NEW INDIA ASSURANCE CO. LTD. DIVISIONAL OFFICE 112700, COOPERATIVE INSURANCE BUILDING, ABOVE KASHMIRI ART EMPORIUM, 4TH FLOOR ,SIR P.M. ROAD, FORT MUMBAI MAHARASHTRA Vs. M/S. KASSA FINVEST PVT. LTD. R/O AT H

JUDGEMENT

(1.) This first appeal has been filed under section 19 of the Consumer Protection Act, 1986 against the impugned order dated 16.09.2010, passed by the Delhi State Consumer Disputes Redressal Commission (for short ‘the State Commission’) in complaint, CC No. C-08/61, vide which, the said complaint filed by the present respondent was allowed and the Appellant Insurance Company was directed to pay a sum of Rs. 22,48,428.00 to the complainant with simple interest @5% p.a. with effect from 26.03.2008 till realisation.

(2.) The facts of the case are that the complainant/respondent is a company registered under the Companies Act, 1956 and is carrying on the business of stock-broker, for which it is registered with the Securities & Exchange Board of India (SEBI) and is a member of the National Stock Exchange (NSE) since 1995. The company has its registered office at Connaught Circus, New Delhi and has its branch offices in different parts of the country, including one at Faridabad, Haryana. The company obtained the Stock-Brokers Indemnity Insurance Policy from the petitioner Insurance Company in accordance with the guidelines of SEBI. One such policy No. 112700/46/07/51/00000300 was obtained by the complainant for the period 01.06.2007 to 31.05.2008 with sum insured at Rs. 50 lakhs. It has been stated that as per section II of the Policy, dealing with ‘Errors and Omissions (Liability)’, the Insurance Company agreed to indemnify the complainants in respect of the legal liability of the complainant for any third party for compensation for financial loss caused by:-

(3.) It has been stated in the complaint that on 08.06.2007, a client of the complainant Sh. S.N. Mohta, (Client Code CFD7) visited the Faridabad Branch office of the complainant and placed an order to sell 100 shares of UFLEX at Rs. 149.00 per share with Sh. Vijay Chandak, Branch Manager of the complainant on the trading terminal of NSE. It is stated that the figure of price of Rs. 149.00 got fed into the quantity field after 100 which was already there, making the quantity read as 100149, and the order was put through by the System. The complainant stated that they had installed sophisticated instruments at their Head Office for surveillance at a cost of Rs. 25 lakh approximately to ensure that the transactions which exceed the parameters as provided therein, shall not be fed into the NSE trading terminal. There was a client exposure limit of Rs. 1 lakh and terminal quantity limit of 17000 shares in respect of the branch office at Faridabad. On account of punching of wrong figure by Sh. Vijay Chandak, the order failed at the surveillance in the Head Office of the complainant, as it exceeded the said client exposure limit and trading terminal quantity limit as stated above. The said incident happened at about 3:15PM and there was heavy trading at that time before the closure of the market at 3:30PM. When Sh. Vijay Chandak received message on his terminal that his order was stopped at the surveillance of Head Office, he under pressure from the client to complete the transaction for the sale of 100 shares, rang up Sh. Ashish Garg, Manager, surveillance in the Head Office and requested him to accept the order and to pass it to NSE. Sh. Vijay Chandak was not aware of the mistake committed by him at that time by feeding the figure of 100149. Sh. Ashish Garg, Surveillance Manager pressed the acceptance keys without actually going into the details of the cause of holding up of the order by the system because a telephone call had come from the Branch Manager. The order for the sale of 100149 shares went through to NSE for execution whereas the intended sale was for 100 shares only at a price of Rs. 149.00 per share.