitration reference so desires, an arbitrator appointed by the Executive Director pursuant to Bye-law 249A shall be appointed from amongst the non-members nominated to the panel of arbitrators under clause (b) hereof. (b) The Governing Board may from time to time nominate to a panel of arbitrators such persons as it thinks suitable from amongst members, partners of members, directors of the Governing Board (other than those directors who are members of the Exchange), retired judges or other persons having knowledge or experience in the field of law, trade, commerce, industry, arbitrations, securities market or stock exchange transactions. The Governing Board may also at its discretion and without assigning any reason remove a person from the panel of arbitrators. The Exchange shall reconstitute a panel of arbitrators in such manner that not less than 60% of the members on the panel are persons who are not members of the Exchange. Such panel shall be reconstituted every year keeping the same proportion of members and non-members. (c) The non-members nominated on the panel of arbitrators shall continue on the panel of arbitrators till they are replaced by the new non-members or they voluntarily resign, whichever event takes place earlier. In case of resignation, the vacancy shall be filled by appointing another eligible non-member on the panel. Governing Board to Prescribe Arbitration Fees, Forms and Procedure 263. The fees to be paid, the forms to be used and the procedures to be followed in connection with a reference to arbitration under these Bye-laws and Regulations shall be such as are prescribed in the relative Regulation or such other as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof. 83 Fees and Charges 264. The fees in arbitration and the charges for submitting and regulating the proceedings of the reference prescribed in the relative Regulation shall be payable in advance and when there is failure, neglect or refusal on the part of a party or parties to pay accordingly the other party shall be responsible for making such payment in advance without prejudice however to his right if any to recover the same from such party or parties failing, neglecting or refusing to pay. It shall be a condition precedent to the hearing of any reference that the prescribed fees and charges shall have been paid in advance to the Exchange by the party or parties to the reference. The Exchange shall collect all such fees and charges and make the necessary payments provided always that no larger sum shall be paid than actually collected. Decision on Written Statements or by Hearings 265. (a) A reference may be decided by the arbitrator on the the written statements of the parties and the documents produced by them. However any party may require of the arbitrator that he be given a hearing. In that event he shall be so heard and the other party or parties shall have a similar privilege. (b) No party shall be entitled without the permission of the Arbitrator nor shall be entitled to insist on a request to the arbitrator to hear or examine witness or receive oral or documentary evidence other than what is deemed necessary by the arbitrators. Proceedings 266. The arbitrator may proceed with the reference notwithstanding any failure to file a written statement within due time and may also proceed with the reference in the absence of any or all the parties who after due notice fail or neglect or refuse to attend at the appointed time and place. Adjournment of Hearings 267. The arbitrator may adjourn the hearings from time to time upon the application of any party to the reference or at his own instance provided however that when the adjournment is granted at the request of one of the parties to the reference the arbitrator may if deemed fit require such party to pay the fees and costs in respect of the adjourned hearing borne by the other party and in the event of such party failing to do so may refuse to hear him further or dismiss his case or otherwise deal with the matter in any way the arbitrator may think just. 84 Assistance in conduct of Arbitration proceedings 268. No advocate shall be permitted to appear, plead or act in the arbitration proceedings. The parties may be permitted by the Arbitrators to have an assistance of duly authorised next friend in the conduct of arbitration proceedings. Proviso: At the request of the Applicant or the Respondent, the Arbitrator(s) may permit a party to be represented by an advocate depending on the complexities of the facts and law involved in the case. Consideration of Recorded Proceedings and Evidence 269. If an arbitrator dies or fails or neglects or refuses to act or becomes incapable of acting as an arbitrator the Executive Director may appoint a substitute arbitrator from among the panel of arbitrators constituted under Bye-law 262(b) in conformity with Clause (c) thereof and such substitute arbitrator shall be at liberty to act upon the record of the proceedings as then existing and on the evidence, if any, then taken in the reference or to commence the reference de novo. The hearing shall be held de novo unless the parties agree otherwise. Reference to Court of Law 270. { Deleted } Set-off and counter-claim 271. On a reference to arbitration by one party the other party or parties shall be entitled to claim a set-off or make a counter-claim against the first party provided such set-off or counter-claim arises out of or relates to dealings, transactions and contracts made subject to the Rules, Bye-laws and Regulations of the Exchange and subject to arbitration as provided therein and provided further such set-off or counter claim is presented together with full particulars at or before the first hearing of the reference but not afterwards unless permitted by the arbitrator. Award to Adjudge Interest 272. Where and in so far as an award is for the payment of money the arbitrator may adjudge in the award the interest be paid on the principal sum adjudged for any period prior to the institution of the arbitration proceedings and may also adjudge the additional interest on such principal sum as is deemed reasonable for the period from the date of the 85 institution of the arbitration proceedings to the date of the award and further interest on the aggregate sum so adjudged at such rate as is deemed reasonable from the date of the award to the date of payment. If the award is silent on interest, the award shall carry interest 18% p.a. from the date of the award to the date of the payment. Costs 273A. Unless otherwise agreed by the parties, - (a) the costs of an arbitration shall be fixed by the arbitral tribunal; (b) the arbitral tribunal shall specify - (i) the party entitled to costs, (ii) the party who shall pay the costs, (iii) the amount of costs or method of determining that amount and (iv) the manner in which the costs shall be paid Explanation: For the purpose of clause (a), "Costs" means reasonable costs relating to - (i) the fees and expenses of the arbitrators and witness. (ii) legal fees and expenses. (iii) any administration fees of the institution supervising the arbitration, and (iv) any other expenses incurred in connection with the arbitral proceedings and the arbitral award. Adjournment Costs 273B. The arbitral tribunal shall not be obliged to adjourn a hearing on the request of any party. However in the event of adjournment being granted the Arbitral tribunal shall be entitled to direct the parties requesting the adjournment to pay to the other party/parties such amount as costs as it claims proper 86 Operation of Contracts 274. All dealings, transactions and contracts which are subject to the Rules, Bye-laws and Regulations of the Exchange and every arbitration agreement to which the Rules, Bye-laws and Regulations of the Exchange apply shall be deemed in all respects to be subject to the Rules, Bye-laws and Regulations of the Exchange and shall be deemed to be and shall take effect as wholly made, entered into and to be performed in the city of Hyderabad and the parties to such dealings, transactions, contracts and agreements shall be deemed to have submitted to the jurisdiction of the Courts in Hyderabad for the purpose of giving effect to the provisions of the Rules, Bye-laws and Regulations of the Exchange. Appeal against Arbitral Award 274A. Appeal Bench : 1. The Executive Director of the Exchange shall constitute one or more Appeal Benches, each comprising of five arbitrators from the panel of arbitrators constituted by the Governing Board under Bye-law 262(b). Out of the five arbitrators, three shall be non-members and two shall be members. 2. None of the arbitrators who have heard the reference or passed the award shall be a member of the Appeal bench hearing an appeal against that award. 3. A party dissatisfied with an Award may appeal to the Appeal Bench against such Award within 15 days of the receipt of such award. 4. The party appealing shall pay the necessary fees and charges for preferring the appeal as may be fixed by the Governing Board from time to time. 5. Arbitration Secretary shall accept the appeal memo submitted to him by the party appealing or his authorised representative against the award. The Appeal memo shall state the objections to the award of the arbitrator. The Appellant shall unless exempted in whole or in part by the Appeal Bench, on application being made by the appellant, deposit with the Exchange in cash the full amount ordered to be paid or the securities or the value at the ruling market price of the securities ordered to be delivered in the award. 87 Provided that if the party appealing has made an application to the Appeal Bench for such exemption within 15 days of the receipt of the award and the exemption application has not been disposed off by the Appeal Bench within 15 days of receipt of the award by the party appealing then the party appealing shall deposit the cash or securities within 15 days of the disposal of the exemption application by the Appeal Bench. The party placing the deposit shall be deemed to have agreed that on the expiry of 3 months from the date of the decision of the Appeal bench such deposit may be handed over by the Exchange to the other party in accordance with the terms of decision in appeal unless the other party has obtained an order of the court restraining such handing over. 6. A certificate from the Exchange showing that exemption application has been filed or that the deposit if any, required by the Clause (5) has been lodged shall be attached to the appeal. 7. The award of the Appeal Bench has been set aside and/ or is pending. The Appeal Bench shall not proceed to hear the appeal unless the Exchange has certified that the required deposit has been made or that no deposit is required to be made by the party appealing. Hearing and decision of Appeal: The Arbitration Secretary after all the formalities are complete shall issue notice to the respondent. A copy of the memo of Appeal shall accompany the notice and respondent shall be called upon to appear before the Appeal Bench on the date specified therein. On that day the Secretary shall place all papers before the Appeal Bench and the Appeal Bench shall on the same day or on some adjourned date hear the parties and shall make the award in writing giving their reasons for the award. The Award made by them shall be deemed to be final and binding on the parties. The judgment of the Appeal Bench shall be a majority judgment and the award shall be as per majority decision. 8. Signing of the Award The Award made by the Appeal Bench shall be signed by all members of the Appeal Bench. 9. Publication of the Award : After the award is made, a signed copy of the award shall be delivered to each party. 88 10. The Appeal to be decided expeditiously: The appeal shall be decided by the Appeal Bench expeditiously and as far as possible, within one month of the filing of the Appeal. 11. Application of provisions relating to arbitrations All the other Bye-laws of this chapter as far as may be applicable shall apply mutatis mutandis to the proceedings before the Appeal Bench and the award of the Appeal Bench. However, there shall be no appeal from the award of the Appeal Bench. Notices and Communications How to be Served 275. Notices and communications to a member or a non-member shall be served in any one or more or all of the following ways and any such notice or communication under (i) to (vi) below shall be served at his ordinary business address and/or at his ordinary place of residence and/or at his last known address : (i) by delivering it by hand; (ii) by sending it by registered post; (iii) by sending it under certificate of posting; (iv) by sending it by express delivery post; (v) by sending it by telegram; (vi) by affixing it on the door at the last known business or residential address; (vii) by its oral communication to the party in the presence of a third person; (viii) by advertising it at least once in any daily newspaper published in Hyderabad (ix) by a notice posted on the notice board of the Exchange if no address be known Service by Hand Delivery When Complete 276. A notice or communication served by hand shall be deemed to have been received by the party on the production of a certificate to that effect signed by the person delivering the notice or communication. 89 Service by Post or Telegram When Complete 277. A notice or communication served by post or telegram shall be deemed to have been received by the party at the time when the same would in the ordinary course of post or telegram have been delivered. The production of a letter of confirmation from the post office or of the post office receipt for the registered letter or telegram or of a certificate of posting shall in all cases be conclusive proof of the posting or despatch of such notice or communication and shall constitute due and proper service of notice. Refusal to Accept Delivery Does not Affect Service 278. In no case shall any refusal to take delivery of the notice or communication affect the validity of its service. Service by Advertisement or by Notice on Notice Board When Complete 279. A notice or communication published in a newspaper or posted on the notice board of the Exchange shall be deemed to have been served on the party on the day on which it is published or posted. Secretarial Duties 280. The Secretary and the employee or employees of the Exchange acting under his authority shall :- (i) maintain a register of references; (ii) Register of references rejected by the Secretary. (iii) Receive all applications for arbitration, references and communications addressed by the parties before or during the course of arbitration or otherwise in relation thereto; (iv) Receive payment of all costs, charges, fees and other expenses; (v) give notices of hearing and all other notices to be given to the parties before or during the course of the arbitration or otherwise in relation thereto. (vi) communicate to parties all orders and directions of the arbitrator; (vii) receive and record all documents and papers relating to the reference and keep in custody all such documents and papers except such as the parties are allowed to retain; for such period as may be prescribed by the Executive Director. 90 (viii) publish the award on behalf of the arbitrator; (ix) to enter the award and any changes therein in the register of references. (x) generally do all such things and take all such steps as may be necessary to assist the arbitrator in the execution of their functions. (xi) to maintain a register of Appeals and make necessary entries therein. Indemnity 281. No party shall bring or prosecute any suit or proceedings whatever against the Exchange, the Governing Board, the President, the Secretary or any employee or employees of the Exchange acting under his authority or against the arbitrator for or in respect of any matter or thing purporting to be done under these Bye-laws and Regulations nor any suit or proceedings (save for the enforcement of the award) against the other party or parties to the reference. Removal of difficulties 281A. If any difficulty arises in giving effect to these Bye-laws in the conduct of arbitration, resort may be had to the provisions of Part - 1 of the Arbitration and Conciliation Act, 1996, which are not inconsistent with these Bye-laws. 281B. An Arbitration agreement shall not be discharged by the death of any party thereto either as respects the deceased or as respects any other party, but shall in such event be enforceable by or against the legal representative of the deceased. Administrative Assistance 281C. The Exchange shall render all secretarial and other assistance for the conduct of arbitration proceedings by appointing adequate staff and by providing proper accommodation, stationery and other facilities. 91 The Secretary of the Arbitration Division with the help of the assistants shall maintain all registers, files and records of arbitrations in proper order and shall be responsible for keeping them up to date. He shall maintain statistics of all pending and disposed of references and at the end of each quarter shall report to the Governing Board of the Exchange the number of pending references at the commencement of every month, references received during the month and the references disposed off. He shall report the references pending for more than four months, with the reasons for the delay and the steps taken for the early disposal of those references and shall carry out the directions issued by the Governing Board from time to time. The Secretary shall also arrange to issue certified copies of the documents, awards and other proceedings to the parties on receiving the charges fixed by the Governing Board from to time and shall render all other assistance for enforcement of the awards. 