payment by cheque a valid discharge of obligation or not?
Rajalaxmi Dei
(Querist) 18 July 2008
This query is : Resolved
I trade in the stock market through a broker. The broker has allowed me margin trading facility aginst my existing shares. I bought some future contracts in January 2008. As the market moved against me I kept on meeting the Marked to Market(MTM) losses by selling some shares from my portfolio. On 21/22.01.2008 there was sharp fall in the stock market. Hence, instead of selling shares from my portfolio, I paid the MTM losses by way of cheque to my broker 22.01.2008 morning. But the broker squared off my future positions at heavy loss to me; and to adjust this loss he sold off all the shares in my portfolio thereby causing me a loss of about Rs.8-10 lacs.
The point is whether the broker has the right to square off my positions without my knowledge when I have already paid my dues (by cheque). I consider this unethical/unlawful and lodged my protest with all concerned ( SEBI, NSE, Broker). NSE have not found anything wrong in the action of the broker and have advised me to go for Arbitration if I am not satisfied with their findings.
I seek advice from any/all learned friends on my future course of action.
R.S.Rajesh
(Expert) 18 July 2008
Please look into the terms and conditions of the agreemnt you have entered into with your broker as the issue is covered under the contractual obligations of the parties to the agreemnt.You can find out if there is any breach of terms and conditions.
Srinivas.B.S.S.T
(Expert) 19 July 2008
by the info submitted by you it can be safely pressumed that there is an arbitration clause in the agreement. If it it so you can invoke the same.
H. S. Thukral
(Expert) 19 July 2008
File a complaint in the consumer court. Arbitration clause is not an obstruction in doing so.
Rajalaxmi Dei
(Querist) 20 July 2008
Yes, I would file a consumer case against the Broker. Thanks for the advice. But is it not the duty of SEBI to protect the interest of a small investor? In my case SEBI has not done anything and NSE has advised me to go for Arbitration. Is there any limitation of time for going for Arbitration? And what may be the cost involved when the claim is less than Rs.10 lacs? Please favour me with any information on the above.
