Appeal No.103/2005
Date of Decision
21.03.2006
In the matter of:
Time Capital Limited.
Appellant – Represented by Mr. Ravikumar Varanasi
Versus
1. Securities and Exchange Board of India.
2. The National Stock Exchange Ltd., Mumbai
Respondent – Represented by none.
Coram:
Justice N. K. Sodhi, Presiding Officer
C. Bhattacharya, Member
R. N. Bhardwaj, Member
Per: Justice N. K. Sodhi, Presiding Officer(Oral)
This case is typical of how arbitrary the Securities and Exchange Board of India (for short “the Board”) could be in demanding turn over fee and interest thereon when none is due thereby withholding various permissions for which the broker has approached the Board. The dispute herein pertains to the fee and interest leviable thereon which is being claimed by the Board. As per the chart at page 20 of the paper book there is no dispute between the parties that a total sum of Rs.5,31,160/- was due from the appellant towards interest on the delayed payment of fee already deposited. This chart was sent by the Board to the appellant through the stock exchange for payment. It is also not in dispute that a sum of Rs.57,155/- had been paid in excess by the appellant towards the fee payable and the amount was lying in credit with the Board. While the amount of interest was due from the appellant the Board came out with a scheme called SEBI (Interest Liability Regularisation) Scheme, 2004 (hereinafter called “the Scheme”) whereunder the defaulting broker could pay the entire outstanding principle amount of fee, if any and 20% of the outstanding interest during the regularization period and if he were to make such payment the balance 80% of outstanding interest would be waived. It is common case of the parties that the regularization period referred to in the scheme is from October 15, 2004 to November 15, 2004 (both days inclusive). We have on record yet another chart which the Board had sent to the appellant showing its liability after giving benefit of the scheme. As per this chart a sum of Rs.1,06,232/- is shown as interest payable under the scheme. This amount represents 20% of Rs.5,31,160/- which was the interest due from the appellant as on 31/8/2004. This chart also indicates the excess payment of Rs.57,155/- made by the appellant which amount is lying with the Board. On receipt of this chart the appellant made a payment of Rs.49,077/- on 6/11/2004 and requested the Board to adjust the excess amount of Rs. 57,155/- lying with it towards interest that was payable. Admittedly, this payment was made by the appellant during the regularization period referred to in the scheme. The request to adjust the excess amount lying with the Board was also made during the same period. If this request of the appellant had been accepted the total amount of Rs.1,06,232/- which it was required to pay would have been paid and nothing would have been due from it. The Board did not accept the request and insisted that the payment made by the appellant was not the full amount of interest payable by it and demanded the balance of Rs.45,724/-. This request of the appellant was declined because the Board did not adjust the excess amount lying with it towards interest. We fail to understand how the Board could decline the request and insist that the balance amount be paid. This has obviously resulted in great hardship to the appellant because several permissions sought by it from the Board have been withheld on account of non payment of this amount which according to us is not due. When the excess amount is lying with the Board and the balance amount is being deposited by the appellant during the regularization period we are satisfied that all the conditions prescribed by the scheme stood fulfilled and the Board should have given the benefit thereof to the appellant without demanding any further amount. The action of the Board in not adjusting the excess payment cannot but be termed as arbitrary. In this view of the matter we have no hesitation in setting aside the demand raised by the Board from the appellant which in fact is not due.
In the result, the appeal is allowed and the impugned action of the Board in demanding the amount from the appellant set aside. The appellant will be entitled to have its costs from the Board which are assessed at Rs.50,000/-
Sd/-
Justice N. K. Sodhi Presiding Officer
C. Bhattacharya
Member
R. N. Bhardwaj
21/03/2006.
Smn/21/3