92 ARBITRATION BETWEEN MEMBERS ___________________________ Reference to Dispute Resolution Officers 282A. Notwithstanding anything stated Bye-law 282, if any claim, complaint, difference or dispute between members of the nature referred to in Bye-law 282 involves, in whole or in part, one or more of the following matters then the decision on such matter or matters shall be referred to the arbitration of a Dispute Resolution Officer as provided in the Bye-law 3158 and the concerned Regulations : (i) the determination as to whether any document constitutes good delivery or bad delivery; (ii) the determination of the correctness or validity of an objection to transfer of a security raised by a company or other issuer of securities or its transfer agent; (iii) the determination of a question whether a member is obliged to rectify or replace any document on the ground that it is a bad delivery document; (iv) the applicability and/or interpretation of any Rules, Bye-laws, Regulations, Guidelines, Directions or instructions (by whatever name called) for determining any matter referred to in sub-clauses (i) to (iii) of this Bye-law; (v) such other matters as may be specified by the Governing Board for the purposes of this Bye-law. Legal Proceedings with Permission of the Governing Board 283. In respect of any claim, complaint difference or dispute required to be referred to arbitration under these Bye-laws and Regulations no member shall commence legal proceedings against another without the permission of the Governing Board. If a member institutes such proceedings without permission and recovers any money or other relief he shall hold the same in trust for the Exchange and shall pay the same to the Exchange to be dealt with in the manner directed by the Governing Board. 93 Application for Arbitration 284. Whenever a claim, complaint difference or dispute which under these Bye-laws and Regulations must be referred to the Arbitration Committee arises between members any member who is a party to such claim, complaint, difference or dispute may apply to the Arbitration Committee to inquire into and arbitrate in the dispute. Arbitrators 285. Whenever a reference is made to the Arbitration it shall be heard by a sole arbitrator or by three of its members to be specified either generally or with reference to any particular claim, complaint, difference or dispute at a meeting of the full Bench of the Arbitration Committee. While appointing the members of the Arbitral Tribunal the Arbitration Committee shall have regard to the fact that none of them is interested in either of the parties and is independent while deciding the disputes between the parties. Such member or members shall act as the Arbitrator or Arbitrators, in regard to such reference (Hereafter referred to as "The Lower Bench of the Arbitration Committee" or "the Lower Bench"). Commencement of Arbitration 285A. The Executive Director shall appoint one of its employees as Arbitration Secretary and one or more of its employees as Arbitration Assistants to assist the Secretary to render ministerial and secretarial assistance and perform other functions as provided in these Bye-laws. The Arbitration Secretary and Arbitration Assistants for Arbitrations between Member and Non-Member and for Arbitrations between Members may be the same or different as may be decided by the Executive Director. 285B. The Arbitration Secretary or any other assistant authorised by arbitration secretary shall receive applications for reference, in such forms as the Exchange may prescribe, made under Bye-law 284 accompanied by the prescribed fees and charges and as many additional copies of application for reference, statement of claim and copies of the documents relied upon such as Contract, Bills, Ledger account, Acknowledgment of delivery and receipt of shares etc. in support of the claim. Arbitration Secretary shall verify whether the application for reference is accompanied by the copies of the application and the documents. He shall also verify whether the 94 prescribed fees and charges for Arbitration have been paid. The Arbitration secretary shall call upon the parties to the reference to ensure that filing of papers and pleadings are completed expeditiously. The Arbitration Secretary shall be entitled to give directions relating to filing of papers and pleadings and all secretarial matters and shall also be entitled to specify and extend the period within which a party should file papers and pleadings. Any dispute relating to filing and the Arbitration Secretary's directions in relation thereto shall be decided by the Lower Bench after hearing the concerned parties. The Arbitration Secretary shall endeavour to ensure that filing of papers and pleadings and all secretarial matters are completed within two months of the application for reference being made and shall place the matter before the Lower Bench forthwith upon the same being completed. The date on which Application for reference is received by the Exchange shall be the date of reference to Arbitration. Any Arbitration Assistant authorised by the Arbitration Secretary may perform the duties of the Arbitration Secretary. 285C. The Lower Bench shall not be obliged to commence the hearing of the arbitration reference until filing of papers and pleadings and all secretarial and ministerial matters have been completed unless - (i) the Arbitration Secretary, being of the view that the matter should be placed before the Lower Bench for directions, places the matter before the Lower Bench for directions; or (ii) the Arbitration Secretary is of the view that filing of papers and pleadings and/or any secretarial or ministerial matter(s) has/have not been completed despite sufficient time having been given for the same and the matter should be placed before the Lower Bench. 285D. If the amount of claim involved in a reference does not exceed Rs.5,000/- then, notwithstanding anything stated in the other Rules, Bye-laws and Regulations, the Lower Bench shall decide the reference on the basis of the pleadings and documents before it without hearing the parties, provided that the Lower bench may afford the concerned parties an opportunity to be heard if it is of the opinion that in view of the facts and circumstances of any particular reference it is necessary to do so in order to properly decide the reference. 95 Notice 286. Save as otherwise provided not less than two day's notice of the time and place appointed for the hearing shall be given to both the parties to the reference. Both Parties Present 287. If both the parties to the reference are present at the appointed time and place the arbitrators shall proceed to hear the reference and to give the award. Ex Parte Decision and Summary Disposal 288. If the party against whom the reference is filed be not present at the appointed time and place the arbitrators may hear and decide the reference ex parte and if the party filing the reference be not present the arbitrators may dismiss the reference summarily. Set-off and Counter-Claim 288A. On a reference to arbitration by one party the other party or parties shall be entitled to claim a set-off or make a counter-claim against the first party provided such set-off or counter-claim arises out of or relates to dealings, transactions and contracts made subject to the Rules, Bye-laws and Regulations of the Exchange and subject to arbitration as provided therein and provided further such set-off or counter-claim is presented together with full particulars at or before the first hearing of the reference by the Arbitrator or Arbitrators but not afterwards unless permitted by the arbitrator or arbitrators. Period for Lower Bench Award 289. The Lower Bench shall make the award within one month of the completion of the filing of papers and pleadings and all secretarial and ministerial matters or the matter being placed before it pursuant to clause (ii) of Bye-law 285C. The Award of any two out of 3 Arbitrators, in case of disagreement shall be deemed to be the award in Arbitration. Costs 289A. Unless otherwise agreed by the parties. - (a) the costs of an arbitration shall be fixed by the arbitral tribunal; (b) the arbitral tribunal shall specify - 96 (i) the party entitled to costs, (ii) the party who shall pay the costs, (iii) the amount of costs or method of determining that amount, and (iv) the manner in which the costs shall be paid. Explanation - For the purpose of clause (a), "costs" means reasonable costs relating to - (i) the fees and expenses of the arbitrators and witness, (ii) legal fees and expenses, (iii) any administration fees of the institution supervising the arbitration, and (iv) any other expenses incurred in connection with the arbitral proceedings and the arbitral award. Lower Bench Award when final and Appeal to Arbitration Committee 290A. The Award of the Lower bench of the Arbitration Committee in a reference shall be final and binding to the reference unless a party is entitled to appeal to the full bench therefrom under clause (B). 290B. A party to a reference who is dissatisfied with any award of the "Lower Bench" may appeal to the Full Bench" of the Arbitration Committee against such award within seven days of the receipt by him of such award if the principal amount of the claim disallowed by the Lower Bench to the Appellant exceeds Rs. 50,000/- or if the amount awarded against the Appellant by the Lower Bench (without taking into account interest from the date of the award) exceeds Rs. 50,000/-. Deposit and Statement of Objections 291 A. The party appealing to the Full Bench of the Arbitration Committee may state in writing the objections to the award of the "Lower Bench" and shall unless exempted in whole or in part by the Governing Bard or the President deposit with the Exchange in cash the full amount ordered to be paid or the securities or the value at the ruling market price of the securities ordered to be delivered in the award. The party placing the deposit shall be deemed to have agreed that such deposit be handed over by the Exchange to the other party in accordance with the terms of the decision in appeal. 97 Deposit Certificate B. A certificate from the Exchange showing that the deposit if any as required by sub-clause (A) has been lodged shall be attached to the appeal and the Full Bench of the Arbitration Committee shall not entertain an appeal to which such certificate is not annexed. Hearing of Appeal 292. When the deposit certificate is annexed to the appeal the Full Bench of the arbitration committee shall itself proceed to hear the appeal and arbitrate in the reference. Period for Full Bench Award 292A. The Full Bench of the Arbitration Committee shall endeavour to made the award within one month of the date of filing of the appeal. Certain Members May Not Vote 293. The members of the Full Bench of the Arbitration Committee who have made the award against which an appeal is made to the Full Bench of the Arbitration Committee shall not attend the meetings or vote at the Full Bench of the Arbitration Committee at which the appeal is heard or decided. Award of Arbitration Committee when Final 294. The award of Full Bench of the Arbitration Committee in a reference shall be final and binding on the parties to the reference if the principal amount of the claim disallowed by the Full Bench of the Arbitration Committee to the Appellant does not exceed Rs.1,00,000/- or if the amount awarded against either party by the Full Bench (without taking into account interest from the date of the award) does not exceed Rs. 1,00,000/-. Appeal to the Governing Board 295. If the principal amount of the claim disallowed by the Full Bench of the Arbitration Committee to a party dissatisfied with the award exceeds Rs. 1,00,000/- or if the amount award by the Full Bench against a party dissatisfied with the award (without taking into account interest from the date of the award) exceeds Rs. 1,00,000/- the party dissatisfied with the award of the Full bench of the Arbitration committee may appeal to the Governing Board against such award within seven days of the receipt by him of such award. 98 Written Objections and Certificate 296. (a) The party appealing to the Governing Board shall state in writing the objections to the award of the Full Bench of the Arbitration Committee and shall unless exempted in whole or in part by the Governing Board or the President deposit with the Exchange in cash the full amount ordered to be paid or the securities or the value at the ruling market price of the securities ordered to be delivered in the award. The party placing the deposit shall be deemed to have agreed that such deposit be handed over by the Exchange to the other party in accordance with the terms of the decision in appeal. Deposit Certificate (b) A certificate from the Exchange showing that the deposit if any as required by sub-clause (a) has been lodged shall be attached to the appeal and the Governing Board shall not entertain an appeal to which such certificate is not annexed. Decision of the Governing Board Final 297. When the deposit certificate is annexed to the appeal the Governing Board shall proceed to hear the appeal and the decision of the Governing Board shall be deemed final and binding on the parties to the appeal. Period for Governing Board Award 297A. The Governing Board shall endeavour to make the award within one month of the appeal being filed. Signing of Award 298. (i) Every award shall be made in writing and shall be signed by those members of the concerned arbitral tribunal who have participated in making the award. (ii) For the purposes of clause (i), the signatures of the majority of the members of the concerned arbitral tribunal who have participated in making the award shall be sufficient so long as the reason for any omitted signature is stated. 99 (iii) For the purpose of clauses (i) and (ii) the members of the arbitral tribunal who have participated in making the award or the majority of such members, as the case may be, may by unanimous resolution or writing authorise any member or members of the arbitral tribunal to sign the award on behalf of all the members so authorising. In such event the award shall be considered as duly signed by all the members so authorising if the award is signed by such authorised member or members. (iv) The award shall state the reasons upon which it is based, unless - (a) the parties have agreed that no reasons are to be given; or (b) the award is on terms agreed between the parties (v) The award shall state its date and the place of arbitration and the award (vi) After the award is made, a signed copy shall be delivered to each party. Members Interested Not to Attend 299. A party to a reference who is a member of the Arbitration committee or the Governing Board shall not attend any meeting of the Arbitration committee or of the Governing Board at which an inquiry into the reference or appeal is made or at which a reference or appeal is heard. Adjourned Meeting 300. It shall be no objection to an award of the Arbitration committee or of the Governing Board that the meeting at which a reference or appeal was inquired into or a reference or appeal was heard was adjourned from time to time or that the inquiry was not completed or that the reference or appeal was not finally heard at one meeting. Change in Composition 301. It shall be no objection to an award of the Arbitration Committee or of the Governing Board that the composition of the Arbitration committee or the Governing Board changed during the inquiry or reference or appeal; 100 Provided however that no member of the Arbitration committee or of the Governing Board as the case may be who shall not have been present at every meeting at which inquiry into the reference or appeal was made of the reference or appeal was heard shall participate in giving the final decision. Summary Dismissal 302. If a party to a reference who has appealed to the Arbitration Committee or to the Governing Board against an award be not present at the time fixed for hearing the appeal the Arbitration committee or the Governing Board as the case may be may dismiss the appeal summarily. Appeal Ex-Parte 303. If a party to a reference in whose favour an award has been made be not present at the time fixed by the Arbitration committee or the Governing Board for hearing the appeal against such award the Arbitration committee or the Governing Board may proceed to hear the appeal ex parte. Rehearing Ex-Parte Award 304. On sufficient cause being shown the Arbitration Committee may set aside an ex parte award made by the arbitrators or the Arbitration Committee and the Governing Board may similarly set aside any Ex-Parte award and in any such case the Arbitration Committee or the Governing Board may direct that the reference or the appeal be again enquired into or heard. Remission of Award 305. The Governing Board in its discretion may within fifteen days of an award remit the award or any matter referred to arbitration to the arbitrators or the Arbitration Committee upon such terms as it thinks fit and thereupon the arbitrators or the Arbitration Committee shall reconsider the matter and either confirm or revise previous decision. Fresh Reference on Non-Compliance with Award When Allowed 306. Whenever an award directs that certain acts or things be done by the parties to the reference and a party fails to comply with such direction the other party may make a fresh reference for a future award for determining the dispute outstanding or the amount of damages or compensation payable by reason of such failure. 