Section 8: Central depository discharged from liability if acting on instructions

8. Central depository discharged from liability if acting on instructions.—(1) A central depository, if acting in good faith and without negligence, shall not be liable for any loss, damages, compensation, costs and expenses in tort or under any law or contract for any breach of trust or duty and in the cases where the central depository has, in the accounts or sub‑accounts maintained by it, made or allowed to be made entries or handled or allowed handling of any book‑entry securities, according to the instructions of an account‑holder or a participant, notwithstanding that the account‑holder or the participant, as the case may be, had no right to dispose of or take any other action in respect of such book‑entry securities. (2) A central depository, if acting in good faith and without negligence, shall be fully discharged of its obligations to an account‑holder and participant, upon the transfer or delivery of book‑entry securities under the instructions of the account holder or participant, as the case may be. (3) A central depository shall not be required to enquire whether or not.— (a) an account‑holder or a participant, has a right to handle any book­entry securities entered in his account or in any sub‑account under his account, as the case may be, or to take any action in that regard; or (b) the document of title in respect of a security deposited with an issuer for the purpose of registration of the transfer of the security in the name of the central depository is genuine. (4) Except as provided in this Act, a central depository shall not owe any fiduciary or any other obligations whatsoever, including, without limitation to the generality of the foregoing, any obligations in law, contract, tort, warranty or strict liability, to the sub‑account holders in whose name sub­accounts are maintained in the central depository system. (5) Without prejudice to the provisions of any other law for the time being in force, if any loss is caused to an account‑holder or a sub‑account holder due to any negligent or wrongful act or omission of a central depository or any of its employees, the central depository shall compensate such account‑holder or sub‑account holder for such loss.

Effective date: 1997-01-01

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