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TMI Blog2024 (12) TMI 1464X X X X Extracts X X X X X X X X Extracts X X X X ..... s no discretion in the hands of the SEBI in the matter. Further, charging of interest is in the nature of compensation for accretion to capital and cannot be compared with penalty which involves discretion based on facts and circumstances and underlying intention. Respondent should have given credit for the interest accrued from the date of this Tribunal s order dated December 6, 2006 till the order of the Hon ble Supreme Court s order dated November 24, 2015 - We find that vide the aforesaid order, the Hon ble Supreme Court has upheld the calculation of annual turnover fee made by the SEBI, which is in accordance with the applicable Stockbrokers Regulations, 2002. In view thereof, interest is rightly charged on the appellant on the outstanding dues of annual turnover fee . There is no merit in the claim of interest thereon, since the appellant has already got the credit for interest on the principal amount of Rs. 2.92 Crore for the entire period from 2006 till 2019, since no interest has been charged thereon. A brief period of September 6, 2003 till October 1, 2003, the appellant was having a credit balance of Rs. 74,55,793/-. No interest has been credited to the appellant for thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nter-alia, the chargeability of interest on the outstanding fee. iv. In pursuance of this, this Tribunal vide order dated September 19, 2019, decided as under : 17. In conclusion, we pass the following directions:- (a) Appellant s claim of fee continuity benefit is devoid of any merit and is dismissed. (b) SEBI shall recalculate the turnover fee liability from October 20, 2000 for a period of five years at the rate of 0.001% of the turnover of the appellant. (c) After adjusting the deposits / payments already made by the appellant, if any outstanding amount of principal is due from the appellant SEBI is at liberty to impose simple interest on such outstanding payment at the rate of 15% per annum. (d) Appellant shall submit the turnover data in the prescribed proforma for the five year period from October 20, 2000 within one month from the date of this order and SEBI shall compute the fee liability and communicated to the appellant within a period of one month thereafter. Payment arising from the revised calculations, from either of the parties, shall be completed within one month thereafter. v. Following this, the appellant made detailed submissions before the SEBI vide letters dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round is that the liberty granted by this Tribunal did not mean charging the interest mechanically but discretion ought to have been exercised judiciously on examination of the facts. iv. The respondent has erred in concluding that it has no discretion with regard to the request for waiver of interest under the applicable regulations and the directions of SAT SAT - Securities Appellate Tribunal vide order dated September 19, 2019 allowed it to exercise the discretion. Reliance was placed on the decision of Hon ble Supreme Court in the following cases, the ratio of which is that discretion cannot be discharged arbitrarily but must be a result of judicial thinking:- 1. Union of India vs. Kuldeep Singh [(2004) SCC 590 (599)]; 2. National Insurance Co. Ltd. vs. Keshav Bahadur [(2004) 2 SCC 370]. v. The respondent has failed to consider that the appellant had paid an amount of Rs. 2.42 crore in August 2003 without prejudice to its rights and contentions and a further amount of Rs. 50 lakh on January 14, 2005 (pursuant to the directions of this Tribunal in the Appeal No. 56 of 2004). Subsequently, this Tribunal gave the relief vide order dated August 14, 2006. However, the aggregate amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appeal. 5.1.2 The learned senior advocate brought to our attention Schedule III of the Stockbrokers Regulations and adverted to Regulation 5 thereof, which provides as under :- 5. If a stock broker fails to remit fees in accordance with Paragraphs 1 and 2, he shall be liable to pay interest at 15% per annum for each month of delay or part thereof: Provided that the liability to pay interest as aforesaid may be in addition to any other action which the Board may take as deemed fit against the stockbroker under the Act, or the Regulations: Provided further that if the liability of the stock broker on account of payment of interest works out to be Rs. 100 or less the same may be waived off by the Board taking into consideration the administrative cost involved in recovering the said amount. 5.1.3 The learned senior advocate pleaded that the said Regulations do not provide for any discretion with the respondent to reduce the interest and hence the interest levied by the SEBI on the appellant is as mandated by the regulations. It was submitted that if at all any discretion could be exercised by the respondent, it could be in respect of granting a waiver of fee and not for charging of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r advocate pleaded that in terms of the relevant Regulations as applicable from October 1st, 2000, annual fee is to be paid on or before 1st day of October of the financial year to which such payment relates to, and in terms of Regulation 5 of Schedule III to the Stock-Brokers Regulations, for any shortfall in payment, interest is to be charged at 15% p. a. 5.4 Mr. Sancheti submitted that there is no merit in the plea taken by the appellant that in order to give effect to the order of this Tribunal dated September 19, 2019, the respondent was mandatorily required to exercise discretion and consider reduction of interest since in the said order the words at liberty were used. It was submitted that in the applicable Regulations, no such discretion is provided. In view of this, he submitted that the appeal may be dismissed. 6. We have carefully considered the facts of the case in the light of the rival submissions made by the appellant and the respondent. 7. The Stock-Brokers Regulations came into effect on October 23, 1992. Clause (1)(b) of Schedule III thereof provided the basis of annual turnover for determination of the registration fee. Keeping in view a large number of complaint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid order, this Tribunal directed that SEBI is at its liberty to impose simple interest on outstanding dues at the rate of 15% p. a. (simple). The appellant has taken a plea is that in holding so, the Tribunal has given a discretion to the SEBI whether to charge any interest or not or to charge interest at a lower rate. This has been the main contention of the appellant. We find that in paragraph No. 15 of the Tribunal s order, it has been clearly held as under :- The date of initial registration of the appellant is to be treated as October 20, 2000, the date of granting the fresh registration by SEBI and all fee liabilities arising from its turnover have to be recalculated with effect from this date. Since rate of interest of 15% per annum has been implemented on delayed payment by SEBI from December 16, 1998 interest, if any, on the registration fee / turnover fee @ 15% per annum also is due from the appellant on any delay in depositing / paying the principal amount of fee. 7.3 In view of this, it cannot be held that this Tribunal had given any discretion to the SEBI for calculating interest deviating from the existing Regulations, which provides for mandatory charging of i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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