TMI Blog2015 (11) TMI 382X X X X Extracts X X X X X X X X Extracts X X X X ..... ved it was granted fee continuity, in light of its letter to the Appellant requesting the same. Further, it appears to us that the Respondent was an entity quite distinct from Oracle, with the consequence that it would be bound to pay the fee in accordance with Schedule III, Clause (a) or (b) as the case may be, and would not be entitled to claim the advantage of Clause (c). In fact, this is the very understanding of the Respondent since fees were deposited by them under Clause (a) in sharp contradistinction of Clause (c). - Civil Appeal No. 7607 of 2005 - - - Dated:- 3-11-2015 - Vikramajit Sen And Shiva Kirti Singh, JJ. For the Petitioner : Mr. Bhargava V. Desai For the Respondent : Mr. Dheeraj Nair JUDGMENT Vikramajit Sen, J. 1. This Appeal assails the Judgment dated 17.8.2005 pronounced by the Securities Appellate Tribunal (hereinafter SAT ) directing the Appellant as well as the National Stock Exchange (NSE for brevity) to continue to grant the Respondent the fee continuity benefit as was available to them before the NSE decided to permit segmental surrender of membership to its members. In response to the fee demanded by the Appellant, namely the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 999 to the Respondent had granted registration to it as a stock broker . The Appellant made its permission conditional inter alia, upon payment of fees for registration provided in the Securities and Exchange Board of India [Stock- Brokers and Sub-Brokers] Regulations, 1992, the salient parts of which we shall extract for ease of reference. However, the relevant terms contained in the letter dated 4.4.1999 are these - 2. d) It shall pay the amount fees for registration in the manner provided in the Securities and Exchange Board of India [Stock Brokers and Sub Brokers] Regulations, 1992; and 5. You are now, in terms of clause [d] of the conditions of grant of registration certificate, required to pay the fees in accordance with regulation 10[1] read with Schedule-III of the Securities and Exchange Board of India [Stock Brokers and Sub Brokers] Regulations, 1992 and remit the same through the stock exchange of which you are a member. All the stock exchange have been separately given necessary instructions in regard to collection of fees from the stock brokers and remittance thereof to the Board. 3 In this continuum NSE, in its letter dated 30.1.2002, again conveyed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time that NSE had granted fee continuity to the Respondent, there was no provision for segmental surrender, as a result of which, subject to certain conditions, fee continuity was granted to Respondent despite it being a new entity. The SAT held that this letter did not have the effect of revocation or cancellation of the earlier conditions which were specifically imposed while granting assignment of WDM Segment from Oracle to the Respondent. Counsel for the Respondent brought to the notice of the SAT that the Respondent had already paid, albeit under protest pending disposal of the appeal, a sum of ₹ 4,37,20,256 towards the principal amount of the Appellant s claim and a further sum of ₹ 26,96,590 as interest. However, the SAT directed the Appellant to refund both the amounts to the Respondent. Hence, the present Appeal. 6. Learned Senior Counsel for the Appellant has relied on Regulation 10 and Schedule III of the SEBI (Stock Brokers and Sub Brokers) Regulations, 1992, which are reproduced for the facility of reference: 10. (1) Every applicant eligible for grant of a certificate shall pay such fees and in such manner as specified in Schedule III or Schedule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the regulations. 7. The learned senior Counsel for the Appellant has contended that a membership of the Stock Exchange is an essential pre-requisite, for which the fee prescribed in Regulation 10 is payable by every such member. The amount that is payable as fee is determined as per the provisions under Schedule III. Emphasis has been placed on Clause 4 of Schedule III (supra) as it provides the only exception to the payment of fees. Facially, it appears to us, this exception has been carved out only for the enablement of persons who are vulnerable to unlimited personal liability in respect of their business debts, to avail of the advantages of converting their mode of transacting business into a corporate structure, provided this conversion is not misused to essentially transfer the business and yet escape payment of transfer fees; hence the insistence of retention of forty per cent share holding. It also manifests that for all other transfers, fees are payable to the Appellant, which depends on these collections for defraying its manifold expenditures. The legal propriety of these pecuniary demands by SEBI have received the attention of the Court and have been found proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business of State is a complicated one and has necessarily to be conducted through the agency of a large number of officials and authorities. Before an action is taken by the authority concerned in the name of the Rajpramukh, which formality is a constitutional necessity, nothing done would amount to an order creating rights or casting liabilities to third parties. It is possible, observed the Court, that after expressing one opinion about a particular matter at a particular stage a Minister or the Council of Ministers may express quite a different opinion which may be opposed to the earlier opinion. In such cases, which of the two opinions can be regarded as the order of the State Government? It was held that opinion becomes a decision of the Government only when it is communicated to the person concerned. 16. To the like effect are the observations of this Court in Laxminarayan R. Bhattad and Ors. v. State of Maharashtra and Anr. 2003 (3) SCR 409, wherein it was said that a right created under an order of a statutory authority must be communicated to the person concerned so as to confer an enforceable right. 9. The manner in which the Respondent understood its role a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal in the new entity. Although Oracle and PYIndia were given two separate registration numbers for EM and WDM respectively, the NSE did not collect the deposit of ₹ 15 million which it would normally have done for new WDM members. Instead, the NSE merely transferred (without refunding the amount to Oracle) a part of the total deposits of Oracle, amounting to ₹ 10 million, in favour of PYIndia. PYIndia did not bring in fresh deposits for the WDM membership of NSE. Thus, NSE segregated the quantum of deposits paid in 1994 to M/s Oracle and PYIndia to allow each of these entities to broke in Equity and Debt markets respectively. It was also stipulated by the NSE that neither of these entities can surrender one of the memberships without surrending the other. Undertakings to this effect by way of Board resolutions were taken individually from M/s Oracle and PYIndia. Thus, in essence, the NSE treated both these companies as one composite member with the same promoter group. The NSE treats the induction of the Prebon Group and the consequent assignment of the WDM segment of Oracle Stocks Shares Ltd. to Prebon Yamane India Ltd. as a continuation of the ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in Association for Welfare of Delhi Stock Brokers vs. Union of India, and an Appeal thereagainst is pending before this Court. However, we find that issue which were in contemplation in those proceeding are dissimilar to what we have in hand. 11. Reliance has also been placed on the affidavit filed by the Appellant before the SAT. Therein the Appellant admitted that the Respondent had applied for fee continuity vide letter dated 4.2.2002 which had enclosed the letter of the NSE confirming that both the memberships had been considered concomitant by it. The Appellant, based on the same, approved in the file that the two cards could be treated as composite for all practical purposes and the turnover of the two cards may be taken together for the purpose of ad-valorem fee. We have already noted that Sethi Auto Service Station enunciates that file notings cannot be relied upon with the intent of binding the concerned Authority or Department. 12. Counsel for the Appellant has pointed out that the Respondent has not paid fee as per Schedule III, Clause 1(c). The Respondent only paid the basic fee indicating that its turnover for the financial year was not beyond ₹ 1 Crore. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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