101 Late Claims Barred 307. (i) The Arbitration Committee shall not take cognisance of any claim, complaint, difference or dispute unless the same has been referred to it within six months of the last date of the concerned settlement. Any dispute as to whether a claim, complaint, difference or dispute falls within the ambit of this clause shall be decided by the Lower Bench. (ii) The Arbitration Committee shall not take cognisance of any claim, complaint, difference or dispute relating to a company objection in respect of a bad delivery where the Company has issued an objection memo as required by the applicable good/bad delivery guidelines unless the same has been referred to it within the time limit prescribed from time to time by the Securities and Exchange Board of India's guidelines, rules or regulations relating to bad delivery. Any dispute as to whether any claim, complaint, difference or dispute falls within the ambit of his clause shall be decided by the Lower Bench. (iii) If a member who desires to refer a dispute to arbitration after the period specified in clauses (i) or (ii), as may be applicable, satisfies the Executive Director that he had sufficient cause for not making the reference within such period then the Executive Director may extend the period to such further period as the Executive Director thinks fit and proper. In such event, the Arbitration Committee may take cognisance of the claim, complaint, difference or dispute if it is referred to arbitration within such extended period. Before deciding whether or not to extend the period under this clause, the Executive Director shall afford an opportunity to be heard to the member applying for the extension as also to the member or members against whom the reference is proposed to be filed. (iv) Every decision of the Executive Director under this By-law shall be in writing and shall take the reasons for the decision. (v) A member aggrieved by a decision of the Executive Director declining to extend the period may file an appeal to the Governing Board within seven days of the Exchange informing him in writing of the Executive Director's decision. 102 Extension of Time 308. The Governing Board may for special reasons extend the time within which a reference to arbitration or an appeal against any award of the arbitrators or the Arbitration Committee may be made whether the time for making the same has expired or not. Extension of Time for Making an Award 309. The Governing Board may if deemed fit whether the time for making the award has expired or not and whether the award has been made or not extend from time to time the time for making an award. Remedies at Law 310. The Arbitration committee or the Governing Board may decline to hear a reference or an appeal or may dismiss any reference or appeal at any time during the proceedings and refer the parties to their remedies at law and it shall so refer them upon the joint request of the parties. Penalty on Failure to Submit to or Abide by Award in Arbitration 311. A member who fails or refuses to submit to or abide by or carry out any award in arbitration between members as provided in these Bye-laws and Regulations shall be expelled by the Governing Board and thereupon the other party shall be entitled to institute legal proceedings to enforce the award under the Civil Procedure Code 1908 (5 of 1908) in the same manner as if it is a decree of the court. Setting aside of Award and Fresh Reference 311A. (1) An arbitration award may be set aside by the Court on an application made under Section 34 of the Arbitration and Conciliation Act, 1996 on the grounds mentioned in that section. (2) Whenever an award made under these Bye-laws and Regulations is set aside by the Court, the matter shall be again referred to arbitration as provided in these Bye-laws and regulations and the claims, differences and disputes shall be decided by arbitration only. 103 Correction and Interpretation of Award 311B. (1) Within 15 days of the receipt of the arbitral award; (a) Any party to an arbitration agreement, with notice to the other party, may request the arbitral tribunal to correct any computational error, any arithmetical error, any clerical or typographical error or any other error of a similar nature occurring in the award; (b) A party with notice to the other party, may request the arbitral tribunal to give an interpretation of a specific point or part of the award. (2) If the arbitral tribunal consider the request made under clause (1) to be justified, it may make the correction or give the interpretation and the interpretation shall form part of the award. (3) The arbitral tribunal may on its own correct the errors of the type indicated in sub clause (a) of clause(1) within 10 days of making the award. An intimation of such correction shall be given to the parties in case correction is made after delivering uncorrected copy of the award to the parties and corrected copies of the award shall be given to the parties. (4) A party with notice to the other party may request the arbitral tribunal within 15 days of receipt of the award, to make an additional award as to claims presented in the arbitral proceedings, but omitted from the arbitral award. (5) If the arbitral tribunal considers the request made under clause (4) to be justified, it shall make the additional arbitral award within 7 days of the receipt of such request. Arbitration Fees 312. The parties desiring to make a reference to arbitration or proceed in appeal shall pay in advance the fees prescribed in the relative Regulation or such other fees as the Governing Board may from time to time prescribe in modification or substitution thereof. Payment of Fees 313. Unless otherwise directed in the award the party against whom the award is finally made shall pay all fees paid by the other party to the reference in connection with the arbitration proceedings. 104 Assistance in Conduct of Arbitration Proceedings 314. No legal Practitioner shall be permitted to plead or act for the parties to Arbitration at any level of the Arbitration including the appeals. The parties may be permitted by the Arbitrator to have assistance of a duly authorised next friend in the conduct of Arbitration Proceedings. Complaint by Non-member 315. (a) Not withstanding anything to the contrary contained in these Bye-laws and Regulations in special cases when the permission of the Governing Board, the President or the Executive Director has been previously obtained a complaint by a non-member against a member or any claim,difference or dispute between a non-member and a member may be referred at the instance of the non-member to arbitration in accordance with the Bye-laws and Regulations relating to arbitration between members and thereupon the member concerned shall submit to such arbitration. Form of Reference (b) The Governing Board or the President or the Executive Director may in its or his sole discretion grant or refuse permission applied for as provided in sub-clause(a) and an application for this purpose shall not be consid- ered unless the non-member first signs and submits the Form of Reference prescribed in the relative Regulation or such other Form of Reference as the Governing Board may from time to time prescribe in modification or substitution thereof. Dispute Resolution Officers & Umpires 315A. (i) The Executive Director and, in the absence of the Executive Director, the Governing Board shall - (a) from time to time appoint one or more Dispute Resolution Officers from amongst its employees for such period, if any, as may be specified; and (b) at any time revoke the appointment of any Dispute Resolution Officer without being required to assign any reason. 105 (ii) The Arbitration Committee shall - (a) from time to time appoint one or more Umpires from amongst the Exchange's employees for such period, if any, as may be specified; and (b) at any time revoke the appointment of any Umpire without being required to assign any reason. References and Appeals to Dispute Resolution Officers & Umpires 315B. (i) If a member (hereinafter referred to as "the Receiving Member") who has received delivery of a document or an objection memo from a company through the Clearing House is of the view, on a scrutiny of the document or objection memo, that the same does not constitute good delivery or a valid objection and therefore desires to return the document/objection memo to the member who delivered the document/objection memo to the Receiving Member through the Clearing House (hereinafter referred to as "the Delivering Member') then the Receiving Member may, within such period as the Governing Board may prescribe, apply to a Dispute Resolution Officer for his decision as to whether the documents constitute bad delivery or whether the objection memo constitutes a valid objection. If the Receiving Member does not apply to the Dispute Resolution Officer for a decision within the period prescribed by the Governing Board then the procedure provided in this Bye-law shall not apply and the Receiving Member may refer his claim or dispute relating to the documents/objection memo to arbitration under Bye-law 284. (ii) Not withstanding anything stated in 315 B(i) or Bye-law 282(A), if a member is declared a defaulter then all proceedings pending before a Dispute Resolution Officer or Umpire at the time of declaration of default and all matters to be thereafter referred to a Dispute Resolution Officer or a Umpire shall be referred to Arbitration in accordance with the provisions relating to Arbitration between members. 106 (iii) Every such application for arbitration to a Dispute Resolution Officer shall mention the number (or other detailed reference in the absence of a number) of the rule, bye-law, regulation, guideline, direction or instruction on the basis of which the Receiving Member is contending that the document does not constitute good delivery or that the objection memo does not constitute a valid objection failing which the Dispute Resolution Officer shall not proceed with the application. (iv) The proceedings before the Dispute Resolution Officer shall be summary in nature. The Dispute Resolution Officer shall not be required to give any party any notice or an opportunity to reply or be heard unless the Dispute Resolution Officer is of the view that, on the facts of that reference, any, some or all of the parties to the claim, complaint, difference or dispute are required to be heard. In the latter case, the Dispute Resolution Officer may give to the concerned parties an opportunity to be heard by serving upon them not less than two hours' notice and the provisions of Bye-laws 287 and 288 shall apply mutatis mutandis. (v) If the Dispute Resolution Office determines that the documents constitute good delivery or that the company's objection memo constitutes a valid objection, the Receiving Member shall not be entitled to return the documents or the objection memo to the Delivering Member on the ground of bad delivery/invalid objection memo. However, if the Receiving Member does not accept the Dispute Resolution Officer's decision that the documents constitute good delivery or that the objection memo constitutes a valid objection, the Receiving Member may prefer an appeal to an Umpire appointed by the Arbitration Committee within three days of the Dispute Resolution Officer's award or a copy of the award being received by the Receiving Member. 107 (vi) If the Dispute Resolution Officer decides that the documents constitute bad delivery or that the company's objection does not constitute a valid objection, the Receiving Member shall be entitled to return the documents/objection memo to the Clearing House on the ground of bad delivery or invalid objection for being in turn returned to the Delivering Member. However, if the Delivering Member does not accept the Dispute Resolution officer's decision that the documents constitute bad delivery or that the objection memo does not constitute a valid objection, the Delivering Member may prefer an appeal to an Umpire within three days of the Dispute Resolution Officer's award or a copy of the award being received by the Delivering Member. (vii) The provisions of Bye-laws 287, 288, 300, 301, 302 303, 312 and 313 shall unless inconsistent with this or any other Bye-law or regulation relating to Dispute Resolution Officers or Umpires, mutatis mutandis apply to references to and arbitration proceedings before a Dispute Resolution Officer and an Umpire so far as the same may be applicable. (viii) Every award by a Dispute Resolution Officer or Umpire shall be in writing, shall state the reasons for the award and shall be signed by the Dispute Resolution Officer or the Umpire. (ix) The Delivering Member or the Receiving Member (or both) may prefer an appeal to the Full Bench of the Arbitration Committee from an award of an Umpire within three days of the award or a copy of the award being received by the member seeking to prefer the appeal. The provisions of these Bye-laws relating to appeals to the Full Bench shall apply mutatis mutandis to the appeals preferred to the Full Bench under this clause. Forms 315C. The Governing Board may from time to time prescribe forms for the purposes of these Bye-laws including forms in which the reference should be made, any notice should be made, any notice should be given, the award should be passed and in which any appeal may be preferred. 108 Member 315D. For the purposes of this chapter the term "member" shall include, and shall always be deemed to have included, a former member of the Exchange who was a member of the Exchange at the time when the concerned bargain, dealing, transaction or contract was entered into. Limitation 315E. (1) Claims against defaulter members: (a) No claim which has arisen or has become due before a member has been declared defaulter as per the Rules, Bye-laws and Regulations of the Exchange, shall be entertained against him by the arbitrators after the expiry of six months from the day the member is declared defaulter. (b) No claim which has arisen after a member has been declared defaulter as per the Rules, Bye-laws and Regulations of the Exchange, shall be entertained against him by the arbitrators after the expiry of six months from the day the claim arises or becomes due. (c) Whether the claim falls within the period of limitation provided in Clause (a) and (b) shall be decided by the arbitrator and in case he finds that it does not fall within the period specified therein, he shall dismiss the application for reference to arbitration. he may admit the application after the prescribed period if the applicant satisfies him that there is sufficient cause for not making the application within such period as provided in section 5 of the Limitation Act, 1963. (2) Application of Limitation Act, 1963: Subject to 1(a) to (c) and special provisions made in these Bye-Laws providing limitation for making various applications, for preferring appeals and for taking other steps in the conduct of Arbitration proceedings or in the proceedings before the Dispute Resolution Officers, all the provisions of Limitation Act, 1963 or other Law relating to limitation as may be in force in India from time to time shall apply to Arbitrations under this chapter as they apply to Proceedings in Court. 109 Adjournment Costs 315F. The Governing Board, the Arbitration Committee, a Lower Bench, a Dispute Resolution Officer, an Umpire and an Arbitration Officer shall not be obliged to adjourn a hearing on the request of any party. However, in the event of an adjournment being granted, the Governing Board, the Arbitration Committee, a Lower Bench, a Dispute Resolution Officer, an Umpire and/or an Arbitration Officer shall be entitled to direct the party requesting the adjournment to pay to the other party/parties such amount as costs as the Governing Board, the Arbitration Committee, the Lower Bench, a Dispute Resolution Officer, an Umpire or the Arbitration Officer thinks fit and proper. Appeal/reference Period Ending on Holiday 315G. If the period within which any reference or appeal is required to be filed ends on a day on which the offices of the Exchange are not open for filing such reference or appeal, then the appeal may be filed on the next day after such period on which the offices of the Exchange are open for filing such a reference or appeal. Award to Adjudge Interest 315H. Where and in so far an award is for the payment of money the arbitral tribunal may adjudge in the award the interest to be paid on the principal sum adjudged for any time prior to the institution of the arbitration proceedings and may also adjudge the additional interest on such principal sum as is deemed reasonable for the period from the date of the institution of the arbitration proceedings to the date of the award and further interest on the aggregate sum so adjudged at such rate as is deemed reasonable from the date of the award to the date of payment or the date of the decree. A sum directed to be paid by the Arbitral award shall, unless the award otherwise directs, carry interest at the rate or 18 percent per annum from the date of award to the date of payment. Ministerial Duties 315I. The Secretary and the employees of the Exchange acting under his authority shall - (i) maintain a register of references; (ii) Receive all applications for arbitration, references and communications addressed by the parties before or during the course of arbitration or otherwise in relation thereto; 110 (iii) receive payment of all costs, charges, fees and other expenses; (iv) give notices of hearing and all other notices to be given to the parties before or during the course of the arbitration or otherwise in relation thereto; (v) communicate to parties all orders and directions of the arbitrator; (vi) receive and record all documents and papers relating to the reference and keep in custody all such documents and papers except such as the parties are allowed to retain; (vii) publish the award on behalf of the arbitrator; (viii) To enter the award and any changes therein in the register of references. (ix) generally do all such things and take all such steps as may be necessary to assist the arbitrator in the execution of their functions. The Secretary or the Exchange shall not be obliged to maintain records of any transaction or matter for a period longer than 5 years after the date of occurrence of such transaction or matter. Indemnity 315J. No party shall bring or prosecute any suit or proceedings whatever against the Exchange, the Governing Board, the President, the Secretary or any employee or employees of the Exchange acting under his authority or against the arbitrators for or in respect of any matter or thing purporting to be done under these Bye-laws and Regulations nor any suit or proceedings (save for the enforcement of the award) against the other party or parties to the reference. Removal of difficulties 315K. If any difficulty arises in giving effect to these Bye-laws in the conduct of arbitration, resort may be had to the provisions of Part I of the Arbitration and Conciliation Act, 1996, which are not inconsistent with these Bye-laws. Administrative Assistance 315L. The Exchange shall render all secretarial and other assistance for the conduct of arbitration proceedings by appointing adequate staff and by providing proper accommodation, stationery and other facilities. 