Gujarat High Court
Ajay Sarabhai vs Union Of India & 2 on 2 December, 2005
Author: M.S.Shah
Bench: M.S.Shah
LPA/1553/2005 1/7 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
LETTERS PATENT APPEAL No. 1553 of 2005
In
SPECIAL CIVIL APPLICATION No. 14355 of 2004
With
LETTERS PATENT APPEAL No. 1554 of 2005
In
SPECIAL CIVIL APPLICATION No. 14351 of 2004
With
LETTERS PATENT APPEAL No. 1555 of 2005
In
SPECIAL CIVIL APPLICATION No. 14640 of 2004
With
LETTERS PATENT APPEAL No. 1556 of 2005
In
SPECIAL CIVIL APPLICATION No. 14654 of 2004
With
LETTERS PATENT APPEAL No. 1557 of 2005
In
SPECIAL CIVIL APPLICATION No. 15183 of 2004
With
LETTERS PATENT APPEAL No. 1558 of 2005
In
SPECIAL CIVIL APPLICATION No. 15406 of 2004
With
LETTERS PATENT APPEAL No. 1559 of 2005
In
SPECIAL CIVIL APPLICATION No. 5792 of 2005
With
LETTERS PATENT APPEAL No. 1560 of 2005
In
SPECIAL CIVIL APPLICATION No. 5793 of 2005
With
LETTERS PATENT APPEAL No. 1561 of 2005
In
SPECIAL CIVIL APPLICATION No. 6095 of 2005
With
LETTERS PATENT APPEAL No. 1562 of 2005
In
SPECIAL CIVIL APPLICATION No. 7544 of 2005
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AJAY SARABHAI - Appellant(s)
Versus
UNION OF INDIA & 2 - Respondent(s)
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LPA/1553/2005 2/7 ORDER
Appearance :
MR MIHIR THAKORE, SR. COUNSEL with MR AMAR N BHATT for Appellant(s) :
1,
None for Respondent(s) : 1, 3,
MR MIHIR JOSHI, SR. ADVOCATE with MR BIJAL CHATRAPATI and MR Joy Amin
for SINGHI & CO for Respondent(s) : 2,
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CORAM : HONOURABLE MR.JUSTICE M.S.SHAH
and
HONOURABLE MR.JUSTICE SHARAD D.DAVE
Date : 02/12/2005
COMMON ORAL ORDER
(Per : HONOURABLE MR.JUSTICE M.S.SHAH) The appeals are admitted.
2. Heard the learned counsel for the parties on the question of interim relief.
3. The appellant-petitioners are stock brokers who are registered with the Ahmedabad Stock Exchange. The stock brokers are liable to pay registration fees in accordance with the provisions of SEBI (Stock Brokers and Sub- Brokers) Regulations, 1992. The levy of registration fees under the Regulations was challenged by certain stock brokers in their individual and representative capacity. The litigation culminated into the decision of the Apex Court in BSE Brokers' Forum vs. Securities and Exchange board of India, (2001) 3 SCC 482. While disposing of the case, the Apex Court suggested that concessional rates of registration fees were required to be prescribed for certain types of transactions. The said suggestions were incorporated in Schedule III of the Regulations of 1992. According to SEBI, several circulars and reminders were sent to all stock brokers through the concerned Stock Exchange informing them that they have to submit turnover HC-NIC Page 2 of 7 Created On Thu Apr 28 02:12:41 IST 2016 LPA/1553/2005 3/7 ORDER data with breakup of the transactions for which concessional rate of registration fee was claimed along with the auditors' certificate and that all this data was required to be submitted before the last date mentioned in such circulars/letters. According to SEBI, such last date was extended from time to time, but the appellants did not submit the relevant data along with the auditors' certificate and, therefore, the SEBI had no other alternative but to assess registration fee on the basis of the data earlier given by the appellants to the to the stock exchange without breakup of the turnover data. It was further submitted on behalf of SEBI that the remission of 80% interest on delayed payment of registration fee as per the provisions of SEBI (Interest Liability Regularization) Scheme 2004 was available only to those brokers who had submitted the turnover data with the breakup along with the auditor's certificate before the extended date and that the appellants having failed to do so, the appellants were not entitled to get any benefit of remission.
4. The appellants herein contending that they were not individually informed of such circulars or reminders filed writ petitions before the learned Single Judge praying for an appropriate writ, order or direction -
(a) quashing the decision of the respondents as stated in paragraphs No.2 and 3 of Part II of the Scheme to the effect and extent that "the stock brokers, who did not report turnover with breakup to exchanges and the exchange submitted the turnover data based on its record, will not be entitled to any concessional rate of fee"
HC-NIC Page 3 of 7 Created On Thu Apr 28 02:12:41 IST 2016 LPA/1553/2005 4/7 ORDER and that "no further data revision would, therefore, be permitted even if a stock broker wishes to submit an audited certificate at this stage, or if the exchange desires to revise its own data."
