LexSECURITIES & EXCHANGE BOARD OF INDIA versus ICAP INDIA PVT. LTD.
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(2015] 11 S.C.R. 65 SECURITIES & EXCHANGE BOARD OF INDIA A v. ICAPINDIAPVT. LTD. Civil Appeal No. 5275 of2006 NOVEMBER 24, 2015 [VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ.] Securities & Exchange Board of India (Stock Brokers B & Sub-brokers) Regulations, 1992-Schedule Ill Explanation c after paragraph 3 - Term 'annual turnover' - Interpretation of -Annual turnover of the stock broker- Computation for the purpose of registration fee - Held: Annual turnover of the stock broker must include the value of entire transaction for the purpose of computing the registration fee - Term 'annual D tu mover' cannot be interpreted so as to mean only the amount earned by the stock broker by way of brokerage. Partly allowing the appeal, the Court HELD: On a careful analysis of the Explanation E occurring after paragraph 3 of Schedule Ill of the Securities & Exchange Board of India (Stock Brokers & Sub-brokers) Regulations, 1992 and the definition of 'annual turnover' contained therein as also the reasonings in the impugned order, the 1SAT erred in F limiting the annual turnover of the respondent only to the amount of brokerage earned by it. The earning by way of brokerage represents only the part of price of securities received by the stock broker on his own G account. The other and more significant part of the 'annual turnover' as per the Explanation is the aggregate of the sale and purchase prices of securities, received or receivable by the stock broker on account of his 65 H 66 SUPREME COURT REPORTS [2015) 11 S.C.R. A clients in respect of sale and purchase or dealing in securities during the. financial year. The view taken by the SAT that since in the wholesale debt market segment the broker has a limited role as per the RBI circular and since the broker does not receive the sale or purchase B price because the payment is directly made to the seller, the broker will be saved from inclusion of the sale and purchase prices in his annual turnover, suffers from an apparent error. The error lies in not appreciating that the component of aggregate of sale and purchase prices C which is receivable by the stock broker even on account of his clients is included in the annual turnover. Such sale and purchase price receivable by the stock broker on account of his clients, under the directions of the RBI 0 through the circular dated June 20, 1992 presently goes directly to the seller but it is of no significance. Even if such sale and purchase price had actually been received by the stock broker not on his own account but on account of his clients, it could not belong to the broker E and had to be passed on to the seller because such amount was receivable clearly on account of his clients in contradistinction to any part of sale and purchase price received or receivable by the stock broker on his own account. Thus viewed, the annual turnover- of the F stock broker as per the Explanation must include the value of entire transaction for the purpose of computing the registration fee as per Schedule Ill of the Regulations. In no case the term 'annual turnover' can be so interpreted as to mean only the amount earned by the G stock broker by way of brokerage. The impugned order passed by the SAT is.erroneous in law and is set aside. The matter is remitted back to the SAT for deciding the other relevant issues and grounds as per law. [Para 12, 15] [74-C-H; 75-A-C; 76-B-C] H SECURITIES & !=XCHANGE BOARD OF INDIA v. ICAP INDiAPVf. LTD. B.S.E. Brokers' Forum v. Securities & Exchange Board of India (2001) 3 SCC 482 -relied on. K.P. Varghese v. Income-tax Officer, Emakulam 1982 (1) SCR 629: (1981) 4 SCC 173; Income- tax Officer, Alleppey v. I. M. C. Ponnoose AIR 1970 SC 385: 1970 (1) SCR 678; Government of Andhra Pradesh v. P. Laxmi Devi 2008 (3) SCR 330: (2008) 4 SCC 720 - referred to. Case Law Reference 1982 (1) SCR 629 referred to. Para 7 1970 (1) SCR 678 referred to. Para 9 2008 (3) SCR 330 referred to. Para 9 (2001) 3 sec 482 referred to. Para 13 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5275 of2006 From the Judgment and Order dated 14.08.2006 of the Securities Appellate Tribunal in.Appeal No. 56 of2004. Chander Uday Singh, Dhaval Mehrotra, Bhargava V. Desai, Saumya Mehrotra, Rishi Gautam for the Appellant. 67 A B c D E Jayant Bhushan, Gaurav Agrawal, Prateek Rusia, Amar Dave, Vanita Bhargava, Ajay Bhargava, Abhisar Bairagi, F Khaita
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