IMPORTANT POINT
Corporate entity is not entitled to claim exemption from payment of registration fee only if individual or partnership had been converted into a corporate entity.

JUDGMENT :

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 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 Board as a stock broker and obtained membership of NSE as a stock broker on 17th October, 1995. Thereafter, when the membership card of Srikant Mantri was transferred in the name of the Company, the latter became a member of CSE and was registered as a stock broker of CSE on 1st April, 1998.

3. After obtaining the membership of CSE on transfer of the card from Srikant Mantri, the appellant Company claimed that it should be exempted from payment of registration fee for the period for which Srikant Mantri had already paid the fees. In other words, it claimed the benefit of exemption of the fee already paid by Srikant Mantri. At the same time, also claimed that all the conditions prescribed under para 4 of Schedule III to the Regulations were satisfied and, therefore, it was entitled to claim exemption.

4. The claim of the Company was rejected by the Board by its Order dated 7th May, 2007 holding that Srikant Mantri was only a Director in the Company during the three years period after the transfer of his membership and since he was not the whole time Director, the conditions prescribed under para 4 of Schedule III are not satisfied and accordingly, was not entitled to claim exemption as prayed for by the appellant.

5. The appellant Company filed appeal against order of the Board dated 7th May, 2007 before the Tribunal on following two issues:-

(i) Whether the stock broker requires multiple registrations to operate on more than one stock exchange(s) or a single registration will suffice for all the stock exchanges.

(ii) Whether the appellant Company is entitled to fee continuity benefits provided under para 4 of Schedule III.

6. In regard to issue no. (i), the learned 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 and therefore, will have to pay the fee for initial registration with the Board and set aside the impugned order and remitted the matter to the Board for a fresh computation of the registration fee payable by the Company on the basis of its registration with effect from 17th October, 1995.

7. So far as issue no. (ii) is concerned, learned Tribunal held that the appellant Company has failed to satisfy the conditions of c