(b) directing the respondent and in particular the second respondent to accept the turnover data with breakup given by the petitioner and to give effect thereof for the computation of the registration fee liability of the petitioner.
(c) directing the second respondent board to interpret the regulations in accordance with Schedule III and to calculate / compute the fees only in accordance with the regulations and in particular Schedule III read with regulation 10 of SEBI (Stock Brokers and Sub Brokers) Regulations, 1992.
5. The learned Single Judge dismissed the petitions holding that the SEBI (Interest Liability Regularization) Scheme 2004 is in consonance with the provisions of the SEBI Act of 1992. Likewise the calculation of registration fees adopted by SEBI in absence of breakup turnover and in absence of auditors' report before a cut- off date is also legal and in consonance with the provisions of the Act and the Regulations. The Court further held that the Court cannot extend the benefit of the scheme after the cut-off date, especially in the facts of the present case when enough extensions have been given by SEBI and a large number of stock brokers of Ahmedabad Stock Exchange have already availed the benefit HC-NIC Page 4 of 7 Created On Thu Apr 28 02:12:41 IST 2016 LPA/1553/2005 5/7 ORDER of the Scheme. The learned Judge further held that the cut-off date is an integral part of the benefit under the Scheme and that cut-off date in the facts of the present case is not arbitrary. The learned Judge held that the concession and conditions of the regularization Scheme cannot be segregated.
6. Having heard the learned counsel for the parties for some time, it appears to the Court that the finding given by the learned Single Judge that the cut-off date is an integral part of the benefit under the SEBI (Interest Liability and Regularization) Scheme 2004 appears to be in accordance with law and the stock brokers who failed to submit all the turnover data with the necessary breakup as certified by the auditor are not entitled to get the benefit of remission of interest on delayed payment of registration fees. Although that finding appears to be unexceptionable, it does not necessarily follow that the stock brokers will not be entitled to claim that registration fees on the excepted categories of transactions would be payable at the lower rates as provided in the amended Regulations, if they submit the turnover data with the necessary breakup along with the auditor's certificate now. The effect of delay in submitting the data with the break up is required to be examined vis-a-vis applicability of the rate of registration fee.
7. In fact the SEBI letter dated November 21, 2005 to the Ahmedabad Stock Exchange stating that since the petitions are dismissed on 11.10.2005, the 15 defaulting stock brokers who had filed the petitions before the High Court may be asked to pay up the outstanding registration HC-NIC Page 5 of 7 Created On Thu Apr 28 02:12:41 IST 2016 LPA/1553/2005 6/7 ORDER fees by November 30, 2005, is itself an indication that without giving such stock brokers the benefit of remission in payment of interest, the stock brokers can still pay the outstanding registration fees at the rates stipulated in the amended Regulations provided the turnover data submitted by them is certified either by the stock exchange or by the auditor. The Court has also of course noted the case of the stock exchange that in the past they had merely forwarded the turnover data submitted by the stock brokers and that they had never certified such data.
8. In view of the above discussion, in the facts and circumstances of the case, the following interim order is passed :-
A. By way of interim relief, it is directed that if, within one month from today, the appellants furnish auditors' certificate/s for data with the break-up in respect of the transactions attracting lower rate of registration fee and pay within one month from today, deficit registration fee, if any, along with interest for the delay in payment of any deficit registration fee in accordance with the Regulations, the respondents shall not take any adverse action against the appellants.
B It is clarified that -
(i) There is no stay of the finding given by
the learned Single Judge that the
appellants are not entitled to the benefit of waiver of interest under the Scheme HC-NIC Page 6 of 7 Created On Thu Apr 28 02:12:41 IST 2016 LPA/1553/2005 7/7 ORDER known as the Securities and Exchange Board of India (Interest Liability Regularization) Scheme, 2004, meaning thereby the appellants having outstanding registration fee liabilities towards the Board are liable to pay the entire outstanding amounts including interest as per the Regulations.
(ii) Pendency of these appeals or the aforesaid interim relief does not preclude the respondent authorities from intimating to the appellants the amounts of the appellants' liability for registration fees plus interest in accordance with the Regulations and it will also be open to the appellants to pay such amounts with interest without prejudice to their rights and contentions in these appeals.
[M.S. SHAH, J.] [SHARAD D. DAVE, J.] sundar/-
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