The instant appeal has been filed under Section 15(Z) of the Securities and Exchange Board of India Act, 1992(hereinafter being referred to as the “Act 1992”) assailing the judgment and order dated 9 August, 2007 passed by the Securities Appellate Tribunal(hereinafter being referred to as the “Tribunal”) affirming the order of the Securities and Exchange Board of India, Mumbai(hereinafter being referred to as the “Board”) dated 7 May, 2007 holding that the appellant did not satisfy the conditions of clause (4) of Schedule III of the Securities and Exchange Board of India(Stock Brokers and Sub-Brokers) Regulations, 1992(hereinafter being referred to as the “Regulations”) hence the exemption from payment of fees for the period for which the erstwhile individual Srikant Mantri has paid to the Board cannot be converted to the corporate entity MFL. Thereafter, when the membership card of Srikant Mantri was transferred in the name of the Company, the latter became a member of CSE and was registered as a stock broker of CSE on 1 April, 1998.
Also Read: https://newslaw.in/case-type/civil/regularization-of-village-level-workers-in-tamil-nadu/
The claim of the Company was rejected by the Board by its Order dated 7 May, 2007 holding that Srikant Mantri was only a Director in the Company during the three years period after the transfer of his membership and since he was not the whole time Director, the conditions prescribed under para 4 of Schedule III are not satisfied and accordingly, was not entitled to claim exemption as prayed for by the appellant. (ii) is concerned, learned Tribunal held that the appellant Company has failed to satisfy the conditions of clause (4) of Schedule III to the Regulations and was not eligible to claim exemption from payment of fee over the period for which the erstwhile individual Srikant Mantri has paid the fees.
Learned counsel further submits that para 4 was added to Schedule III pursuant to Board’s policy to corporatize individual stock brokers, and to institutionalize the stock broking activity and further submits that the interpretation ought to be in consonance with the intent and purport of the policy to which para 4 was added to Schedule III. Learned counsel further submits that in the case of conversion, the individual registration has been converted into a corporate registration and, therefore, the exemption for the payment of fees is available and further submits that para 4 to Schedule III does not contemplate two registrations. It remains uncontroverted that Srikant Mantri transferred his membership card of CSE to the appellant Company and he was not a whole time Director therein but only a Director and the corporate entity is entitled to claim exemption from the payment of registration fee only if the individual or partnership membership had been converted into a corporate entity.
Thus, in our considered view, the conjoint reading of the expression “a certificate” as referred to in Section 12(1) of the Act read with the scheme of Rules, 1992 and Regulations 1992, leads to an inevitable conclusion that the stock broker not only has to obtain a certificate of registration from SEBI for each of the stock exchange where he operates, at the same time, has to pay ad 2022 SCCOnline SC 1392 valorem fee prescribed in terms of Part III annexed to Regulation 10 of the Regulations, 1992 in reference to each certificate of registration from SEBI in terms of the computation prescribed under Circular dated 28 March, 2002 and fee is to be paid as a guiding principle by the stock broker which is in conformity with the scheme of Regulations 1992.”
The issue involved in the instant appeal confines as to whether the appellant Company is entitled to fee continuity benefits under Para 4 of Schedule III of the Regulations 1992. For granting such benefit, the conditions subject to which such benefit is available need to be established beyond doubt.
Hence, MFL cannot become eligible for exemption from payment of fees for the period for which the erstwhile individual Shri Shrikant Mantri has already paid the fees.”
On appeal being preferred by the appellant Company, the Board, on reappreciating the evidence on record confirmed the finding under its Order impugned dated 9 August, 2007 as follows:- “…. In the case before us the Board has found that when Srikant Mantri transferred his membership card of CSE to the company, he was not a whole time director therein but was only a director. The company before us was an existing company and therefore, when it became a member of CSE on the transfer to membership card from Srikant Mantri it could not claim the benefit under paragraph 4. At the same time, appellant Company was granted registration after para 4 was put in place by notification dated 21 January, 1998 and the appellant Company failed to satisfy that it fulfilled the conditions of para 4 to Schedule III pursuant to which the appellant has claimed his entitlement of fee continuity benefits.
Pending application(s), if any, shall stand disposed of.
Also Read: https://newslaw.in/case-type/civil/judgment-on-execution-of-lease-deed-for-remaining-land/
This appeal is preferred by the Board against the self-same impugned judgment dated 9 August, 2007 as in Civil Appeal No.
Case Title: GPSK CAPITAL PVT. LTD. Vs. SECURITIES & EXCHANGE BD.OF INDIA (2023 INSC 262)
Case Number: C.A. No.-002402-002402 / 2008
