9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (10) TMI 526 - SC - SEBIRegistration of stock brokers, sub-brokers, share transfer agents with SEBI - Single registration with SEBI as sufficient even if the stock broker has various memberships and functions from several stock exchanges - Whether under the Act 1992, a stock broker has to obtain a certificate of registration from SEBI for each of the stock exchanges where he operates or whether a single certificate of registration from SEBI is sufficient and the same would enable him to trade in all other stock exchanges? - Whether the ad valorem fee to be paid for an initial period of five years will recur with every such registration? HELD THAT - High Court, in our view, appears to be influenced by the expression a certificate of registration referred to under Section 12(1) of the Act, 1992 but has failed to notice that the expression a certificate is not in reference to any number and it can be considered that the words in the singular shall include plural as well, and has failed to notice that certificate of registration has to be obtained from the Board in accordance with the regulations framed in exercise of power under Section 30 of the Act 1992. The very scheme of rules framed by the Central Government in exercise of power under Section 29 and regulations framed by the Board under Section 30 of the Act, 1992 has been completely misplaced which indeed has a statutory force. Although the scheme may be in the nature of subordinate legislation, the same has superior force and supplements a mechanism/ procedure according to which the member (stock broker) of the stock exchange has to obtain certificate of registration from the Board and issuance of certificate of registration from SEBI remain co-terminus with the stock exchange to which the stock broker is a member and that being the reason, Reg. 10 read with Schedule III lays down the procedure according to which the fees has to be paid/deposited by the stock broker in obtaining certificate of registration from SEBI in reference to the stock exchange and for its renewal at a later stage for keeping its registration in force. When the law has to be applied in a given case, it is for the Court to ascertain the facts and then interpret the law to apply on such facts. Interpretation, indeed, cannot be in a vacuum or in relation to hypothetical facts. It is always the function of the legislature to say what shall be the law and it is only the Court to say what the law is and this Court applied the principle of purposive construction while interpreting the law to apply to such facts. A statute has to be construed according to the intent that makes it and it is always the duty of the Court to act upon the true intention of the legislature. If a statutory provision is open to more than one interpretation, it is always desirable of the Court to choose the interpretation which represents the true intention of the legislature. It is also well-settled that to arrive at the intention of the legislation, it is always depending on the objects for which the enactment is made, the Court can resort to historical, contextual and purposive interpretation leaving textual interpretation aside. Thus, while interpreting the statutory provisions, the Court is always supposed to keep in mind the object or purpose for which the statute has been enacted. The conjoint reading of the expression a certificate as referred to in Section 12(1) of the Act read with the scheme of Rules, 1992 and Regulations 1992, leads to an inevitable conclusion that the stock broker not only has to obtain a certificate of registration from SEBI for each of the stock exchange where he operates, at the same time, has to pay ad valorem fee prescribed in terms of Part III annexed to Regulation 10 of the Regulations, 1992 in reference to each certificate of registration from SEBI in terms of the computation prescribed under Circular dated 28th March, 2002 and fee is to be paid as a guiding principle by the stock broker which is in conformity with the scheme of Regulations 1992. So far as the emphasis which was made to the expression date of initial registration as referred to in Schedule III(I)(1)(c) is concerned, it is in relation to a certificate of registration which has been obtained by the stock broker from SEBI, which in turn is in relation to the stock exchange of which he is a member. After the expiry of five financial years from the date of initial registration, in reference to the stock exchange, the fee has to be deposited for the purpose of sixth financial year to keep his registration in force. Insofar as the procedure of charging fees as prescribed under Schedule III annexed to Regulation 10 of the Regulations, 1992 is concerned, it has already been examined by this Court, in B.S.E. Brokers Forum, Bombay and Others 2001 (2) TMI 957 - SUPREME COURT and needs no further deliberation of this Court. As in the case where stock broker is declared defaulter or disqualified to continue as a stock broker in reference to one of the stock exchanges, in terms of SEBI Circular SEBI/MIRSD/Master Cir-04/2010 dated 17th March, 2010, it has been notified that such stock exchange shall immediately inform all other stock exchange(s) the details of the defaulter member such as name of the member, the names of the proprietors/partners/ promoters/dominant shareholders, as applicable. This may be a mechanism according to which if the stock broker who is a member of the stock exchange commits default, or on being disqualified to continue as a member, consequential actions could be taken against him pursuant to the circular to which a reference has been made. However, this is not a question to be examined by this Court in the instant proceedings. Consequently, the appeal deserves to succeed and is accordingly allowed and the judgment and order passed by the Division Bench of the High Court is hereby quashed and set aside.
Issues Involved:
1. Whether under the SEBI Act, 1992, a stock broker must obtain a certificate of registration from SEBI for each stock exchange where he operates or if a single certificate is sufficient. 2. Whether the ad valorem fee to be paid for an initial period of five years will recur with every such registration. Issue-wise Detailed Analysis: 1. Requirement of Multiple Registrations: The Supreme Court examined whether a stock broker needs separate certificates of registration from SEBI for each stock exchange or if one certificate suffices. The Court noted that SEBI, established under the SEBI Act, 1992, regulates the securities market and mandates registration for stock brokers. The Division Bench of the High Court had concluded that a single registration with SEBI is sufficient, influenced by the expression "a certificate" in Section 12(1) of the SEBI Act, 1992. However, the Supreme Court disagreed, emphasizing that the term "a certificate" can be interpreted in plural form. The Court highlighted that the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992, and the associated rules require stock brokers to obtain separate registrations for each stock exchange where they operate. The Court concluded that multiple registrations are envisaged under the scheme of the SEBI Act and Regulations. 2. Recurrence of Ad Valorem Fee: The second issue was whether the ad valorem fee, payable for an initial period of five years, recurs with each registration. The Supreme Court referred to Schedule III of the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992, which prescribes the fee structure. The Court noted that the fee is based on the "annual turnover" of the stock broker and must be paid for each certificate of registration. The Court emphasized that after the expiry of five financial years from the date of initial registration, the stock broker must pay the prescribed fee for the sixth financial year to keep the registration in force. The Court held that the ad valorem fee is applicable to each certificate of registration obtained from SEBI in relation to different stock exchanges. Conclusion: The Supreme Court allowed the appeal, setting aside the judgment of the Division Bench of the High Court. The Court upheld the requirement for stock brokers to obtain separate registrations for each stock exchange and pay the ad valorem fee for each registration. The Court emphasized that the scheme of the SEBI Act, Rules, and Regulations supports multiple registrations and the associated fee structure. The judgment clarified the regulatory framework for stock brokers, ensuring compliance with SEBI's mandate to regulate the securities market effectively.
|
