2004 (10) TMI 345 - HC - Companies Law

Summary

Issues Involved:
1. Challenge to SEBI circular requiring separate registration fees for multiple registrations.
2. Interpretation of SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992.
3. Validity of SEBI's methodology for fee calculation.
4. Application of Supreme Court's judgment in BSE Brokers' Forum v. SEBI.

Comprehensive, Issue-wise Detailed Analysis:

1. Challenge to SEBI circular requiring separate registration fees for multiple registrations:
The trading members of the National Stock Exchange challenged the SEBI circular dated 28-3-2002, which required separate registration fees for each SEBI registration held by a stockbroker. The petitioners argued that this clarification was contrary to the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992, and should be quashed.

2. Interpretation of SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992:
The petitioners contended that the Regulations envisaged only a single registration for stock brokers, as indicated by the singular terms used in Regulation 6 and Schedule III. They argued that the concept of "initial registration" and the calculation of fees based on turnover should apply uniformly, without requiring separate fees for multiple registrations.

3. Validity of SEBI's methodology for fee calculation:
The court examined the methodology adopted by SEBI for fee calculation, which was based on the aggregate turnover of all cards held by a broker. The petitioners argued that the fee should be based on a single registration and aggregated turnover from different stock exchanges. However, the court noted that SEBI's approach was consistent with the regulatory framework and the Supreme Court's directives in the BSE Brokers' Forum case.

4. Application of Supreme Court's judgment in BSE Brokers' Forum v. SEBI:
The court referred to the Supreme Court's judgment in BSE Brokers' Forum v. SEBI, which upheld the imposition of fees under Regulation 10 read with Schedule III of the Regulations. The Supreme Court had approved the recommendations of the R.S. Bhatt Committee, which suggested different rates of payment of fees depending on the nature of transactions. The court emphasized that SEBI's circular was a result of these recommendations and the Supreme Court's judgment, and thus, the methodology for fee calculation was valid.

Conclusion:
The court dismissed the petition, finding no merit in the challenge to the SEBI circular. It held that the circular was intra vires the Regulations and clarified the mode and manner of fee calculation. The court noted that the petitioners' attempt to further reduce the incidence of fees, having failed in their earlier challenge in the BSE Brokers' Forum case, could not be permitted. The court also clarified that the petitioners would not be deprived of the benefits of the Securities and Exchange Board of India (Interest Liability Regularisation) Scheme, 2004, due to the interim orders during the pendency of the petition.