9911796707
TMI Blog2008 (5) TMI 415X X X X Extracts X X X X X X X X Extracts X X X X ..... ('the Act') is directed against the order dated 12-5-2006 passed by the Securities Appellate Tribunal, Mumbai in Appeal No. 221 of 2004. 3. The impugned order is a one line order which makes a reference to the detailed order passed on 12-5-2006 in a companion matter titled as Kamlesh Ramanlal Shah v. SEBI [Appeal No. 211 of 2004, dated 12-5-2006]. 4. The question which calls for adjudication in this case is regarding 'fee continuity benefit'. Under the SEBI (Stock Brokers and Sub-Brokers) Regulations, 1992 ('the Regulations') a fee is required to be paid by the stock brokers. Broadly, the fee was structured in two distinct phases, in the first five years of operation of a broker, the quantum of the fee was linked to the turnover of the st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al & Sons and, therefore, now the Security Exchange Board of India (SEBI) should give the benefit of fee continuity as for the first five years they have already been charged from the partnership on a turnover basis, therefore, they must now charge on a flat rate of Rs. 5,000 per annum for the registration. The appellant claims on account of transmission since the business and trade continued in the same name or entity and the stock exchange permits continuation of the same membership under the same number and clearing code. They should also be given the benefit under the same registration of the earlier stock broker and the benefit of fee continuity. 8. Mr. Altaf Ahmed, learned senior counsel appearing for the SEBI submitted that there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarified that the conversion of individual or partnership membership card of the exchange into corporate entity shall be deemed to be in continuation of the old entity and no fee shall be collected again from the converted corporate entity for the period for which the erstwhile entity has paid the fee as per the regulations." 9. Mr. Ahmed further contended that it was an incentive for corporatisation since a corporate entity is required to maintain all records under law and as such it facilitates regulating of the stock brokers. Under no other circumstances fee continuity benefit is available under the statutory regulations and hence the appellant cannot be granted benefit of fee continuity on account of transmission. 10. Mr. Ahmed also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grant of a certificate shall pay such fees and in such manner as specified in Schedule III : Provided that the Board may on sufficient cause being shown permit the stock-broker to pay such fees at any time before the expiry of six months from the date on which such fees become due. (2) Where a stock-broker fails to pay the fees as provided in regulation 10, the Board may suspend the registration certificate, whereupon the stock-broker shall cease to buy, sell or deal in securities as a stock-broker." 11. Mr. Ahmed contended that in order to become a member of the stock exchange, the person is required to be qualified as per rule 8 of the Securities Contracts (Regulations) Rules, 1957. This right is also not inheritable, since every pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Shri Kanchanlal K. Vakharia, father of the appellant, was a member of the stock exchange and not the firm M/s. Kanchanlal & Sons. Ordinarily, if M/s. Kanchanlal & Sons is not a member of the stock exchange, the firm would not be entitled to deal with securities in securities market in the Bombay Stock Exchange. The Bombay Stock Exchange does not enroll partnership firm as members. As such, Late Shri Kanchanlal K. Vakharia alone was the member of the stock exchange and he alone was thus entitled to deal in securities in the Bombay Stock Exchange. However, under rule 179 of the Bombay Stock Exchange Rules, an individual member can do business in partnership with certain categorized relations and, therefore, the Bombay Stock Exchange permit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities unless the member of the stock exchange namely the individual member Late Shri Kanchanlal K. Vakharia gets registered with SEBI. It is through that individual member Late Shri K. Vakharia that the partnership firm and registered partners are able to deal in securities on the Bombay Stock Exchange. Even otherwise, the entire turnover of the partnership firm on the stock exchange is on securities and, therefore, relatable to the registered member i.e. Late Shri Kanchanlal K. Vakharia under whose membership of Bombay Stock Exchange and registration of SEBI, such trading is permitted. 16. It was also submitted on behalf of the SEBI that the appellant wants only his turnover to be considered as a member of the Exchange and the other partn ..... X X X X Extracts X X X X X X X X Extracts X X X X
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