Fee continuity on amalgamation applies only when merger is compelled by law; fresh regulatory fees remain valid otherwise.

A merger sanctioned under the Companies Act does not automatically entitle the transferee to fee continuity under the SEBI circular on "compulsion of law"; that expression is construed narrowly and applies only where amalgamation is effectively an alternative to liquidation or comparable legal compulsion. Because the amalgamation here was undertaken to meet the net-worth requirement for entry into the derivative segment, the exemption failed. SEBI was also entitled to levy fresh turnover and registration fees on the merged entity, as its independent regulatory fee regime was not displaced by the amalgamation and did not conflict with the Companies Act.

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Issues: (i) Whether the transferee company, on amalgamation sanctioned by the High Court, was entitled to fee continuity under the SEBI circular dated 30-9-2002 on the footing that the merger was carried out as a result of compulsion of law; (ii) Whether SEBI's demand for fresh turnover and registration fees on the merged entity was inconsistent with the Securities and Exchange Board of India Act, 1992 or otherwise in derogation of the Companies Act, 1956.

Issue (i): Whether the transferee company, on amalgamation sanctioned by the High Court, was entitled to fee continuity under the SEBI circular dated 30-9-2002 on the footing that the merger was carried out as a result of compulsion of law.

Analysis: The expression "compulsion of law" in the circular was construed narrowly and in context. A scheme under sections 391 to 394 of the Companies Act, 1956 is not, by itself, an alternative mode of liquidation in every case; whether it operates as an alternative to liquidation depends on the facts. The circular was intended to protect mergers compelled by circumstances akin to liquidation, particularly where the company is on the brink of winding up and the amalgamation is necessary as an alternative to liquidation. On the facts, the amalgamation was undertaken to satisfy the net-worth requirement for entry into the derivative segment, not because the transferor company was facing liquidation or a comparable legal compulsion.

Conclusion: The transferee company was not entitled to fee continuity under the circular, and the plea of compulsion of law failed.

Issue (ii): Whether SEBI's demand for fresh turnover and registration fees on the merged entity was inconsistent with the Securities and Exchange Board of India Act, 1992 or otherwise in derogation of the Companies Act, 1956.

Analysis: SEBI's role under the Securities and Exchange Board of India Act, 1992 is to regulate the securities market, register and regulate stock-brokers, and protect investors. The licence to trade granted through the stock exchange is distinct from SEBI's regulatory power to levy fees for its statutory functions. After amalgamation, a new entity emerged with a right to operate in the derivative segment, and SEBI was entitled to regulate that entity and insist on fresh fees on the turnover basis. The demand did not conflict with the Companies Act, 1956, because the corporate amalgamation did not extinguish SEBI's independent regulatory fee regime.

Conclusion: SEBI's demand for fresh turnover and registration fees was valid and not in derogation of the Companies Act, 1956.

Final Conclusion: The appeals failed on both the fee-continuity claim and the challenge to SEBI's fresh-fee demand, leaving the impugned orders undisturbed.

Ratio Decidendi: A merger sanctioned under the Companies Act does not automatically attract fee continuity under a regulatory circular; exemption from fresh regulatory fees applies only where the amalgamation is truly compelled by law in the sense of being an alternative to liquidation, and the regulator may levy fresh fees on a newly constituted entity where its statutory mandate so requires.

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