NSDL -BYELAWS -2000 CH-11 11. DISCIPLINARY ACTION 11.1. DISCIPLINARY ACTION COMMITTEE 11.1.1. A Disciplinary Action Committee shall be appointed by the Board of Directors to deal with any disciplinary matters relating to the Participants, Clients, Issuer or its Registrar and Transfer Agent and other users. 11.1.2. The maximum strength of the Disciplinary Action Committee shall be five. 11.1.3. The Disciplinary Action Committee appointed by the Board of Directors shall consist of :- i) an officer of the Depository nominated by the Board of Directors who shall be the Chairman of such Committee; ii) two persons nominated in that behalf by the Board of Directors from amongst the Participants, Issuers, Registrars & Transfer Agents, Banks or other entities or intermediaries interfacing with the Depository, to be known as 'User Representatives'; iii) two persons of eminence in the field of finance, accounting, law or any other discipline and amongst Clients as decided by the Board; 11.2. POWERS OF THE DISCIPLINARY ACTION COMMITTEE 11.2.1. The Disciplinary Action Committee shall have such responsibilities and powers as may be delegated to it by the Board, from time to time, which may inter-alia include the following responsibilities and powers to be discharged in accordance with the provisions of these Bye Laws : i) suspension of a Participant; ii) expulsion of a Participant; iii) declaring a security as " ineligible" on the Depository; iv) freezing the account of the Participant; v) powers to conduct inspection; vi) power to conduct an investigation/inquiry, call for records, to issue show cause notice to Participants for suspension/expulsion. 11.3. PARTICIPANT'S RESPONSIBILITY FOR PARTNERS, AGENTS AND EMPLOYEES A Participant shall be fully responsible for the acts and omissions of its authorised officials, authorised representatives and employees and if any such act or omission be held by the Executive Committee to be one which, if committed or omitted by the Participant would subject it to any of the penalties as provided in the Bye Laws of the Depository, then such Participant shall be liable therefor to the same penalty to the same extent as if such act or omission had been done or omitted by itself. 11.4. SUSPENSION OF A PARTICIPANT 11.4.1. The Disciplinary Action Committee shall require a Participant to suspend its business when it fails to meet the continuing requirements for fulfilling criteria of admission as provided in these Bye laws there under and the suspension of business shall continue until Participant furnishes satisfactory evidence of meeting with the requirements. 11.4.2. The Disciplinary Action Committee may require a Participant to suspend its business in part or in whole inter alia where :- i) in the opinion of the Disciplinary Action Committee, the Participant's financial condition is such that it has gone below the networth norms or the Participant fails to maintain it as specified in the Regulations and Bye Laws of the Depository; ii) the Participant violates the provisions of the Bye Laws and the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996; iii) The Participant does not comply with the instructions of the Client and is required to do so under the provisions of the Depositories Act, 1996, The Securities and Exchange Board of India Act, 1992 and any directives there under, the Securities and Exchange Board of India (Depositories And Participants) Regulations, 1996, the Bye Laws and Business Rules. 11.5. EXPULSION OF A PARTICIPANT 11.5.1. The Disciplinary Action Committee shall expel a Participant from the Depository under the following circumstances :- i) in case the Participant commits repeated breach of the provisions of the Bye Laws and the Business Rules, in spite of repeated reminders from the Depository in this regard; ii) in case the Participant consistently exposes himself to risks which in the opinion of the Disciplinary Action Committee is not commensurate with Participant's net worth; iii) if the quality of services rendered by the Participant is not satisfactory in the opinion of the Disciplinary Action Committee as evidenced by the complaints of their Client (s); iv) if the Participant carries on the activities in a manner which is detrimental to the interests and continued existence of the Depository as well as the interests of the investors in general. 11.6. REVOCATION OF SUSPENSION 11.6.1. The suspension of business under the Bye Laws as stated above shall continue until the Participant has been allowed by the Disciplinary Action Committee to resume business on its paying such deposit or on its doing such act or providing such evidence as the Disciplinary Action Committee may require. 11.7. PROCEDURE FOR EXPULSION/SUSPENSION OR OTHER DISCIPLINARY ACTION 11.7.1. A Participant shall appear and testify before and cause its partners, authorised representatives and employees to appear before the Disciplinary Action Committee or before such other Committee (s) or such members of Disciplinary Action Committee authorised in this behalf by Disciplinary Action Committee, officer (s) of the Depository authorised in that behalf by the Disciplinary Action Committee and shall produce before the Disciplinary Action Committee or Committee(s) or officer of the Depository authorised in that behalf, such books, correspondence, documents, papers and records or any part thereof which may be in its possession and which may be deemed relevant or material to any matter under inquiry or investigation. 11.7.2. The Disciplinary Action Committee shall issue show cause notice to the concerned Participant who shall be required to reply within such time as may be specified in the show cause notice or within such extended time as may be granted by the Disciplinary Action Committee on an application made to it. 11.7.3. The concerned Participant shall be entitled to a personal hearing. The Participant may appear himself or through a professional counsel, attorney, advocate or other representative at any hearing given by the Disciplinary Action Committee. 11.7.4. The Disciplinary Action Committee shall after taking into account the pleadings written and oral explanation and arguments, shall pass reasoned order. The Disciplinary Action Committee shall send a copy of its final order to Participants, Executive Committee and the Securities and Exchange Board of India. 