In Brief
Rusoday Securities Ltd, a trading member of NSE, challenged its expulsion and the withholding of securities. The Supreme Court upheld the expulsion, holding that: (1) a circular prescribing gross exposure limits is valid operational guidance not requiring prior SEBI approval; (2) the obligation to maintain security deposits continues despite trading facility withdrawal as it concerns membership status; (3) expulsion was justified for failure to maintain capital adequacy despite opportunity to comply. Regarding withheld securities, the Court held that vesting occurs only upon expulsion, not upon withholding; the Exchange has a limited fiduciary duty to act prudently but discretion in the manner of dealing; and registration is conditional upon the member's payment, not an absolute obligation. The Court directed NSE to realize remaining securities and return surplus with interest.
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