LexNIKHIL KANCHANALA LVAKHARIA versus SECURITIES AND EXCHANGE BOARD OF INDIA AND ANOTHER
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
[2008) 8 S.C.R. 946
A
NIKHIL KANCHANALA LVAKHARIA
-1 -
v..
SECURITIES AND EXCHANGE BOARD OF INDIA AND
ANOTHER
(Civil Appeal No. 4210 Of 2006)
B
MAY 15, 2008
[TARUN CHATTERJEE AND DALVEER BHANDARl,JJ]
~
SEBI (STOCK BROKERS AND .SUB-BROKERS)
c REGULATIONS, 1992:
Regulation 10,Schedule Ill, para 4-"Fee continuity ben-
efit"-Son of a member df stock exchange claiming benefit
stating that on being nominated in the partnership firm by his
father, he, as a member of the partnership firm was entitled to
D "fee continuity benefit"-Held: Father of claimant and not the
firm was member of the stock exchange and, as such, the
claimant would not be entitled to the benefit - SEBI (Stock-
Brokers and Sub-Brokers) Rules, 1992 - rr. 4 and 10 - Secu-
rities and Exchange Board of India Act, 1992 - s. 15Z.
E
The appellant claimed that his father was a member
of the Bombay Stock Exchange and was carrying on the
business of stock-broker in the name of a stock broking
firm; that his father, because of his ill health, nominated
F
him in his place as a member of the Stock Exchange, and
thus, he became a partner of the firm; that the Securities
and Exchange Board of India should give the benefit of
fee continuity to the firm, as for the first five years the
Board had already charged from the partnership on turn-
over basis. TIJerefore, the firm should thereafter be
G charged on the flat rate of Rs 5000/- per annum for the
registration. The case of the appellant was that on ac-
"
count of transmission since the business and trade con-
tinued in the same name or entity and the stock exchange
permitted continuation of the same membership under the
H
946
NIKHIL KANCHANALA LVAKHARIA v. SECURITIES
947
AND BOARD OF INDIA AND ANOTHER
~1
same number and clearing code, they should be given A
the benefit under the same registration of the earlier stock
broker as also the benefit of fee continuity. The claim of
the appellant was rejected. The instant appeal was filed
u/s 15Z of the SEBI Act, 1992. The other appeals were filed
in the similar situation.
.f3
The appeal was contested by the SEBI on the ground,
inter alia, that there was no provision in the SEBI Act, Rules,
and/or Regulations of the SEBI which recognized regis-
tration of stock brokers by inheritance and/or transmis-
sion for the purpose of granting fee continuity bene_fit. C
The appellant who was son of the stock broker could, on
transmission, be registered only as a new stock broker
with SEBI in accordance with the Act, Regulations and
the Rules, and subject to payment of registration fee for a
new stock - broker as per the Schedule fixed in the Regu-
D
lations; and that there was no provision for grant of fee
continuity benefit iil case of such transmission.
Dismissing the appeals, the Court
HELD: 1. In the instant case, admittedly, father of the E
appellant was a member of the stock exchange and not
the firm. Ordinarily, if the firm is not a member ofthe stock
exchange, it 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
F
as members. As such, father of the appellant alone was
the member of the stock exchange, and he alone was thus
entitled to deal in securities in the Bombay Stock Ex-
change. [para 14] [953-D,E & F]
1.2 By clear interpretation of the Regulations, it is G
abundantly clear that no provision of succession to reg-
istration is permissible. Son of late member in order to
operate in the stock exchange has to obtain a fresh reg-
istration from the SEBI, and for the first five years he would
be required to pay the quantum of fee linked to the turn-
H
t-
948
SUPREME COURT REPORTS
[2008] 8 S.C.R.
A over and thereafter at the flat rate of Rs. 5000/- in order to
-{-·
keep the registration in force. [para 18] (955-D & E]
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 4210
of 2006
B
From the final Judgment and Order dated 12.5.2006 of
the Securities Appellate Tribunal, Mumbai in Appeal No. 221 of
2004
WITH
c
C.A. Nos. 2951, 3004, 3008, 3009, 3010, 3015, 3016,
3017, 3058, 3082 of 2006
C.A. Sundaram, Shyam Divan, Nisha Bhaksi, Shashi M.
Kapila, Vikas Mehta, Bina Gupta, Varuman Khandelwal, M.K.S.
Menon, Thomas J. Arackaparamban and M.K. Michael for the
D Appellants.
Altaf Ahmad, Bhargava V. Desai, Rahul Gupta, Reema
Sharma, Rajeev Kumar, Jyoti Mendiratta and Ambhoj Kumar
Sinha for the RespondExcerpt shown. Read the full judgment & AI analysis in Lexace.