111 The Secretary of the Arbitration Division with the help of the assistants shall maintain all registers, files and records of arbitrations in proper order and shall be responsible for keeping them up to date. He shall maintain statistics of all pending and disposed off references and at the end of each quarter shall report to the Governing Board of the Exchange the number of pending references at the commencement of every month, references received during the month and the references disposed off. He shall report the references pending for more than four months, with the reasons for the delay and the steps taken for the early disposal of those references and shall carry out the directions issued by the Governing Board from time to time. The Secretary shall also arrange to issue certified copies of the documents, awards and other proceedings to the parties on receiving the charges fixed by the Governing Board from time to time and shall render all other assistance for enforcement of the awards. 112 DEFAULT Declaration of Default 316. A member may be declared a defaulter by direction of the Governing Board or the President or in the absence of the President by direction of any two Members of the Governing Board : (i) if he is unable to fulfil his engagements or (ii) if he admits or discloses his inability to fulfil or discharge his engagements, obligations and liabilities ; or (iii) if he fails or is unable to pay within the specified time the damages and the money difference due on a closing-out effected against him under these Bye-laws and Regulations ; or (iv) if he fails to pass Claim Notes to members (provided that fact is reported to the Exchange by the member not receiving the Claim Note before the Pay-in-Day fixed for that Clearing) or to pay any sum due to the Clearing House or to submit or deliver to the Clearing House on the due date the Delivery and Receive Orders, Statements Sheets of Differences and Securities, Balance Sheet and such other Clearing Forms as the Governing Board may from time to time determine provided that in any such case the declaration of default may be delayed if deemed proper upto but no beyond the Settling Day fixed for that Clearing or (v) if he fails to pay or deliver to the Defaulter's Committee all money's securities and other assets due to a member who has been declared a defaulter within such time of the declaration of default of such member as the Governing Board or the President may direct or (vi) if he fails to pay any sum payable by him to the Settlement Guarantee Fund: " Provided that the Governing Board or the President or the Executive Director may not declare a member as a defaulter if his default is of a sum less than the value of the Base Capital and Additional Capital of the member with the Exchange, all refundable contributions by the member to the Trade Guarantee Fund, and any other marketable securities, money and bank guarantee furnished by the member to the Exchange and accepted by the Exchange and in such case, the Exchange may realise and utilise the Base Capital, Additional Capital, refundable contributions, such securities, money and guarantee to discharge the members' obligations and liabilities and suspend the member's membership rights ". 113 316A. " Subject to the provisions of Bye-law 316, where a member has failed to pay his settlement dues to the Clearing House, the Governing Board or the President or Executive Director shall declare the member as a defaulter before the pay out is declared; provided that nothing in this Bye-law shall prevent the Governing Board or the President or Executive Director from declaring the member as a defaulter after the declaration of the pay out if the member was for any reason not declared as a defaulter before the pay out ". Failure to Fulfil Obligations to Non-Members 317. The Governing Board may order a member to be declared a defaulter if he fails to meet an obligation to a member or non-member or non-member arising out of a Stock Exchange transaction. Insolvent a Defaulter 318. A member who has been adjusted an insolvent shall be ipso facto declared a defaulter although he may not be at the same time a defaulter on the Exchange. Member's Duty to Inform 319. A member shall be bound to notify the Exchange immediately if there be a failure by any member to discharge his liabilities in full. Compromise Forbidden 320. A member guilty of accepting from any member anything less than a full and bonafide money payment in settlement of a debt arising out of a transaction in securities shall be suspended for such period as the Governing Board may deter- mine. Notice of Declaration of Default 321. On a member being declared a defaulter a notice to that effect shall be posted forthwith on the notice board of the Exchange. Defaulter's Books and Documents 322. When a member has been declared a defaulter the Defaulters' Committee shall take charge of all his books of accounts, documents, papers and vouchers to ascertain the state of his affairs and the defaulter shall hand over such books, documents, papers and vouchers to the Defaulters' Committee. 114 List of Debtors ad Creditors 323. The defaulter shall file with the Defaulter's Committee within such time of the declaration of his default as Governing Board or the President any direct a written statement containing a complete list of his debtors and creditors and the sum owing by and to each. Defaulter to Give Information 324. The defaulter shall submit to the Defaulters' Committee such statement of accounts, information and particulars of his affairs as the Defaulter's Committee may from time to time require and if so desired shall appear before the Committee at its meetings held in connection with his default. Inquiry 325. The Defaulter's Committee shall enter into a strict inquiry into the accounts and dealings of the defaulter in the market and shall report to the Governing Board anything improper, unbusiness like or unbecoming a member in connection therewith which may come to its knowledge. Defaulter's Assets 326. The Defaulters' Committee shall call in and realise the security and margin money and securities deposited by the defaulter and recover all moneys, securities and other assets due, payable or deliverable to the defaulter by any other member in respect of any transaction or dealing made subject to the Rules, Bye-laws and Regulations of the Exchange and such Assets shall vest in the Defaulters' Committee for the benefit and on account of the creditor members. 326 A : Notwithstanding anything stated in Bye-law 326, where a member is declared a defaulter on or subsequent to the date on which the Settlement Guarantee Fund becomes operational, the provisions of Bye-law 326 shall be inapplicable and in such case, the Defaults Committee shall call in and realise the security and margin money and securities deposited by the defaulter and recover all money and securities and other assets due, payable or deliverable to the defaulter by any other member in respect of any transaction or dealing made subject to the Articles, Bye-laws and Regulations of the Exchange and such assets shall vest in the Defaults Committee and shall be dealt with by the Defaults Committee in accordance with the relevant Regulations. 115 Payment to Defaulters' Committee 327. All moneys securities and other assets due, payable or deliverable to the defaulter must be paid or delivered to the Defaulter's Committee within such time of the declaration of default as the Governing Board or the President may direct. A member violating this provision shall be declared a defaulter. Fraudulent Preference 328. A member who shall have receive a difference on an account or shall have received any consideration in any transaction prior to the date fixed for settling such account or transaction shall in the event of the member from whom he received such difference or consideration being declared a defaulter refund the same to the Defaulters' Committee for the benefit and on account of the creditor members. Any member who shall have paid or given such difference or consideration to any other member prior to such settlement day shall again pay or give the same to the Defaulters' Committee for the benefit and on account of the creditor members in the event of the default of such other member. 328A: Notwithstanding anything stated in Bye-law 328, where a member is declared a defaulter on or subsequent to the date on which date the Settlement Guarantee Fund becomes operational, the provisions of Bye-law 328 shall be inapplicable and in such case a member who shall have received a difference on an account or shall have received any consideration in any transaction prior to the date fixed for settling such account or transaction shall in the event of the member from whom he received such difference or consideration being declared a defaulter on or subsequent to such date as the Governing Board may specify in this behalf refund the same to the Defaults Committee for being dealt with by the Defaults Committee in accordance with the relevant Regulations. Notwithstanding anything stated in Bye-law 328, any member who shall have paid or given such difference or consideration to any other member prior to such settlement day shall, in the event of the default of such other member on or subsequent to such date as the Governing Board may specify in this behalf again pay or give the same to the Defaults Committee for being dealt with by the Defaults Committee in accordance with the relevant Regulations. 116 Preferential Difference 329. A member who receives from another member during any Clearing a Claim Note or Credit Note representing a sum other than a difference due to time or due to his constituent which amount is to be received by him on behalf for the account of that constituent for that Clearing shall refund such sum if such other member be declared a defaulter before next clearing or within seven days whichever may be earlier after the Setting Day. Such refund shall be made to the Defaulters' Committee for the benefit and on account of the creditor members and it shall be applied in liquidation of the claims of such creditors members whose claims are admitted in accordance with these Bye-laws and Regulations. 329A: " Notwithstanding anything stated in Bye-law 329, where a member has been declared a defaulter on or subsequent to the date on which the Settlement Guarantee Fund becomes operational, the provisions of Bye-law 329 shall be inapplicable and in such case a member who receives from another member during any clearing, a claim note or credit note representing a sum other than a difference due to him or due to his constituent which amount is to be received by him on behalf and for the account of that constituent for that clearing shall refund such sum if such other member be declared a defaulter within seven days after the setting day. In such a case, such refund shall be made to the Defaults Committee for being applied in accordance with the relevant Regulations. Distribution 330. The Defaulters' Committee shall at the risk and cost of the creditor members pay all assets received in the course of realisation into such bank and/or keep them with the Clearing house in such names as the Governing Board may from time to time direct and shall distribute the same as soon as possible pro rata upto sixteen annas in the rupee but with- out interest among the creditor members whose claims are admitted in accordance with these Bye-laws and Regulations. 330A: "Notwithstanding anything stated in Bye-law 330, where a member has been declared a defaulter on or subsequent to the date on which the Settlement Guarantee Fund becomes operational, the provisions of Bye-law 330 shall be inapplicable and in such case, the Defaults Committee shall at the risk and cost of the creditors of the defaulter pay all assets received in the course of realisation into such bank and/or keep them with the Clearing House in such names as the Defaults Committee may from time to time determine and shall apply the same as soon as possible in accordance with the relevant Regulations. 117 Confirmed or Altered making-up Prices and Fixed Prices. 331. On declaration as a defaulter the Governing Board shall fix if necessary the prices current in the market immediately after the declaration, at which price all Members having contracts open with the defaulter shall be deemed to have closed such contracts, the differences arising from the defaulters transactions being paid to, or claimed from, the Defaulters Committee in accordance with the Bye-laws. Adjustment at Confirmed or Altered Making-up Prices. 332. (a) Members having transactions with the defaulter in the current Clearing in which his default was declared shall adjust their accounts at the confirmed or altered making-up prices. Closing-out, At fixed Prices (b) Members having open transactions with the defaulter in the ensuing Clearing that is in the Clearing following the one in which his default was declared shall be deemed to have closed-out transactions at the fixed prices. Closing-out Open Market (c) Members having open transactions with the defaulter in Non- Cleared Securities shall close-out such transactions in the open market immediately after the declaration of default. Adjustment of Accounts with Defaulter 333. Members having transaction with the defaulter shall adjust their accounts with the defaulter at the confirmed or altered making-up prices, fixed prices and closing-out prices as provided in these Bye-laws and Regulations. The difference arising from such adjustment shall as the case may be either claimed from the defaulter or paid to the Defaulter's Committee for the benefit of members who are creditors of the defaulter. 118 CONFIRMED OR ALTERED MAKING UP PRICES AND HAMMER PRICES: 333A:" Notwithstanding anything stated in Bye-laws 331, 332 and 333, where a member has been declared a defaulter on or such subsequent to the date on which the Settlement Guarantee Fund becomes operational, the provisions of Bye-laws 331, 332 and 333 shall be inapplicable and in such case, closing out, adjustment, settlement or cancellation shall be effected against the defaulter only if required by the relevant Regulations and in such case, the closing out, adjustment, settlement or cancellation shall be effected in accordance with the provisions of the relevant Regulations. The difference, if any, arising from such closing out, adjustment, settlement or cancellation shall as the case may be, either claimed from the defaulter or paid to the Default Committee for being applied in accordance with the relevant Regulations. Claim Against Defaulter 334. Within such time of the declaration of default as the Governing Board or President may direct every member carrying on business on the Exchange shall according as he may be required to do either compare with the Defaulter's Committee his accounts with the defaulter duly adjusted and made up as provided in these Bye-laws and Regulations or furnish a statement of such accounts with the defaulter in such form or forms as the Governing Board may prescribe or render a certificate that he has no such account. Delay in Comparison or Submission of Accounts 335. Any member failing to compare his accounts or send a statement or certificate relating to a defaulter within the time prescribed shall be called upon to compare his accounts to send such statement or certificate within such further time as may be specified. Penalty for Failure to Compare or Submit Account 336. The Governing Board may suspend or expel any member who fails to compare his accounts or submit a statement of his accounts with the defaulter or a certificate that he has no such account within the prescribed time. Misleading Statement 337. The Governing Board may fine, suspend or expel a member if it is satisfied that any comparison statement or certificate relating to a defaulter sent by such member was false or misleading. 