New Delhi: The Supreme Court on Wednesday directed IL&FS Securities Services Ltd to approach the appropriate court against a payment commitment of ₹380 crore because of fraudulent trades by Allied Financial Services Private Limited, a stock broker with whom IL&FS Securities Services Ltd had signed a clearing agreement.
“There would be a stay of payment obligation under the option contract till the first date of hearing before the relevant forum/court. We further clarify that in case the applicant/appellant delays or otherwise there is a delay in listing of the matter, it will be open for the respondents to point this out to the appropriate forum/court and ask for vacation of stay," the order reads.
“Extension of the time of payment won't create havoc in the market," remarked Justice Sanjiv Khanna.
The matter was being heard by the vacation bench of Justices Sanjiv Khanna and BR Gavai.
IL&FS Securities Services had received margins in the form of mutual fund units and cash amounting to ₹380 crore as collateral for clearing trades of Allied Financial Services in the futures & options segment of the National Stock Exchange. The Securities and Exchange Board of India (SEBI) received an interim report from the exchange regarding irregularities in the dealings of Allied Financial Services before IL&FS Securities Services could use the mutual funds to clear the trades of Allied Financial Services.
IL&FS Securities had moved the Supreme Court for a hearing before the appropriate forum on the issue of annulment of these fraudulent trades, and its own liability of payment arising out of these fraudulent trades by Allied Financial Services.