TMI Blog2007 (8) TMI 819X X X X Extracts X X X X X X X X Extracts X X X X ..... one registrations of a stock broker and whether the registration fee payable by the appellant has been properly worked out in accordance with the provisions of the Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992 (hereinafter called the Regulations) are the other questions which fall for our consideration. Facts giving rise to this appeal lie in a narrow compass and these may first be noticed. 2. One Srikant Mantri became a member of CSE and sought registration as a stock broker with the Board. He was granted registration on 30.11.1992 with registration no. INB030054715. He continued as a stock broker for a few years. Sometime in the year 1997 he decided to transfer his membership card of CSE in favour of Mantri Finance Ltd. the appellant herein and hereinafter referred to as the company. It is not in dispute that the company was registered with the Registrar of Companies, Calcutta on 27.12.1988 under the name and style of Ushagram Properties and Finance Ltd. It changed its name to Mantri Finance Ltd. on 13.11.1992. The company started the business of stock broking in 1995 and became a member of NSE and thereafter sought registration wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h financial year; (b) Where the annual turnover of the stock-broker exceeds rupees one crore during any financial year, a sum of rupees five thousand plus one hundredth of one percent of the turnover in excess of rupees one crore for each financial year; (bb) . (c) after the expiry of five financial years from the date of initial registration as a stock-broker, he shall pay a sum of rupees five thousand for every block of five financial years commencing from the sixth financial year after the date of grant of initial registration to keep his registration in force. 2. Fees referred to in clause (a) and (b) of paragraph 1 above shall be paid - (a) in respect of the financial year 1992-1993 within one month of the commencement of these regulations; (b) in respect of the financial year beginning on the 1st day of April, 1993 and the following financial years, on or before the first day of October of the financial year to which such payment relates, and such fees shall be computed with reference to the annual turnover relating to the preceding financial year. 3. Every remittance of fees referred to in clauses (a) and (b) of paragraph 1, shall be accompanied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... keep his registration in force. Paragraph 4 then provides some relief to stock brokers who convert their individual or partnership membership card of an exchange into a corporate entity. This paragraph provides that where an individual or a partnership firm gets converted into a corporate entity then the corporate entity shall be exempt from payment of fee for the period for which the erstwhile individual or partnership member, as the case may be had already paid the fees subject to, of course, the fulfilment of the other conditions enumerated in this paragraph. One of the conditions is that the erstwhile individual should become a whole time director of the corporate entity so converted and should continue to hold 40% shares of the paid up equity capital of the corporate entity for a period of three years from the date of conversion. The explanation to this paragraph makes it abundantly clear that where an individual or a partnership has been converted into a corporate entity, then the latter (corporate entity) shall be deemed in continuation of the old entity. It follows that if there is no conversion, there will be no continuity and the corporate entity will not get the benefit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1995 on becoming a member of NSE and again on 1.4.1998 when it became a member of CSE on the transfer of the membership card from Srikant Mantri. When the case came up for hearing on 24.7.2007 we had put to the learned counsel for the respondent Board as to whether the Act contemplates more than one registrations for stock brokers and whether the fee liability of the company has been worked out on the basis of its two different registrations. She sought an adjournment to seek instructions in the matter. We accordingly adjourned the case for today. She informs us that, according to the Board, the Act contemplates multiple registrations of stock brokers and, therefore, it was justified in granting two registrations to the company on the basis of its memberships with NSE and CSE. She has also informed us that the fee payable by the company has been worked out on the basis of its two registrations and that the block period of five financial years has been worked out separately as per the dates of membership of the two exchanges. 5. Having heard the learned counsel for the parties we are clearly of the view that the Act does not contemplate multiple registrations of stock brokers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Exchange Board of India and any other part of the circular inconsistent with section 12(1) as interpreted by us is hereby quashed. The appeal is allowed with no orders as to costs. 6. The learned counsel for the respondent Board strenuously urged before us that the view expressed by the Delhi High Court should not be followed as it was contrary to the Rules, Regulations, circulars and contemporaneous practice of the Board as a regulator. She urged that right from the beginning the Board has been granting multiple registrations to the stock brokers on the basis of their memberships with different stock exchanges and that the said practice should be allowed to be continued. She has filed her detailed written submissions in this regard. She also informs us that the Board has preferred an appeal in the Supreme Court against the aforesaid judgment of the Delhi High Court and that the same stands admitted and the parties therein have been directed to maintain status quo. We have given our thoughtful consideration to the contentions advanced by the learned counsel for the respondent but regret our inability to accept the same as we are in agreement with the view expressed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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