119 Accounts of Defaulter's Committee 338. The Defaulter's Committee shall keep a separate account in respect of all moneys, securities and other assets payable to a defaulter which are received by it and shall defray therefrom all costs, charges and expenses incurred in or about the collection of such assets or in or about any proceedings it takes in connection with the default. Report 339. The Defaulters' Committee shall every six months present a report to the Governing Board relating to the affairs of a defaulter and shall show the assets realised, the liabilities discharged and dividends given. Inspection of Accounts 340. All accounts kept by the Defaulters' Committee in accordance with these Bye-laws and Regulations shall be open to inspection by any creditor member. " Provided that no creditor member shall be entitled to inspection of any accounts relating to the Settlement Guarantee Fund ". Scale of Charges 341. The charges to be paid to the Exchange on the assets collected shall be 5 percent, on the first Rs. 5,000 collected or part thereof and 2 per cent, on any sum in excess of Rs. 5,000 or such other as the Governing Board may from time to time prescribe. Application of Assets 342. The Defaulters' Committee shall apply the net assets remaining in its hands after defraying all such costs, charges and expenses as are allowed under these Bye-laws and Regulations in satisfying first the claim of the Securities and Exchange Board of India, the Exchange and the Clearing House and then rateable such admitted claims of members against the defaulter arising out of contracts entered into in the market in accordance with the provisions of the Rules, Bye-laws and Regulations of the Exchange. 120 342A: " Notwithstanding anything stated in Bye-law 342, where a member has been declared a defaulter on or subsequent to the date on which the Settlement Guarantee Fund becomes operational, the provisions of Bye-law 342 shall be inapplicable and in such case, the Defaults Committee shall, after defraying all such costs, charges and expenses as are allowed under these Bye-laws and Regulations, apply the net assets remaining in its hands in accordance with the provisions of the relevant Regulations". Certain Claims Not to be Entertained 343. The Defaulter's Committee shall not entertain any claim against a defaulter : (i) which arises out of a contract in securities dealings in which are not permitted or which are not made subject to the Rules, Bye-laws and Regulations of the Exchange ; (ii) which arises out of a contact in respect of which comparison has not been made in the manner prescribed in these Bye-laws and Regulations or when there has been no comparison if a contract note in respect of such contract has not been rendered as provided in these. Bye-laws and Regulations and receipt thereof obtained either on the duplicate or on the counterpart of such contract note or in a peon book stating the date and the number of contract note rendered ; (iii) which arises from bargains not settled by delivery and payment within the time prescribed by these Bye-laws and Regulations. (iv) which arises from any arrangement for settlement of claims in lieu of bonafide money payment in full on the day when such claims become due ; (v) which arises from any outstanding balance or any outstanding differences upon previous transactions which has not been claimed at the proper time and in the manner prescribed in these Bye-laws and Regulations ; (vi) which is in respect of a loan with or without security ; (vii) which is not field with the Defaulters' Committee within such time of the date of declaration of default as may be prescribed by the Governing Board. 121 Claim Against Defaulting Representative Member 344. The Defaulter's Committee shall entertain the claim of a member against a defaulter in respect of loss incurred by him by reason of the failure of the constituents introduced by such defaulter to fulfil their obligations arising out of transactions in securities dealings in which the permitted on the Exchange and made subject to the Rules, Bye-laws and Regulations of the Exchange provided the defaulter was duly registered as a representative member working with such creditor member. Differences Due 345. Any difference due to or from a defaulter in the current Clearing shall be allowed to be set off against that due in the ensuing Clearing. 345A: " Notwithstanding anything stated in Bye-law 345, where a member has been declared a defaulter on or subsequent to the date on which the Settlement Guarantee Fund becomes operational, the provisions of Bye-law 345 shall be inapplicable and in such case, any difference due to or from a defaulter in the current clearing shall not be set off against that due in the ensuing clearing unless so permitted or directed by the Defaults Committee ". Claims of Defaulters' Committee 346. A claim of one defaulter whose estate is represented by the Defaulters' Committee against another defaulter shall not have any priority over the claims of other creditor members but shall rank with other claims. Assignment of Claims on Defaulters' Estate 347. A member being a creditor of a defaulter shall not sell, assign or pledge is claim on the estate of such defaulter without the consent of the Governing Board. Proceedings in Name of Defaulter 348(i): " Without prejudice to the powers conferred upon the Defaults Committee under the other Articles, Bye-law and Regulations ", Defaults Committee with the consent of the Governing Board shall be entitled to take any proceedings in a Court of Law either in its own name or in the name of the defaulter as it may be advised for recovering any assets or dues of the defaulter. 122 Payment to Defaulters' Committee 349. If any member takes any proceedings in a court of law against a defaulter whether during the period of his default or subsequent to his readmission to enforce any claim against the defaulter's estate arising out of any transaction or dealing in the market made subject to the Rules, Bye-laws and Regulations of the Exchange before he was declared a defaulter and obtains a decree and recovers any sum of money thereon he shall pay such amount or any portion thereof as may be fixed by the Governing members having claims against such defaulter. 349A: " Notwithstanding anything stated in Bye-law 349, where a member has been declared a defaulter on or subsequent to the date on which the Settlement Guarantee Fund becomes operational, the provisions of Bye-law 349 shall be inapplicable and in such case if any member takes any proceedings in a Court of Law against such defaulter whether during the period of his default or subsequent to his readmission to enforce any claim against the defaulters estate arising out of any transaction or dealing made subject to the Rules, Bye-laws and Regulations of the Exchange before he was declared a defaulter and obtains a decree and recovers any sum of money thereon, he shall pay such amount or any portion thereof as may be fixed by the Governing Board to the Defaults Committee for being applied in accordance with the relevant Bye-laws ". General Notice of Dividend 350. A notice of any dividend declared by the Defaulter's Committee shall be posted on the notice board of the Exchange. Payment of Dividend 351. Dividends declared shall be paid to each creditor member either by crediting his account with the Clearing House or in such other manner as the Governing Board or the President directs. Creditor members who do not maintain an account with the Clearing House shall be paid such dividends on applications. 123 Unclaimed Dividend 352. If any dividend which has been declared on claims admitted by the Defaulters' Committee but which the creditor entitled (except) in the case of a creditor who shall have died, has failed or neglected to claim remains with the Defaulter's Committee unclaimed for more than one year or where after paying a final dividend any assets of the defaulter remain unclaimed or undistributed the same shall be dealt with or disposed of by the Governing Board on behalf of the creditors . Deceased Creditors 353. If any member who is a creditor of a defaulter be dead the dividend due to such member shall be paid to his legal representatives or heirs on applications even when the right of nomination has been exercised in respect of such deceased creditor member. But if such deceased creditor be himself a defaulter the dividend due shall be paid to the Defaulters' Committee for the benefit and on account of the creditor members. 353 A: " In the event of a member being declared a defaulter in accordance with the Articles, Bye-laws and Regulations of the Stock Exchange, all amounts due to such member from a non-member under a contract issued by such member shall be payable on the due date to the trustees of the Stock Exchange Customers' Protection Fund on demand in accordance with the rules of the above fund and the trustees of the above fund shall thereafter disburse the same in accordance with those rules ". PROHIBITIONS AND PENALTIES Void Contracts 354. (a) A member shall not enter into the following contracts and any such contracts if entered into in contravention of the provisions in that behalf contained in these Bye-laws and Regulations shall be void ; (i) contracts for the Clearing in other than Cleared Securities; (ii) contracts for the period beyond the current and ensuring Clearings in Cleared Securities ; (iii) contracts for hand delivery for a period beyond fourteen days save as provided in these Bye-laws and Regulations. (vi) contracts for special delivery without the permission of the Governing Board or the President as provided in these Bye-laws and Regulations. 124 (v) contracts (other than specific bargains) for purchase and sale of securities dealings in which are not permitted on the Exchange; and (vi) contracts for the purchase and sale of prospective dividends. Options Illegal (b) A member shall not enter into options in securities and any such contracts if entered into shall be illegal. Penalty of Breach of Bye-laws and Regulations 355. (a) Every member shall be liable to expulsion or suspension or withdrawal of all or any of his membership right and/or to payment of fine and/or to be censured, reprimanded or warned for contravening, disobeying, disregarding or willfully evading any of these Bye-laws and Regulations or any resolutions, orders, notices, directions, decisions or rulings thereunder of the Exchange or the Governing Board or the President or any Committee or any officer of the Exchange or for any disreputable or fraudulent transactions or dealings with any person whether a member or not or for any conduct, proceeding or method of business which the Governing Board in its absolute discretion deems unbecoming a member of the Exchange or inconsistent with just and equitable principles of trade. Penalty for Misconduct, Unbusinesslike Conduct and Unprofessional Conduct (b) In particular and without in any way limiting or prejudicing the generality of the provisions in sub-clause (a) a member shall be liable to expulsion or suspension or withdrawal of all or any of his membership rights and/or to payment of a fine and/or to be censured, reprimanded or warned for any misconduct, unbusinesslike conduct or unprofessional conduct in the sence of the provisions in that behalf contained herein. Misconduct 356. A member shall be deemed quality of misconduct for any of the following or similar acts or omissions namely : (i) if he is convicted of a criminal offence or commits fraud or a fraudulent act which in the opinion of the Governing Board renders him unfit to be a member. Improper Conduct (ii) if in the opinion of the Governing Board he is quality of dishonourable or disgraceful or disorderly or improper conduct on the Exchange or of willfully obstructing the business of the Exchange ; 125 Breach of Rules, Bye-laws and Regulations (iii) if he shields or assists or omits to report any member who he has known to have committed a breach or evasion of any Rule, Bye-law or Regulations of the Exchange or of any resolution, order notice or direction thereunder of the Governing Board or President of or any committee or officer of the Exchange authorised in that behalf ; Failure to comply with Resolutions (iv) if he contravenes or refuses or fails to comply or abide by any resolution, order, notice, direction or ruling of the Governing Board or the President or of any Committee or officer of the Exchange or other person authorised in that behalf under the Rules, Bye-laws and Regulations of the Exchange; Failure to Submit to or Abide by Arbitration (v) if he neglects or fails or refuses to submit to arbitration or to abide by or carry out any award, decision or order of the Governing Board or the Arbitration Committee or the arbitrators made in connection with a reference under the Rules, Bye-laws and Regulations of the Exchange ; Failure to Testify or Give Information (vi) if he neglects or fails or refuses to submit to the Governing Board or to the President, or to a committee or an officer of the Exchange authorised in that behalf, such books, correspondence, documents and papers or any part thereof as may be required to be produced or to appear and testify before or cause any of his partners, attorneys, agents, remisiers, authorised clerks, or employees to appear and testify before the Governing Board or the President or such committee or officer of the Exchange. Failure to Submit Special Returns (vii) if he neglects or fails or refuses to submit to the President within the time notified in that behalf special returns in the form prescribed in the relative Regulations or in such other form as the Governing Board may from time to time prescribe in addition thereto or in modification or substitution thereof together with such other information as the Governing Board or President may require whenever circumstances arise which in the opinion of the Governing Board or the President make it desirable that such special returns of or information should be furnished by any or all the members ; 126 Failure to Compare or Submit Accounts with Defaulter (viii) if he neglects or fails to compare his accounts with the Defaulters' Committee or to submit to it a statement of his accounts with a defaulter or a certificate that he has no such account or if he makes a false or misleading statement therein ; False or Misleading Returns (ix) if he neglects of fails or refuses to submit or makes any false or misleading statement in his Clearing Forms or returns required to be submitted to the Exchange or to the Clearing House under these Bye-laws and Regulations. Vexatious Complaints (x) if he or his agent brings before the Governing Board or the President or a committee or an officer of the Exchange or other person authorised in that behalf a charge, complaint or dispute which in the opinion of the Governing Board is frivolous, vexatious or malicious ; Failure to Pay Dues and Fees (xi) if he fails to pay his subscription, fees, arbitration charges or any other money which may be due him or any fine or penalty imposed on him. Unbusiness Conduct 357. A member shall be deemed guilty of unbusiness conduct for any of the following or similar acts or omissions namely : Fictitious Names (i) if he transacts his own business or the business of his constituent in fictitious names ; Fictitious Dealings (ii) if he makes a fictitious transaction or gives an order for the purchase or sale of securities the execution of which would involve no change of ownership or executes such an order with knowledge of its character ; Prejudicial Business (iii) if he makes or assists in making or with such knowledge is a party to or assists in carrying out any plan or scheme for the making of any purchases or sales or offers of purchase or sale of securities for the purpose of upsetting the equilibrium of the market or bringing about a condition of demoralisation in which prices will not fairly reflect market values ; 127 Rumours (iv) if he directly or indirectly and in any manner whatsoever circulates or cause to be circulated rumours of a sensational character ; Unwarrantable Business (v) if he engages in reckless or unwarrantable or unbusinesslike dealings in the market or effects purchases or sales for his constituent's account or for any account in which he is directly or indirectly interested which purchases or sales are excessive in view of his constituent's or his own means and financial resources or in view of the market for such security. Compromise (vi) if he convives at a private failure of a member or accepts less than a full and bonafide money payment in settlement of a debt due by a member arising out of a transaction in securities. Dishonoured Cheque (vii) if he issues to any other member or to his constituent a cheque which is dishonoured on presentation for want of funds. Failure to Carry out Transactions with Constituents (viii) if he fails in the opinion of the Government Board to carry out his stock-broking transactions with his constituents. Unprofessional Conduct 358. A member shall be deemed guilty of unprofessional conduct for any of the following or similar acts or omissions namely: Street Dealing (i) if he calls out prices or makes bids or offers or trades in the street or at the entrances to or in the vicinity of the Stock Exchange ; Business in Securities in which Dealings Not Permitted (ii) if he enters into bargains in securities in which dealings are not permitted; except in spot delivery; 128 Business for Defaulting Constituent (iii) If he deals or transacts business directly or indirectly or executes an order for a constituent who has within his knowledge failed to carry out his engagements relating to securities and is in default to another member unless such constituent shall have made a satisfactory arrangement with the member who is his creditor; Business for Insolvent (iv) if without first obtaining the consent of the Governing Board he directly or indirectly is interested in or associated in business with or transacts any business with or for any individual who has been bankrupt or insolvent even though such individual shall have obtained his final discharge from an Insolvency Court; Business Without Permission When Under Suspension (v) if