May 09, 2006
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Orders :
Orders of SAT
IN THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Appeal No: 334 of 2004
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Date of Decision
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09/05/2006
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Jupiter Stock Broker Ltd. & Anr.
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…..Appellants
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Versus
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Securities & Exchange Board of India & Anr.
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….Respondents
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Mr. Bharat B. Merchant, Advocate for the appellants
Mr. Dipan Merchant, Sr. Advocate with Mr. U.N. Das, Advocate for Respondent no. 1.
None for respondent no.2
CORAM
Justice N.K. Sodhi, Presiding Officer
C. Bhattacharya, Member
R.N. Bhardwaj, Member
Per: Justice N.K. Sodhi, Presiding Officer (Oral)
Sunrise Industrial Traders Limited (for short ‘Sunrise’) is a public limited company incorporated under the provisions of the Companies Act, 1956. It is a multi operational company as is clear from the object clause contained in its memorandum of association. Amongst others, it is carrying on business of general trading, commission agents and a variety of other businesses as referred to in that clause. Jupiter Stocker Brokers Limited (for short ‘Jupiter’) is also a public limited company which was incorporated on 06/11/1996 for the purpose of carrying on the business of a stock broker and other stock exchange related activities. It become a member of the National Stock Exchange (for short ‘NSE’) on 29/05/1997 and was registered with the Securities and Exchange Board of India (for short ‘the Board’) on 03/04/1998. It is relevant to mention here that Sunrise also become a member of NSE on 16/05/1994 and even though it was registered as a broker with the Board, it did not carry on any broking business. The learned counsel appearing for the appellants has placed before us a letter dated April 20, 1998 issued by NSE informing Sunrise that on its request its membership had been withdrawn and that Jupiter had been registered as a broker with the Board. The grievance of Jupiter is that the Board has not granted the benefit of exemption from registration fee for the period 1997-98 to 2002-2003. Feeling aggrieved by this act of the Board Jupiter and Sunrise have both filed this appeal.
We have heard the learned counsel for the parties and are of the view that there is no merit in this appeal. Jupiter is claiming exemption from registration fee on the basis of a circular dated September 30, 2002 issued by the Board, a copy of which was issued to all the members by NSE. The relevant part of this circular on which strong reliance has been placed by Jupiter reads as under:
“TRANSFER OF MEMBERSHIP TO 100% SUBSIDIARY, GROUP COMPANY, HOLDING COMPANY, ETC.
Where brokers are forced by compulsion of law to transfer their membership to:-
100% subsidiary company or
group company or
holding company
they shall not be required to pay fees afresh. In such cases, the Exchange would have to enumerate the circumstances under law resulting in the said transfer to 100% subsidiary / group/ holding company for consideration by SEBI.”
A reading of the aforesaid circular leaves no room for doubt that before any broker could claim exemption two conditions have to be satisfied - (1) that the broker was forced by the compulsion of law to transfer the membership to a 100% subsidiary company, and (2) that there is actually a transfer of membership from one company to another. We find that none of the two conditions are satisfied in the present case. We repeatedly asked the learned counsel for the appellant to point out the law which compelled Sunrise to transfer its membership of NSE to Jupiter (assuming there is a transfer) he could not refer to any provision of law in this regard. We are therefore of the view that the first condition enumerated in the circular is not satisfied. The second condition, too, remains unsatisfied. There is nothing on the record to show that the membership of Sunrise with NSE was transferred to Jupiter. The letter dated April 20, 1998 addressed by NSE to Sunrise on which reliance has been placed by the appellants does not clearly indicate that any transfer of membership took place or that the membership of Sunrise was transferred in the name of Jupiter. A reading of this letter indicates that the membership of Sunrise was withdrawn and Jupiter was registered as a broker with the Board. We are not satisfied that any transfer of membership took place. In this view of the matter the case of Jupiter is not covered by the circular dated September 30, 2002 and therefore it is not entitled to any fee exemption.
In the result, the appeal fails and the same stands dismissed with no order as to costs.
sd/-
Justice N.K. Sodhi
Presiding Officer
sd/-
C.Bhattacharya
Member
sd/-
R.N.Bhardwaj
Member