Jun 23, 2006
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Orders :
Orders of SAT
IN THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Appeal No: 31 of 2006
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Date of Decision
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23/06/2006
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Active Finstock P. Ltd.
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…..Appellant
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Versus
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Securities & Exchange Board of India
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….Respondent
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Mr. N.H. Seervai, Sr. Advocate with Mr. S.H. Merchant, Advocate and Mr. O. Mohandas, Advocate for the appellant
Mr. Kumar Desai, Advocate with Mr. Ravi Hegde, Advocate for the respondent.
CORAM
Justice N.K. Sodhi, Presiding Officer
C. Bhattacharya, Member
R.N. Bhardwaj, Member
Per: Justice N.K. Sodhi, Presiding Officer (Oral)
This order will dispose of two Appeals nos. 4 and 31 of 2006 in which a common question of law arises. Arguments in Appeal no. 4 were heard on 19/06/2006 and the order was reserved. Appeal no. 31 of 2006 has come up for hearing today and the learned counsel for the parties in Appeal no.4 who are present state that the decision in Appeal no. 31 of 2006 will govern the other case as well. We are noticing the facts from Appeal no.31 of 2006.
2. This appeal filed under Section 15T of the Securities and Exchange Board of India Act, 1992 is directed against the order dated 25/01/2006 passed by the wholetime member of the Securities and Exchange Board of India (for short the “Board”) suspending for 45 days the certificate of registration of the appellant as a broker on the ground that it violated the circular dated December 11, 1998 inasmuch as it did not collect margin money from its clients while trading on their behalf.
3. As would be seen from the impugned order the only allegation against the appellant is that it did not collect the margin money. The learned senior counsel appearing for the appellant has brought to our notice a circular dated November 18, 1993 issued by the Board wherein a buying broker acting on behalf of his client is required to collect margin money of a minimum of 20% of the price of the securities proposed to be purchased unless he already has an equivalent credit with him from his client. The selling broker is also required to collect margins of 20% on the price of the securities to be sold unless the member broker has received the securities to be sold with valid transfer documents to his satisfaction prior to such sale. It is urged on behalf of the appellant that in view of the circulars dated November 18, 1993 and December 11, 1998 the appellant was not required to collect any margin money because its stand before the enquiry officer was that while buying securities on behalf of its clients it already had an equivalent credit with it and that for selling securities it always received the securities to be sold with valid transfer documents prior to sale. The plea of the appellant has not been controverted by the Board in the impugned order. This being so we are satisfied that the appellant is not required to collect the margin money. Moreover an identical issue came up for discussion before us in Kasat Securities Private Limited v. Securities and Exchange Board of India in appeal no. 27 of 2006 and on a consideration of the two aforesaid circulars we held that a broker like the appellant was not required to collect margin money. Learned counsel for the respondent very fairly concedes that the dispute is covered by our aforesaid decision in favour of the appellant and against the respondent Board. In this view of the matter the impugned order suspending the certificate of registration of the appellant cannot be sustained.
4. In the result the appeals are allowed and the impugned orders set aside leaving the parties to bear their own cost.
Sd/-
Justice N. K. Sodhi
Presiding Officer
Sd/-
C. Bhattacharya
Member
Sd/-
R. N. Bhardwaj
Member