without the permission of the Governing Board he does business on his own account or on account of a principal with or through a member during the period he is required by the Governing Board to suspend business on the Exchange; Business for or With Suspended Expelled and Defaulter Members (vi) If without the special permission of the Governing Board he shares brokerage with or carries on business or makes any bargain for or with any member who has been suspended, expelled or declared a defaulter; Business for Partners (vii) If he transacts any business or makes any bargain for and on behalf of a partner of a partnership firm; Business for Employees of Other Members (viii) If he transacts business directly or indirectly for or with or executes an order for a remisier, authorised clerk or employee of another member without the written consent of such employing member; Business for Exchange Employees (ix) if he makes a speculative transaction in which an employee of the Exchange is directly or indirectly interested; 129 Business for or with Non-Member Broker (x) if in the purchase or sale of securities he shares brokerage with or transacts business as principal with or acts as a broker for or enters into any business with a non-member if such non-member be a member of or a partner, agent or employee of a member of any other association dealing in securities within a distance of fifteen miles of the city of Hyderabad or if such non-member within that distance either acts as a broker or passes his own contracts or advertises as broker or dealer in share and security business or issues price lists or circulars respecting such business or permits such advertising or issues or is associated directly or indirectly with any company, association, firm or undertaking which so advertises or makes such issues; Advertisement (xi) if he advertises for business purposes or issues regularly circulars or other business communications to persons other than his own constituents, members of the Exchange, Banks and Joint Stock Companies or publishes pamphlets, circulars or any other literature or report of information relating to the stock markets in the public prints with his name attached; Evasion of Margin Requirements (xii) If he willfully evades or attempt to evade or assist in evading the margin requirements prescribed in these Bye-laws and Regulations relating to charging and sharing of brokerage. Offences by Partners, Agents, and Employees of Members 359. The Governing Board may expel or suspend and/or fine and/or censure and/or warn the partners of a member or his attorney, agent, remisier, authorised clerk or employees for any act or omission which if done or omitted by the member would subject him to the same penalties. Suspension on Failure to Provide Margin Deposit 360. The Governing Board or the President shall require a member to suspend his business when he fails to provide the margin deposits as provided in these Bye-laws and Regulations and the suspension of business shall continue until he furnishes the necessary margin deposit. The Governing Board may expel a member acting in contravention of this provision. Suspension of Business 361. (a) The Governing Board may by a special resolution require a member to suspend his business in part or in whole; 130 Prejudicial Business (i) when in the opinion of the Governing Board he conducts his business in a manner prejudicial to the Exchange by making purchases or sales of securities or offers to purchases or sell securities for the purpose of upsetting the equilibrium of the market or bringing about a condition of demoralisation in which prices will not fairly reflect market values; Unwarrantable Business (ii) when in the opinion of the Governing Board he engages in unwarrantable business or effects purchases or sales for his constituent's account or for any account in which he is directly or indirectly interested which purchases or sales are excessive in view of his constituent's or his own means and financial resources or in view of the market for such security ; or Unsatisfactory Financial Condition (iii) when in the opinion of the Governing Board he is in such financial condition that he cannot be permitted to do business with safety to his creditors or the Exchange. Removal of Suspension (b) The suspension of business under sub-clause (a) shall continue until the member has been allowed by the Governing Board to resume business on his paying such deposit or on his doing such act or providing such thing as the Governing Board may by a special resolution require within the time prescribed by such resolution. Penalty for Contravention (c) A member who is required to suspend his business shall be expelled by the Governing Board if he acts in contravention of this provision. REGULATIONS Amendments to Regulations 362. Any amendments, additions or alterations to any Regulations made by the Governing Board in pursuance of the powers conferred by these Bye-laws together with a reference to the Bye-law or Bye-laws to which such Regulations relate shall be communicated to the SEBI by post within twentyfour hours. The Governing Board shall forthwith amend, alter or withdraw any such Regulation if so desired by the SEBI. Business on Weekly Delivery Basis 363. The business on the Exchange is on weekly delivery basis. If at any time the period is altered by the Governing Board the said altered period shall be substituted in place of seven days in Bye-laws and Regulations. 131 SETTLEMENT GUARANTEE FUND AND DEFAULTS SUBSEQUENT TO COMMENCEMENT OF OPERATION OF SETTLEMENT GUARANTEE FUND. DEFINITIONS: 364 (A) in Bye-laws (364) to (417), unless there is anything repugnant in the subject or context: 364(A)(1) " Associate " of a member shall mean - (i) a designated director of the member in the event of the member being a company or other corporate body, (ii) a lineal ascendant or descendant of the member, or of a designated director referred to in (i) above , (iii) a spouse, daughter-in-law, son-in-law, brother or sister of the member, or of a designated director referred to in (i) above, or a lineal ascendant or descendant of a spouse, dauther-in-law or son-in-law referred to in this clause or a lineal descendant of a brother or sister referred to in this clause. (iv) a Relative of the member, or of a designated director referred to in (i) above, (v) in the case of a member which is a company or other body corporate, a person who has a substantial interest in the member within the meaning of Section 13 of the Income-Tax Act, 1961. 364(A)(2) " Business Day " shall have the same meaning as is assigned thereto in Bye-law 1. 364(A)(3) " Fund " shall mean the Settlement Guarantee Fund. 364(A)(4) " Settlement " shall include all such settlement as may be prescribed by Governing Board from time to time. " Settlement in which a member or a defaulter has been declared a defaulter " shall have the following meaning: " Where a member has been declared a defaulter for non-payment of any amount payable by him into the Clearing House in respect of any settlement period, then the settlement period in respect of the non-payment of which the member is declared a defaulter shall be the " Settlement in which the member or the defaulter is or has been declared a defaulter " and where the member has failed to pay any amount payable by him into the Clearing House in respect of more than one settlement period, then the settlement so specified by the authority who or which has declared him a defaulter. 132 364(B) In the Articles, Bye-laws and Regulations, unless there is anything repugnant in the subject or context " Date on which the Settlement Guarantee Fund becomes operational " means the date specified by the Governing Board as the date on which the Settlement Trade Guarantee Fund shall become operational ". 365 (i) The Exchange shall establish a fund which shall be known as the " Settlement Guarantee Fund ". (ii) Subject to the other provisions of the Articles, Bye-laws and Regulations of the Exchange, the objects of the Fund shall be to guarantee, in accordance with the Articles, Bye-laws and Regulations of the Exchange, the settlement of bonafide transactions of members of the Exchange inter-se which form part of the Exchange's settlement system so as to endeavour to ensure timely completion of settlements in respect of all normal trades excluding all the transactions such as spot trades, odd lots, bad delivery auctions, bad delivery renewals and thereby protect the interests of the investors on the Exchange and the members of the Exchange and thereby also inculcate confidence in the minds of inves- tors regarding the expeditious completion of settlements on the Exchange and support the development of the Stock Market. (iii) The Governing Board shall be entitled to make such Regulations as it thinks fit and proper in connection with the manner, norms and procedures of the Fund and defaults declared subsequent to the commencement of the operation of the Fund. The Regulations made by the Governing Board shall not be inconsistent with any Bye-law. (iv) Without prejudice to the generality of Clause (iii) above, the Governing Board shall be entitled to make Regulations relating to norms, procedures and manner in respect of; a) the management and administration of the fund; b) the structure and composition of the fund; c) the contributions to be made to the Fund by the Exchange, members of the Exchange and others; d) investment of the fund; e) application of the fund; f) meetings of the Defaults Committee; g) Persons who would not be entitled to receive any benefit from the fund; h) minimum value of the fund and maximum limits on disbursements from the fund; i) the rights and powers of the Default Committee; j) the money and property to be paid to or received by the Defaults Committee. k) the application of the money and property paid to or received by the Defaults Committee including the order of priority in which they shall be applied and l) the closing out, adjustment, settlement and/or cancellation of contracts entered into by a member with the defaulter. 133 MANAGEMENT OF THE FUND: 366 (i) Subject to the Articles, Bye-laws and Regulations of the Exchange and any directions and instructions which the Governing Board may from time to time issue, the Defaults Committee shall have complete control over the management and administration of the Fund. In addition to the powers conferred by the other provisions of the Articles, Bye-laws and Regulations of the Exchange, the Defaults Committee shall be vested with all powers, authorities and discretions necessary or expedient for or incidental to the management and administration of the fund or for achieving the object and purpose of the Fund. (ii) Without prejudice to the generality of the foregoing, the Defaults Committee shall have for the purposes of the Fund, the powers to - (a) summon any member, or any directors of members who are corporate bodies to appear before the Defaults Committee and question them. (b) call upon any member or any director of members who are companies or other corporate bodies to furnish to the Defaults Committee such information, documents books of accounts and papers as the Defaults Committee may require and within the period specified by the Defaults Committee. (c) prescribe forms, agreements, affidavits, undertakings and other writings to be signed by member, directors of members who are companies or other corporate bodies or by other persons and specify the period within which the same should be signed and submitted. (d) invest or otherwise deal with the money of the Fund. (e) realise or otherwise deal with any security or other property recovered by or offered to the Fund. (f) borrow money without security or against the security of the Fund or any property of or available to or accessible by the Fund or otherwise. (g) enter into financial arrangements with banks, institutions, companies and other persons. (h) issue guarantees and indemnities. 134 (i) delegate any of the powers and functions of the Defaults Committee to one or more sub-committees comprising of one or more members of the Defaults Committee and/or delegate any of the administrative powers and functions of the Defaults Committee to one or more employees of the Exchange, subject to such terms and conditions as the Defaults Committee may think fit to impose, and subject to overall ratification by the Defaults Committee. (j) do all such acts as the Defaults Committee considers necessary to protect or advance the interests of the Fund or to achieve the purposes and objects of the Fund. (k) institute and conduct legal proceedings to recover assets of a defaulter or a member. ACCOUNTS AND AUDIT OF THE FUND: 367 Unless the Governing Board otherwise directs, the accounts of the Fund shall be prepared and maintained as a part of the accounts of the Exchange and shall be audited as a part of the accounts of the Exchange. DOCUMENTS TO BE EXECUTED BY THE MEMBER: 368 (i) Within such period as may be specified by the Defaults Committee (as may be extended by the Defaults Committee from time to time), every member shall sign and deliver to the Defaults Committee agreements and other writings in such form as may be prescribed by the Defaults Committee from time to time with the prior approval of the Governing Board. (ii) In the event of any change in the form of any agreements or writings (which change shall be made by the Defaults Committee with the prior approval of the Governing Board), the Defaults Committee may require every member to sign and deliver to the Defaults Committee supplemental agreements or writings or fresh agreements or writings within such period as may be specified by the Defaults Committee (as may be extended by the Defaults Committee from time to time). COMPOSITION OF THE FUND: 369 (a) The Fund shall consist of - (i) non-refundable contributions from members of the Exchange as hereinafter provided; (ii) contributions from the Exchange as hereinafter provided; 135 (iii) interest, dividend or other income arising from investments of the Fund; (iv) accretions arising from investments of the Fund; (v) any money or property which the Defaults Committee is entitled to appropriate to the Fund and (vi) any other money or property forming part of the Fund. (b) unless otherwise provided by the Articles, Bye-laws and Regulations of the Exchange, the Defaults Committee and the Fund shall also have access to - (i) refundable contributions from members of the Exchange as hereinafter provided; (ii) money and assets given to the Fund as security and money arising from realisation thereof; (iii) money or property received or recovered by the Defaults Committee or the Exchange from any member, guarantor or other person liable to pay money to the Exchange, the Fund or the Defaults Committee in connection with or pursuant to a default; (iv) any money available to the Fund upon invocation of a guarantee and (v) any other money or property available to the Fund. EXCHANGE'S CONTRIBUTION TO THE FUND: EXCHANGE'S INITIAL CONTRIBUTION: 370 The Exchange shall contribute to the Fund a sum of rupees one crore as initial contribution. The Exchange shall also contribute Rs. 50 Lakhs per annum for the two financial years, 1999-2000 & 2000-2001. EXCHANGE'S OTHER CONTRIBUTION: 371 The Exchange may, from time to time, contribute such further amounts to the Fund as the Governing Board may in its absolute discretion determine. MEMBERS' CONTRIBUTION TO THE FUND: MEMBERS' BASE CAPITAL CONTRIBUTIONS: 372.All the trading members have to maintain the base minimum capital as security deposit and in addition, have to pay Rs. 10,000/- as base capital (non-refundable contribution) towards Settlement Guarantee Fund. 136 MEMBERS CONTINUOUS CONTRIBUTIONS: 373 The members continuous contribution as determined by the Governing Board may be a lump sum or such other sum or determined on the basis of the turnover of the member or otherwise as may be decided by the Governing Board. A member's continuous contribution shall be non-refundable and ______________ may be collected through bills raised by the Clearing House and/or by debiting the members's settlement account. A member shall not be allowed to recover the same from his constituents. EXPLANATION: For the purpose of this clause " turnover " as regards any member shall mean (i) the aggregate value at the transaction price of all sale and purchase transactions entered into by the member during a settlement in respect of that transactions were entered into by the member through the Exchange's computerised trading system or (ii) shall have such other meaning as the Governing Board may from time to time determine. MEMBERS' ADDITIONAL CONTRIBUTIONS: 374 Each member shall provide to the Fund such additional contributions as the Governing Board may from time to time determine (hereinafter referred to as " members' additional contribution '). A member's additional contribution may be in such form as the Governing Board may determine (which may include cash, securities, bank guarantees or fixed deposit receipts). The members' additional contributions may be refundable or non-refundable contributions as may be specified by the Governing Board and shall be in such form as the Governing Board may specify. Unless the Governing Board otherwise specifies, the Fund shall be entitled to receive all dividend, interest, rights entitlements, rights shares, bonus shares and other income and accretions in respect of the members' non-refundable additional contributions. The Governing Board may specify the manner in which the members' additional contributions shall be utilised. GENERAL AND SPECIFIC ACCESS TO CONTRIBUTIONS: 375 (i) Upon any member being declared a defaulter, all non-refundable contributions and base capital contribution of every member shall be available to the Defaults Committee and the Fund for application in accordance with the Articles, Bye-laws and Regulations of the Exchange (hereinafter referred to as" General Access Funds "). 