11.7.5. The Participant shall have the right to appeal to Executive Committee against final order of Disciplinary Action Committee. 11.8. IMPOSITION OF PENALTIES 11.8.1. The Disciplinary Action Committee may pass an order suspending/expelling a Participant for such period or on such terms and conditions as the Disciplinary Action Committee deems fit. 11.9. CONSEQUENCE OF SUSPENSION 11.9.1. The suspension of a Participant shall have the following consequences namely :- i) Suspension of Participant rights : The suspended Participant shall during the terms of its suspension be deprived of and excluded from all the rights and privileges of a Participant on the Depository; ii) Rights of Clients unimpaired : The suspension shall not affect the rights of the Clients of the suspended Participant; iii) Rights of creditors unimpaired : The suspension shall not affect the rights of the Participants who are creditors of the suspended Participant; iv) Fulfillment of obligations : The suspended Participant shall be bound to fulfill obligations outstanding at the time of its suspension as directed by Disciplinary Action Committee. The Depository shall have the power to fulfill all obligations towards its Clients of the suspended Participant outstanding at the time of suspension of such Participant; v) Further business prohibited : The suspended Participant shall not during the terms of its suspension transact any Depository business with or through a Participant; vi) Participants not to deal : No Participant shall transact business for or with the suspended Participant during the terms of its suspension except with the previous permission of the Disciplinary Action Committee. 11.9.2. In case of suspension of Participant, the Client shall have the option of either getting the securities held with the Participant transferred to another Participant or getting the securities rematerialised. 11.10. CONSEQUENCES OF EXPULSION 11.10.1. The expulsion of a Participant shall have the following consequences namely :- i) Participants rights forfeited : The expelled Participant shall forfeit to the Depository, its rights as a Participant and all rights and privileges as a Participant of the Depository including any right to the use of or any claim upon or any interest in any property or funds of the Depository; but any liability of any such Participant to the Depository or to any Participant of the Depository shall continue and remain unaffected by its expulsion; ii) Office vacated : The expulsion shall create a vacancy in any office or position held by the expelled Participant in the Depository; iii) Rights of Clients unimpaired : The expulsion shall not affect the rights of the Clients who are Clients of the expelled Participant; iv) Rights of Creditors unimpaired : The expulsion shall not affect the rights of the Participants who are creditors of the expelled Participants; v) Fulfillment of obligations: The expelled Participant shall be bound to fulfill transactions outstanding at the time of his expulsion and it may with the permission of the Disciplinary Action Committee close such outstanding transactions with or through a Participant. The Depository shall have the power to fulfill all obligations towards its Clients of the expelled Participant outstanding at the time of expulsion of such Participant; vi) Participants not to deal : No Participant shall transact business for or with expelled Participant except with the previous permission of the Disciplinary Action Committee. In case of expulsion of Participant, the Client shall have the option of either getting the securities held with the Participant transferred to another Participant or getting the securities rematerialised. 11.11. EXPULSION RULES TO APPLY When a Participant ceases to carry on business otherwise than on death, the Participant shall be deemed to be expelled and in that event all provisions relating to expulsion contained in these Bye Laws shall apply to such concerned Participants in all respects. 11.12. NOTICE OF SUSPENSION OF BUSINESS Notice shall be given to all other Participants by a notice on the system of the Depository of the expulsion or suspension of business in relation to the operations of the Depository by a Participant or of any other charges imposed on it, on its partners, authorised representatives or other employees. The Disciplinary Action Committee may, in its absolute discretion and in such manner as it thinks fit, notify or cause to be notified to the Participants of the Depository or to the Clients and to public, that any person who is named in such notification has been expelled, suspended or has suspended its business or ceased to be a Participant. No action or other proceedings shall, in any circumstances, be maintainable by such suspended/expelled Participant against the Depository or the Disciplinary Action Committee, or any member of the Disciplinary Action Committee or any employee of the Depository for the publication or circulation of such notification. 11.13. PROCEDURE FOR CANCELLATION OF AGREEMENT BETWEEN PARTICIPANT AND DEPOSITORY 11.13.1. The agreement entered into between the Participant and the Depository shall be cancelled under the following cases :- i) on the expulsion of the Participant by the Disciplinary Action Committee; or, ii) on the termination of the Participant by the Depository in accordance with the provisions of Bye Law 6.5.1; or, iii) on the termination of the Participant ship by the Participant in accordance with the provisions of Bye Law 6.5.3. 11.13.2. The cancellation of the agreement shall have effect only when such cancellation has been approved by the Depository. The Depository shall give approval for such cancellation only if :- i) there exists no suspense balance in the accounts of the Participants with the Depository; ii) the accounts of all the Clients of the Participants have been closed and there exist no balances; iii) the Participant has paid or settled all his outstanding dues to the Depository. 11.13.3. Such cancellation of the agreement referred to in Bye Law 11.13.1 above shall not affect any claims arising in respect of transactions effected by the Participant while it was a Participant of the Depository.