GPSK CAPITAL PRIVATE LIMITED (FORMERLY KNOWN AS MANTRI FINANCE LIMITED) versus THE SECURITIES AND EXCHANGE BOARD OF INDIA

Citation: [2023] 2 S.C.R. 737 · Decided: 20-03-2023 · Supreme Court of India · Bench: AJAY RASTOGI · Disposal: Disposed off
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Judgment (excerpt)

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[2023] 2 S.C.R. 737
737
GPSK CAPITAL PRIVATE LIMITED (FORMERLY KNOWN AS
MANTRI FINANCE LIMITED)
v.
THE SECURITIES AND EXCHANGE BOARD OF INDIA
(Civil Appeal No(s). 2402 of 2008)
MARCH 20, 2023
[AJAY RASTOGI AND BELA M. TRIVEDI, JJ.]
Securities and Exchange Board of India Act, 1992: s. 15(Z) –
Securities and Exchange Board of India (Stock Brokers and Sub
Brokers) Regulations, 1992 – Sch. III, para 4 – Fees continuity
benefits under – Entitlement to – Conversion of individual
membership into a corporate entity – On facts, a member of Calcutta
Stock Exchange-CSE, registered as a stock broker, transferred his
membership of CSE in favour of the appellant company which was
a member of National Stock Exchange- NSE – Appellant company
then became the member of CSE and was registered as stock broker
of CSE – Appellant company claimed exemption from the payment
of registration fee for the period for which the erstwhile member
has already paid the fees and that the conditions prescribed under
para 4 of Sch. III to the Regulations were satisfied – Board rejected
the claim – In appeal, the tribunal held that the single registration
with the Board is sufficient even if the stock broker has multiple
memberships and functions from several stock exchanges, thus will
have to pay the fee for initial registration with the Board and that
the Company failed to satisfy the conditions of clause (4) of Schedule
III and was not eligible to claim exemption from payment of fee
over the period for which the erstwhile individual paid the fees –
On appeal, held: When the erstwhile member transferred his
membership card of CSE to the appellant Company, he was not a
whole time Director but was only a Director – Date on which he
acquired 40% of the shareholding in the appellant Company is
unclear – Details provided nowhere indicate the erstwhile member
as a whole time Director for any of the relevant years – Thus, the
appellant Company failed to fulfil the conditions under Para 4 of
Sch. III and not entitled to claim fee continuity benefits.
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SUPREME COURT REPORTS
[2023] 2 S.C.R.
Securities and Exchange Board of India Vs. National
Stock Exchange Members Association and Another
2022 SCC Online SC 1392 – referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2402
of 2008.
From the Judgment and Order dated 09.08.2007 of the Securities
Appellate Tribunal, Mumbai in Appeal No. 76 of 2007.
With
Civil Appeal No. 5636 of 2007.
Chander Uday Singh, Sr. Adv., Bhargava V. Desai, Rahul Gupta,
Ms. Viddushi Shandilya, Ms.
Bidya Mohanty, Amjid, Zubin M John, Ms. Pallavi Maurya, Ms.
Devina Bhandari, Amit Annappa Pai, Ramesh Babu M. R., Ashish Bhakta,
Advs. for the appearing parties.
The Judgment of the Court was delivered by
RASTOGI, J.
Civil Appeal No(s). 2402 of 2008
1. The instant appeal has been filed under Section 15(Z) of the
Securities and Exchange Board of India Act, 1992(hereinafter being
referred to as the “Act 1992”) assailing the judgment and order dated
9th August, 2007 passed by the Securities Appellate Tribunal(hereinafter
being referred to as the “Tribunal”) affirming the order of the Securities
and Exchange Board of India, Mumbai(hereinafter being referred to as
the “Board”) dated 7th May, 2007 holding that the appellant did not satisfy
the conditions of clause (4) of Schedule III of the Securities and Exchange
Board of India(Stock Brokers and Sub-Brokers) Regulations,
1992(hereinafter being referred to as the “Regulations”) hence the
exemption from payment of fees for the period for which the erstwhile
individual Srikant Mantri has paid to the Board cannot be converted to
the corporate entity MFL.
2. The brief facts of the case culled out are that one Srikant Mantri
became a member of the Calcutta Stock Exchange (hereinafter being
referred to as the “CSE”) and was granted registration as a stock broker
on 30th November, 1992. Sometime in the year 1997, he decided to
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transfer his membership card of CSE in favour of Mantri Finance Ltd.-
the appellant herein (hereinafter being referred to as the “Company”).
It is not in dispute that the company was registered with the Registrar of
Companies, Calcutta on 27th December, 1998 under the name and style
of Ushagram Properties and Finance Ltd. Later, it changed its name to
Mantri Finance Ltd. on 13th November, 1992. The Company had started
the business of stock broking in 1995 and became a member of NSE
and thereafter sought registration with the
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