137 (ii) If the additional capital (as required by the Exchange or the Securities & Exchange Board of India) or any bank guarantee furnished at the instance of a member is treated as his contribution to the Fund pursuant to Bye-law 374 or otherwise, the Defaults Committee or the Fund shall have access to the same only in the event of default of the concerned member and not in case of default of any other member and only for paying the creditors of that member and not for paying the creditors of any other member (hereinafter referred to as " Specific Access Funds "). (iii) Subject to the provisions of clauses (i) and (ii) of this Bye-law, the Governing Board shall determine whether any member's additional contributions or General Access Funds or Specific Access Funds. LIABILITY OF MEMBER UNAFFECTED BY CESSATION OF MEMBERSHIP: 376 An unsatisfied obligation of a member to the Fund shall not be discharged or otherwise prejudicially affected by the cessation of his membership. ACTION FOR FAILURE TO PAY TO FUND: 377 The Governing Board may take such action as it thinks fit and proper against a member who fails to pay any amount to the Trade Guarantee Fund including action by way of suspension of the business or membership of the member, fine, declaring him as a defaulter and/or expulsion from the membership of the Exchange. REPLACEMENT OF REFUNDABLE CONTRIBUTION: 378 Unless otherwise provided by the Articles, Bye-laws and Regulations of the Exchange, the Defaults Committee may permit a member to withdraw a refundable contribution after he has furnished to the Fund other refundable contribution of the same or greater value and of a nature acceptable to the Default Committee. NON REFUNDABLE CONTRIBUTION: 379. A Member shall not be entitled to receive back any non-refundable contribution on cessation of membership or for any other reason whatsoever. 138 REFUND OF REFUNDABLE CONTRIBUTION: 380. The Defaults Committee may refund a member's refundable, contribution to him upon his ceasing to be a member provided he satisfies all the conditions which the Governing Board or the Defaults Committee may from time to time impose and provided further that each of the following conditions at clauses (i) to (v) are satisfied or conditions of Clause vi are satisfied. (i) All obligations and transactions of the member which are outstanding at the time of his ceasing to be a member and which could result in the Fund being required to pay any amount shall have been closed and finally settled. (ii) All obligations of the member to the Exchange and the Clearing House shall have been satisfied in full. (iii) All non disputed amount payable by the member in respect of transactions in securities made subject to the Articles, Bye-laws and Regulations of the Exchange shall have been satisfied in full. (iv) All amounts disputed by the member as payable by him in respect of transactions in securities made subject to the Articles, Bye-Laws and regulations of the Exchange shall have been satisfied in full or shall have been secured by the member to satisfaction of the Governing Board or the Defaults Committee. (v) A suitable amount as may be determined by the Governing Board or the Defaults Committee at its discretion shall have been set aside for providing for. (a) any payment which may arise from any bad-delivery or document defects that may be reported in future, and (b) such other obligations as may be perceived by the Governing Board or the Defaults Committee to arise in future. (vi) In case of transfer of membership, the incoming member of the Exchange shall have (a) agreed to take over and discharge all the obligations, and all amounts payable by, the member as are referred to in clauses (i) to (v) above. (b) satisfied the Defaults Committee that the other member has adequate funds to discharge such obligations and pay such amounts and (c) executed such documents and writing as may be required by Governing Board. 139 DISCHARGE OF MEMBER'S OBLIGATIONS: 381.In the event of a member ceasing to be a member of the Exchange otherwise than by being declared a defaulter, the Governing Board or the Defaults Committee may retain and/or apply any unutilised refundable contribution of the member towards discharging any of his obligations specified in Bye-Law 380 or paying any of the amounts payable by him as specified in Bye-Law (380 in such manner and in such order or priority as the Governing Board or the Defaults Committee thinks fit. NON-REFUND OF REFUNDABLE CONTRIBUTIONS: 382. A member shall not be entitled to receive back any refundable contribution in the event of the member being declared as a defaulter and after it has been applied for the purposes of the Fund. LIMIT ON REFUND OF REFUNDABLE CONTRIBUTIONS: 383.The amount of a refundable contribution refunded to a member shall not exceed the actual refundable contribution available to the credit of such member after deducting therefrom all sums which may be deducted or retained therefrom. CONTRIBUTION PART OF THE FUND: 384 (i) A non-refundable contribution by a member to the Fund shall form part of the fund and the member shall not be entitled to any rights whatsoever over the contribution in any manner. (ii) A Member shall not be entitled to transfer, assign or otherwise deal with a refundable or non-refundable contribution made by him in any manner and the contribution shall not be liable to be attached or otherwise prejudicially affected by any attachment, injunction or other order at the instance of the member or in respect of any obligation of the member or otherwise. MINIMUM VALUE OF THE FUND: 385(a)The Governing Board shall endeavour to ensure that the value of the Fund at any point of time is not less than - (i) the Exchange's Initial Contribution or 75% of the closing value of the Fund as on the immediately preceding 31st March, whichever is higher, or 140 (ii) such other amount, not being less than Two Crores as the Governing Board may from time to time specify (b) The value of the Fund shall include the value of all money, assets and property mentioned in Clauses (a) and (b) of Bye-law (369) but shall not include any specific Access Funds. (c) The operation of the Fund shall not be suspended by reason of the value of the Fund becoming less than the minimum value under this Bye-Law. (d) "If the value of the Fund decreases to less than Rs. 10,00,000/- (Rupees Ten Lakhs only) then (A) the Exchange shall, within three Business Days, place a notice on the Exchange's notice board notifying the members of the Exchange of the same and (B) the Securities and Exchange Board of India may suspend any benefit for which Securities and Exchange Board of India has prescribed the introduction of the Trade Guarantee Fund as a pre-condition. FURTHER CONTRIBUTIONS TO THE FUND: 386. (i) In the event of the value of the Fund becoming less than the minimum value under Bye-Law (385 (a)), the Governing Board will forthwith, and in any event within two weeks of the Fund becoming less than such minimum value, take such steps as it thinks fit to ensure that the value of the Fund is increased to a value which is not less than the minimum value by way of (a) Contributions from the Exchange (b) Contributions from all the Members, equitably or otherwise and/or (c) in such other manner as the Governing Board may decide from time to time (ii) The provisions of clause (i) of this Bye-Law shall not prejudice the Governing Board's right to call from time to time for additional contributions from the members when the value of the Fund is above the minimum value. (iii) "The operation of the Fund shall not be suspended by reason of the Fund becoming less than the minimum value under Bye-Law 385". 141 INVESTMENT OF THE FUND: 387 (a) Subject to the instructions and directions of the Governing Board, the Defaults Committee may:- (i) open, maintain, operate and close one or more bank accounts and (ii) invest the money of the Fund in such investments as are permissible for investing the funds and money of the Exchange and sell, transfer, vary transpose and otherwise deal with such investments. (b) All investments of the Fund may be held in the name(s) of, and all bank accounts of the Fund may be held in the name(s) of and operated by, the Exchange, any two or more of the Trustees of the Exchange, any two or more of the members of the Defaulters' Committee or any two or more of the members of any sub-committee appointed by the Defaulters' Committee, as the Defaulters' Committe may determine. (c) The Defaulters' Committee shall be entitled to utilise the money of the Fund only for the purposes of the Fund. (d) The Fund shall be maintained in a separate account and should not be mixed up with the other funds of the Exchange. LOSSES TO THE FUND INVESTMENTS: 388.Any loss or diminution in value of the investments of the Fund whatever cause arising, not being due to the willful default or fraud of any member(s) of the Defaults Committee, any member(s) or any sub-committee or any Trustee(s) shall be borne by the Fund and the members of the Defaults Committee or the sub-committee or the Trustee(s) shall incur no responsibility or liability by reason of or on account thereof. In case of any such loss or diminution by reason of willful default or fraud by any member or members of the Defaults Committee or any member(s) of any sub-committee or any Trustee(s), the persons committing the willful default or fraud shall be personally liable for the loss or diminution and other persons who are not parties to the willful default or fraud shall not be liable for the loss or diminution. INTIMATION OF MEMBER'S APPREHENDED FAILURE: 389.A member who has reason to apprehend that he may commit any of the acts or omissions referred to in Bye-Law 316 shall immediately notify to the Defaults Committee. (i) the details of such acts or omissions; 142 (ii) the details and value of all his commitments, obligations and liabilities to other members arising out of contracts or transactions made subject to the Articles, Bye-law and Regulations of the Exchange. (iii) the extent to which he will be able to discharge and meet such commitments and obligations out of his own funds and/ or out of funds obtained by him from others and (iv) all the facts and circumstances which have caused or contributed to the apprehended failure to meet such commitments and obligations. MEMBER'S FAILURE TO PAY AMOUNT INTO THE CLEARING HOUSE: 390 (i) If a Member fails to pay any amount payable by him into the Clearing House in respect of any transaction entered into by him then, within 24 hours of such failure the member or the Clearing House shall inform the President or the Executive Director in writing of such failure and of the extent of the unfulfilled obligations and commitments of the member. (ii) On receipt of any of the above mentioned intimations from the Clearing House or the member, the President or the Executive Director shall forthwith, by not less than two hours, written or oral notice, summon the member to appear before the Governing Board or the President or in the absence of the President before any two members of the Governing Board. (iii)If the member fails to pay, before the pay-out of the relevant Settlement, any amount payable by him into the Clearing House in respect of that Settlement then the Governing Board the President or the Executive Director or in the absence of the President any two members of the Governing Board shall declare the member as a defaulter before the pay-out is made for the Settlement. PAYMENT UNDER SETTLEMENT GUARANTEE: 391.Upon a member being declared a defaulter, if the settlement in which the defaulter has been declared a defaulter has not been completed by reason of the default by the defaulter, the Defaults Committee shall; (i) pay into the Clearing House before the pay-out of the relevant settlement the unpaid settlement dues payable by the defaulter into the Clearing House and 143 (ii)within 2 weeks days from the date of Pay-out deliver the securities to be delivered by the defaulter, in respect of the settlement in which the defaulter has been declared a defaulter. 392. Notwithstanding anything stated in Bye-Law 391; (i) Under Bye-Law 391 the Defaults Committee shall pay only such amounts as are payable by the defaulter into the Clearing House in respect of sale and purchase transactions entered into by the defaulter in respect of the settlement which he has been declared a defaulter. (ii)in case of the defaulter having failed to deliver any security into the Clearing House in respect of the settlement in which he has been declared a defaulter, the Defaults Committee may deliver the security into the Clearing House or directly to the concerned member, within 2 weeks, by acquiring the same from the market or otherwise, failing which the provisions of closing out of contracts will apply. 393 (i) Notwithstanding anything stated elsewhere in the Articles, Bye-Laws and Regulations, if the Defaults Committee has reason to believe that any transaction - (a) is not bonafide, (b) is disallowed under any Bye-Law relating to the default of a member and in particular, under Bye-Law 343; or (c) is connected with payment or repayment of a deposit or loan then; (I) if the amount involved in Pay out or the transaction value or the market value of the concerned transaction/s referred to above is Rs. 5,00,000/- (Rupees Five Lakhs) or more the Defaults Committee, shall record the reasons for its belief, and shall not make payment or deliver securities out of the Fund in respect of any transactions which is of a nature referred to in sub-clause (a), (b) or (c) of Clause (i) of the Bye-Law (in this Bye-Law referred to as "disallowed transactions")unless and until the Defaults' Committee has finally determined that the transaction is not a disallowed transaction but shall make payment and deliver securities in respect of other transactions in accordance with Bye-Law 391 and other applicable Articles, Bye-laws and Regulations. If for any reason any payment is made or securities are delivered in respect of any such transactions, the concerned receiving member shall repay such amount or re-deliver such securities to the Defaults Committee within 48 hours of being required to do so and in accordance with the provisions of Bye-Law 397. 144 (II) If the amount involved in Pay Out or the transaction value or the market value of the concerned transaction of each member is less than Rs. 5,00,000/- (Rupees Five Lakhs) then the Defaults Committee shall make payment out of the Fund in respect of such transaction and, if the Defaults Committee finally determines that the transaction is a disallowed transaction then the concerned receiving member shall repay such amount or re-deliver such securities to the Defaults Committee within 48 hours of being required to do so in accordance with the provisions of Bye-Law 397. (ii) For the purpose of Clause (i) of this Bye-Law the Defaults Committee shall be entitled to aggregate the values and amounts of all transactions of each member, of the nature referred to in this Bye-Law. (iii)If the Defaults Committee has withheld or received back payment of any amount or any securities under sub-clause (I) if clause (i) of this Bye-law the Defaults Committee shall afford an opportunity to the concerned member(s) to be heard by giving him/them not less than 24 hours' written notice before finally determining whether the transaction is a disallowed transaction. (iv) For the purpose of sub-clause (II) of clause (i) of this Bye-law, the Defaults Committee shall afford an opportunity to the concerned member(s) to be heard by giving him/them not less than 24 hours' written notice before finally determining whether the transaction is a disallowed transaction. (v) For the purpose of determining whether or not a transaction is a disallowed transaction, the Defaults Committee shall be entitled to consider, inter alia, the surrounding circumstances, the usual course of dealings on the Exchange, the relationship between the defaulter and the claimant, the quantity and price of the securities involved in the transaction, other trades in the same scrip and such other matters as the Defaults Committee thinks fit. (vi) The Defaults Committee shall determine whether or not a transaction is a disallowed transaction within one month from the date of the relevant Pay-out. 145 (vii)A member whose transaction has been finally determined by the Defaults Committee to be a transaction of the nature referred to in clause (i) of this Bye-law may file an appeal to the Governing Board against the decision of the Defaults Committee within seventy two hours of the Defaults Committee's decision and the reasons therefor being communicated to him or such other extended period (not exceeding 15 days of the Defaults Committee's decision and the reasons therefor being communicated to him) as the Governing Board permits. Provided that if the concerned member has received payment or securities for the disallowed transactions then he shall not be entitled to file an appeal unless he has re-deposited the payment or securities received by him, in respect of the disallowed transaction, with the Defaults' Committee. OUTSTANDING CONTRACTS IN OTHER SETTLEMENTS: 394. In respect of any settlement or settlements which is or incomplete at the time when a member is declared a defaulter, the Defaults Committee may at the risk and cost of the defaulter, square up all or any of the defaulters outstanding sales and purchase positions by entering into corresponding purchase and sale contracts in the market. The profit or loss on such squaring up shall, in the first place, be paid to or by the Fund and credited or debited by the Fund to the defaulter's account with the Fund. 395. Upon a member being declared a defaulter, in addition to the provisions of Bye-Law, 390, the provisions of Bye-Law 391, 392, 393 and other applicable Bye-Laws shall apply Mutates Mutandis to any settlement or settlements other than the settlement in which the defaulter has been declared a defaulter unless the Governing Board, for reasons to be recorded, passes a resolution determining otherwise, in which case no payment shall be made from the Fund in respect of such settlement or settlements (other than the settlement in which the defaulter has been declared a defaulter) as the Governing Board may specify. 