2010 (6) TMI 856 - HC - Companies Law

Court orders SEBI to accept revised turnover data, calculate fees under SILRS 2004, and adjust excess payments.

Association For Welfare of Delhi Stock Broker And Ors. Versus Union of India And Ors

The Court found in favor of the Petitioners, an association of Delhi Stock Brokers, in a case challenging SEBI's refusal to accept revised turnover data ... - Issues Involved:1. Challenge to SEBI circular dated 10th October 2003 and Clauses 2 and 3 of Part 2 of the SEBI (Interest Liability Regularization) Scheme, 2004 (SILRS).2. Petitioners' request for the benefit of reduced fee rates under Clause (bb) of Schedule III of SILRS.3. SEBI's refusal to accept turnover data submitted by the Petitioners before the regularization period.4. SEBI's calculation of fee liability based on gross turnover data.5. SEBI's refusal to revise 'Fee Liability Statements' to account for payments already made by Petitioners.Detailed Analysis:1. Challenge to SEBI Circular and Clauses of SILRS:The Petitioners, an association of Delhi Stock Brokers, challenged a SEBI circular dated 10th October 2003 and Clauses 2 and 3 of Part 2 of SILRS 2004. They argued that the circular and clauses were unfair as they restrained SEBI from considering the turnover data with a breakup provided by the Petitioners until the end of the regularization period on 15th November 2004.2. Petitioners' Request for Reduced Fee Rates:The Petitioners sought the benefit of reduced fee rates under Clause (bb) of Schedule III of SILRS, which provides concessional rates for specific transactions like jobbing, government securities, and certain other transactions. They argued that the SEBI should compute their fee liability based on the concessional rates rather than the highest rates.3. SEBI's Refusal to Accept Turnover Data:The Petitioners submitted that the turnover data, duly certified by their auditors, was not accepted by SEBI due to the failure of the Delhi Stock Exchange Association Limited (DSEAL) to submit the data in the correct format. The Petitioners contended that this failure was not deliberate and that SEBI should have accepted the revised data submitted before the regularization period ended.4. SEBI's Calculation of Fee Liability:SEBI calculated the fee liability based on the gross turnover data, arguing that the Petitioners failed to submit the required data by the final deadline of 31st October 2003. SEBI maintained that the fee liability was correctly calculated as per the regulations and that no further data revisions were permissible under SILRS 2004.5. SEBI's Refusal to Revise 'Fee Liability Statements':The Petitioners requested SEBI to revise the 'Fee Liability Statements' to account for the payments already made by them. They argued that SEBI should give them credit for these payments in the revised statements.Judgment:The Court found that SEBI's refusal to accept the revised turnover data submitted by the Petitioners before the regularization period ended was unreasonable. The Court noted that the failure to submit the data in the correct format was due to the lapses of DSEAL and not the individual brokers. The Court directed SEBI to accept the turnover data certified by M/s. Doogar & Associates and compute the fee liability accordingly, giving the Petitioners the benefit of Clause (bb) of Schedule III of SILRS 2004.The Court also directed SEBI to revise the 'Fee Liability Statements' to account for the payments already made by the Petitioners. If any amount was owing to the Petitioners as a result of the revision, it could be adjusted against their future dues. The Court clarified that this was a one-time measure and not to be treated as a precedent.The writ petition was disposed of with the above directions, and no orders as to costs were made.