P.S. Dinesh Kumar, Presiding Officer

This appeal is directed against orders dated 12.02.2026 and 04.06.2025 passed by the Member Committee of the NSEIL1, imposing penalty of ₹5.69 Crore2 on the appellant. This miscellaneous application is filed with a prayer to stay the effect, operation and implementation of the impugned order.

2. We have heard Mr. P N Modi, learned Senior Advocate for the appellant and Mr. Sumit Rai, learned Advocate for the SEBI.

3. Brief facts of the case are:

                          a. Appellant, M. Prasad & Co Limited is a registered broker of NSEIL ('NSE' for short). NSE observed that between 26.03.2024 and 01.04.2024, appellant executed trades in NIFTY call option in its proprietary account on one side and Monet Securities Private Limited ('Monet' for short) on the other side.

                          b. Monet is an RBI3 registered NBFC4 and appellant's sister concern having common directors. Monet is one of appellant's clients. Both 'buy' and 'sell' orders were placed in a synchronised manner and reversal trades were carried out between the same parties.

                          c. NSE issued a show cause notice dated 10.05.2024 to the appellant alleging reversal transactions between Monet and the appellant.

                          National Stock Exchange of India Limited Precisely ₹5,69,00, 678.96/-

                          Reserved Bank of India Non-Banking Finance Company d. Appellant filed its reply and an additional reply. Member Committee and the NSE passed its original order on 04.06.2025 and a review order on 12.02.2026.

4. Mr P.N. Modi for the appellant submitted that:

                          a. The trades were executed without realizing that they would trigger an additional/special margin requirement of over ₹69 Crore by the NSE. Loans were taken to meet the urgent margin obligation. Due to high borrowing expense, appellant was compelled to square off the positions. Strike price of the said options were highly illiquid and squaring off resulted in reversal trades between the same parties and it was not intentional.

                          b. The impugned order has imposed 100% penalty on both profit & loss, which is untenable, grossly excessive and disproportionate.

                          c. Appellant and Monet made profit in one strike price contracts and loss in the other, but the impugned order imposed penalties on the gross amounts of both (profit + loss) and not on the net profit of each party (profit - loss), thereby imposing double penalty. Appellant's CA has certified that the appellant had made a net profit of ₹16.02 Lakhs and Monet had made a net loss of about ₹41.81 Lakhs and hence, the net effect of the impugned trades was a net loss of about ₹25.78 Lakhs.

                          d. No investor, third party suffered any loss and NIFTY was also not affected.

                          e. SEBI in similar illiquid stock option matters imposed penalties of about ₹5 Lakhs.

                          f. Appellant is an operating broker with large deposits with the NSE. NSE can always recover the penalty, if the appeal fails.

                          g. In MVM securities Pvt Ltd. v. NSE5, this Hon'ble Tribunal held that 'prima facie, the levy of penalty of 100% appears to be excessive', and directed to deposit 25% of the penalty amount during the pendency of the appeal. A similar interim order was also passed in Marwadi Shares and Finance Ltd. v. NSE6 and prayed for stay the operation of the impugned order with lenient conditions.

5. In reply, Mr. Sumit Rai, learned Advocate for the SEBI argued opposing the miscellaneous application and submitted that this Tribunal has been granting interim orders subject to Misc. Application No.1617 of 2023 in Appeal No.970 of 2023, decided on 15.12.2023 by the Securities Appellate Tribunal, Mumbai Interim order in Appeal No.57 of 2026, decided on 13.03.2026 by the Securities Appellate Tribunal, Mumbai deposit of 50% of penalty and no extraordinary circumstance is made out in this case to reduce that norm.

6. We have carefully considered the rival contentions and perused the records.

7. The main ground urged by Mr. Modi is that penalty has been imposed on both sides, which amounts to double penalty. Admitted position is, appellant is a registered stock broker and Monet is its sister concern. It was argued that no loss was caused to any investor nor it affected NIFTY in any manner.

8. Mr. Modi's contention that penalty has been imposed on both sides merits consideration. Hence, without expressing any opinion on the merits of that submission, we direct that recovery shall remain stayed subject to appellant depositing 25% of the penalty amount in a bank with lien marked in favour of the NSE within 4 weeks from today.

9. Accordingly, Misc. application is disposed of with the above directions.