146 SHORTFALL IN THE FUND: 396. IN the event of the Fund being insufficient to make full payment of the payments to be made from the Fund under Bye-Law 391 and in such case the contracts of members with the defaulter in the settlement in which he has been declared a defaulter and in subsequent settlements shall be closed out, adjusted, settle and/or cancelled in accordance with the provisions of Bye-Law (417), and the Defaults Committee shall pay the amounts payable to the members by the Defaulter on such closing out, adjustment, settlement and/or cancellation on a pro-rata basis to the extent possible out of the Fund, and the balance unfulfilled obligations remaining after such application of funds may be assessed against the members in such manner as the Governing Board may from time to time, in its absolute discretion thinks fit and equitable. REPAYMENT OF PAYEE DISENTITLED TO RECEIVE: 397. If the Defaults Committee or the Clearing House has paid any sum under these Bye-laws and it is subsequently found that the payee was for any reason not entitled to receive such amount then the payee shall forthwith repay the same to the Defaults Committee or the Clearing House, as the case may be, together with interest thereon at the rate of 2% per month (or such other rate as the Defaults Committee may specify) for the period commencing on the date on which the payment was received by the payee and ending on the date on which such amount is repaid by the payee. MONEY AND PROPERTY OF THE DEFAULTER: 398. All money (including margin money and Additional Capital), securities and other property whatsoever of the defaulter with the Exchange or the Clearing House (save and except those which may be at any time excluded by the Governing Board from the provisions of this Bye-law) and all securities and money delivered or paid by the members into the Clearing House or to the Exchange to the Credit of the defaulter shall be handed over to the Defaults Committee or held by the Exchange or the Clearing House subject to these Bye-laws and the directions of the Defaults Committee. 147 UTILISATION OF MONEY AND PROPERTY FOR PAYMENT AND ORDER OF PRIORITY: 399. For the purpose of making any payment referred to in Bye-laws (391) (394) and (395), the Defaults Committee shall be entitled to utilise such of the money of the Fund and/or other money and assets available to the Defaults' Committee as the Defaults Committee thinks fit and, so far as may be possible, convenient and expedient the Defaults Committee shall utilise the money of the Fund and/or other money and assets available to the Defaults Committee in the following order of priority: (i) Firstly, the money, property and securities referred to in Bye-law (398) and/or the proceeds from the realisation of such property and securities, and (ii) In the event of further funds being required, any security and/or the proceeds of the realisation of any security which may have been created by the Defaulter in favour of the Defaults Committee or the Exchange; and (iii) In the event of further funds being required, the refundable contribution of the defaulter and any Specific Access Funds available upon default of the defaulter; and (iv) In the event of further funds being required, the proceeds of sale of Membership card of the defaulted member. (v) In the event of further funds being required, any other assets and/or the proceeds of the realisation of any assets of the defaulter available to the Defaults Committee; and (vi) In the event of further funds being required, the accumulated interest, accretions and other earnings of the Funds, and 148 (vii) In the event of further funds being required, the corpus of the Fund; and (viii) In the event of further funds being required, the refundable contributions of the other members to the extent the same are available for such application. REPAYMENT AND PAYMENT OF INTEREST BY DEFAULTER: 400.If on account of the default of a member any amount is paid by the Defaults Committee out of the money or property referred to at clauses (vi) to (vii) of Bye-law (399) then the defaulter shall be liable to forthwith repay the same to the Exchange or to the Defaults Committee to the credit of the Fund together with interest on such amount at the rate of 2% per month (or such other rate as the Governing Board may determine) for the period commencing on the date of payment by the Defaults Committee and ending on the date of repayment; and, for the purposes of the Articles, Bye-laws and Regulations of the Exchange, such interest shall be deemed to be an amount paid out of/due to the Fund. APPLICATION OF DEFAULTER'S ASSETS AND OTHER AMOUNTS: 401. Subject to the provisions of Bye-Law (399), the Defaults Committee shall realise and apply all the money, rights and assets of the defaulter which have vested in or which have been received by the Defaults Committee/Governing Board and all other assets and money of the defaulter in the Exchange including proceeds from sale of membership card in the market including the money and security receivable by him from any other member, money and securities of the defaulter lying with the Clearing House or the Exchange, credit balances lying in the Clearing House, security deposits, any bank guarantee furnished on behalf of the defaulter, fixed deposit receipts discharged or assigned to or in favour of the Exchange, Base/Additional Capital deposited with the Exchange by the defaulter, any security created or agreed to be created by the defaulter or any other person in favour of the Exchange or the Defaults Committee for the obligations of the defaulter to the following purposes and in the following order of priority, viz., (i) Firstly to make any payments required to be made under Bye-Law (391), (394) and (395), (ii) Secondly, the payment of such subscription, debts, fines, fees charges and other money as shall have been determined by the Defaults Committee to be due to the Securities and Exchange Board of India , to the Exchange or to the Clearing House by the defaulter; 149 (iii) Thirdly, the rectification or replacement of or compensation for any bad deliveries made by or on behalf of the defaulter to any other member in the settlement in which the defaulter has been declared a defaulter or in any prior or subsequent settlement (unless the Governing Board has otherwise determined in respect of such settlement or settlements under Bye-law 394 & 395 provided the conditions of Bye-Law 153 and all other applicable Rules, Bye-laws and Regulations and instructions of the Governing Board are complied with; (iv) Fourthly - the balance, if any, shall be paid into the Fund to the extent of the money paid out of the Fund (other than payments made out of the Members' refundable contributions) and not recovered by the Fund and the interest payable by the defaulter to the Fund in respect thereof, (v) Fifthly - the balance, if any, shall be paid into the Fund to the extent of the money paid out of the Fund out of the refundable contributions of members (other than the refundable contribution of the defaulter) and not recovered by the Fund and the interest payable by the defaulter to the Fund in respect thereof. (vi) Sixthly - subject to the Articles, Bye-laws and Regulation of the Exchange, including in particular Bye-Law 343, the balance, if any, shall be applied by the Defaults Committee for the payment of such unpaid outstanding, debts, liabilities, obligations and claims to or of members of the Exchange arising out of any contracts made by the defaulter with such members subject to the Rules, Bye-laws and Regulations of the Exchange as shall have been admitted by the Defaults Committee provided that if the amount available be in sufficient to pay and satisfy all such debts, obligations and claims in full they shall be paid and satisfied pro-rata; (vii) Seventhly - subject to the Articles, Bye-laws and Regulation of the Exchange, including in particular Bye-law 343, the balance, if any, shall be applied by the Defaults Committee for the payment of such unpaid outstandings, debts, liabilities, obligations and claims to or of defaulters constituents arising out of any contracts made by such defaulter subject to the Rules, Bye-laws and Regulations of the Exchange as shall have been admitted by the Governing Board, provided that if the amount available be insufficient to pay and satisfy all such debts, liabilities, obligations and claims in full they shall be paid and satisfied pro-rata; 150 (viii) Eighthly - the balance, if any, shall be paid into the Exchange's Customers' Protection Fund to the extent of any and all amounts paid out of the Customers' Protection Fund towards the obligations or liabilities of the defaulter and interest thereon at the rate of 2% per month (or such other rate as the Governing Board may specify) from the date of payment out of the Customers' Protection Fund to the date of repayment to the Fund and (ix) Ninthly - the surplus, if any, shall be paid to the defaulter. CHARGE ON DEFAULTER'S ASSETS: 402.Upon payment of any money by the Defaults Committee out of the money or property referred to at clauses (vi) to (viii) of Bye-law (399) the Exchange and the Defaults Committee shall each have a first charge on all assets and property of the defaulter wheresoever situated and of whatsoever nature as security for the repayment of such money and the payment of interest thereon subject only to any and all charges, mortgages and other encumbrances created thereon by the defaulter bonafide for valuable consideration prior to the day such payment was made by the Defaults Committee. PROCEEDINGS BY DEFAULTS COMMITTEE AND THE EXCHANGE: 403. For the purpose of recovering any amount payable by the defaulter to the Exchange, the Defaults Committee, the Customers' Protection Fund, the Exchange and/or the Executive Director shall be entitled to take such steps and proceedings (including but not limited to sale of any property or a portion thereof) as the Exchange and/or the Defaults Committee may think fit against the defaulter, the defaulter's property and any person by whom any amount is payable to the defaulter. BORROWINGS: 404.For the purpose of making any payments referred to at Bye-law 391 and/or Bye-law 394 & 395 the Defaults Committee may borrow money without security and/or against the security of any property of the Fund and/or any property offered to it as security by the defaulter or any member; 151 EXPENSES OF THE FUND: 405.The members of the Defaults Committee shall not be entitled to any remuneration but shall be entitled to charges to the Fund all expenses of creation, administration and management of the fund including fees of auditors, lawyers, legal advisors, chartered accountants, valuers and other professional advisers and salaries wages and all related costs, charges and expenses in connection with the creation, administration or management of the Fund and the exercise of the powers of the Fund. PROTECTION FOR ACTS DONE IN GOOD FAITH AND INDEMNITY: 406.Save and except in the case of willful default and fraud, the Defaults Committee, any sub-committee or a member of the Defaults Committee or any sub-committee shall not be liable for any acts or omissions on its or his part in the exercise of its or his duties and functions. 407.Without prejudice to the above, the Fund shall bear all costs, charges and expenses for all suits, actions, proceedings and claims filed or made against the Defaults Committee or any member of the Defaults Committee except those arising out of their willful default or fraud and the members of the Defaults Committee shall be indemnified by the Fund from and against all actions, proceedings, losses, damage, claims, liabilities, costs, charges and expenses in connection with the Fund or the creation, management and administration thereof or any dealings therewith except those arising by reason of their willful default or fraud. LIMITED PAYMENT FROM THE FUND: 408.The payment from the Fund shall be limited to the extent of the money and assets in or available to the Fund; and in the event of any shortfall, the Exchange, and/or the Defaults Committee shall not be liable. MEETINGS OF THE DEFAULTS COMMITTEE: 409.The Defaults Committee shall meet atleast once in three months during every calendar year and not more than three months shall elapse between any two meetings. 152 MEETINGS OF THE DEFAULTS COMMITTEE: 410.A Defaults Committee meeting may be convened by giving not less than forty eight hours' written notice of the same to the members of the Defaults Committee. Provided however that in case of urgency a Defaults Committee meeting may be convened by giving not less than one hour's oral or written notice of the same to such of the members of the Defaults Committee and the decision of the Chairman of the Defaults Committee as to whether a case of urgency exists and as to whether proper notice has been given shall be final and conclusive. A meeting of the Defaults Committee may be held on working days, holidays, within business hours as also outside business hours. CONFIDENTIALITY: 411.All minutes and proceedings of and all information obtained by the Exchange, the President, the Executive Director, the Governing Board and the Defaults Committee shall be deemed confidential. MINUTES: 412.Minutes of the proceedings of the Defaults Committee shall be maintained under the authority of the Secretary of the Defaults Committee. Such minutes shall be deemed to be confidential. CORRESPONDENCE: 413.The Defaults Committee shall not be obliged to recognise or act upon any communication unless it is in writing, discloses the identity and address of the person addressing the communication and is signed by the person addressing the communication. ARBITRATION: 414.Any claim, dispute or difference between the Exchange or the Defaults Committee and a member or a defaulter in connection with any amount payable or alleged by the Exchange or the Defaults Committee as being payable by the member or the defaulter to the Exchange, the Defaults Committee or the Trade Guarantee Fund shall be referred to the arbitration of the Executive Director of the Exchange or to the arbitration of such person as the Executive Director may nominate in this behalf. 153 DATE ON WHICH THE FUND BECOMES OPERATIONAL: 415. (1) Upon the Governing Board being satisfied that the value of the Fund is sufficient for the Fund to become operational (which value shall not be less than the value mentioned in Bye-law 385 (a)(ii), the Governing Board shall specify a date as the date on which the Fund become operational, (2) The provisions of Bye-law 391 to 402 and 404 shall come into force only on and from the date on which the Fund become operational and shall apply only to defaults declared after such date. 416.Notwithstanding anything stated elsewhere in the Articles, Bye-laws and Regulations the Defaults Committee shall not be liable to pay any of the following amounts from the Fund. (a) any amount payable by the defaulter to the Clearing House on account of costs, charges, expenses, fines or penalties; (b) any amount payable by the defaulter to any constituent on any account whatsoever; (c) any amount payable by the defaulter in respect of a transaction which is not part of the Exchange's settlement procedure'; (d) any amount payable by the defaulter in respect of any transaction which would have been settled otherwise than through the Clearing House (if such default had not occurred); (e) any amount payable by the defaulter in respect of any transaction which is not entered into through the Exchange's computerised trading system; (f) any amount payable in respect of spot trades. (g) any amount payable in respect of bad delivery renewals or bad delivery auctions. 154 APPLICABILITY OF HAMMER PRICE PROVISIONS: 417.Notwithstanding anything stated elsewhere in these Articles, Bye-Laws and Regulations, when a member is declared a defaulter, in the following circumstances the sale and purchase contracts entered into by the defaulter with other members in the settlement in which the defaulter was declared a defaulter and in any other settlements which are open or incomplete at the time of declaration of default shall be adjusted, closed out settled in accordance with the provisions of the Articles, Bye-laws and Regulations relating to hammer prices and closing out and adjustment of open transaction with a defaulter; (i) Where a member is declared a defaulter prior to the date on which the Fund becomes operational, (ii)When the payment is not made from the Fund by reason of the Fund being insufficient to make full payment as envisaged under Bye-Law 396, (iii) to contracts entered into in such settlements as the Governing Board has, pursuant to the provisions of Bye-law 395, passed a resolution determining that the provisions of Bye-law 394 and/or the provisions of Bye-law 391 and/or Bye-law 392 shall not apply. (iv) to contracts to which the Defaults Committee is precluded from or is not obliged to apply the Fund under Bye-law (392) or any other Article, Bye-law or Regulation. 155