Nuvama Wealth Management's wholly owned subsidiary Nuvama Clearing Services has won a long-running legal dispute after the Supreme Court set aside orders requiring it to reinstate securities liquidated during the default of stockbroker Anugrah and in a related Vrise matter.
Nuvama shares could remain in focus as the ruling removes the restitution directions that had exposed the clearing business to a liability linked to securities worth more than Rs 900 crore at the time of the earlier order.
The Supreme Court on Wednesday allowed appeals filed by Nuvama Clearing Services in the Anugrah and Vrise matters and set aside the orders passed by the Member and Core Settlement Guarantee Fund Committee of NSE Clearing and the Securities Appellate Tribunal.
In the lead Anugrah case, the securities ordered to be reinstated were worth about Rs 460.32 crore when they were liquidated and more than Rs 900 crore by the date of the Committee's order, according to the judgment.
Court Rejects Restitution Order
The court ruled that the NCL Committee did not have the statutory power to order restitution of the liquidated securities. It also held that the regulatory framework at the time did not impose a statutory obligation on professional clearing members to verify individual clients' debit and credit positions before liquidating collateral.
The Supreme Court further ruled against claims by investors against the professional clearing member for the trading member's default in the circumstances of the case.
Four Appeals Allowed
The judgment allowed four appeals, including Nuvama Clearing's cases, and set aside the orders of the NCL Committee and SAT.
Nuvama said the litigation related to its erstwhile professional clearing member business for domestic brokers.
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