2015 (8) TMI 575 - AT - Companies Law

Tribunal Upholds Respondent's Actions, Dismisses Appeal

Mrs. Dina Parikh Versus Inter Connected Stock Exchange of India Ltd. (ISE) and Others

The appeal was dismissed by the Tribunal without any order as to costs. The Tribunal upheld the respondent's actions, including the deduction of annual ... Failure to maintain minimum net worth – Deactivation of trading terminal – Refund of membership subscription fees – Held that:- Deactivating terminal does not ipso facto amount to cancellation of membership, so long as membership subsists, appellant was obliged to pay yearly membership subscription – Appellant was repeatedly informed prior and subsequent to making application for cancellation, that payment of annual subscription fees was mandatory – Yet payment was not paid – In these circumstances decision of respondent in refunding Base Minimum Capital amount after deducting annual subscription amount cannot be faulted – Inspite of approval granted by SEBI, appellant could not complete sale/transfer of membership and hence sought cancellation, thus appellant cannot blame respondent for charging enhanced membership fees – No merit in appeal and hereby dismissed – Decided against Appellant. Issues Involved:1. Condonation of delay in filing the appeal.2. Entitlement to interest on the refunded amount.3. Justification of deduction of annual subscription fees and interest.4. Enhancement of membership fees by the respondent.5. Comparison with arbitration proceedings.Condonation of Delay:The appellant sought condonation of approximately 1000 days delay in filing the appeal. The Tribunal allowed the Miscellaneous Application, condoning the delay without any order as to costs.Entitlement to Interest on Refunded Amount:The appellant requested interest at the rate of 12% on Rs. 66,924 from March 1, 2005, until the final disposal of the appeal. The Tribunal found no merit in this contention, stating that the amount was refunded promptly on August 2, 2011, after receiving SEBI's approval for cancellation of membership effective from June 29, 2011. There was no undue delay in the refund, and hence, the appellant was not justified in demanding interest.Justification of Deduction of Annual Subscription Fees and Interest:The appellant also sought the balance amount of Rs. 33,076 along with interest at 12% per annum from April 1, 2005, till final payment. The Tribunal noted that the appellant's trading terminal was deactivated in April 2005 due to failure to maintain the minimum net worth, but the membership continued. The appellant was liable to pay annual subscription fees as long as the membership subsisted. The appellant paid these fees from 2005 to 2009. The Tribunal held that the deduction of Rs. 33,076 by the respondent, which included annual fees for 2009-2010 and 2010-2011 plus interest on delayed payment, was justified.Enhancement of Membership Fees:The Tribunal addressed the appellant's protest against the enhancement of membership fees from April 1, 2009. The appellant had applied for the transfer of membership on February 9, 2009, and SEBI approved it on June 4, 2009, with the condition that the security deposit would not be released until registration was granted to the transferee-broker. The appellant failed to complete the transfer and sought cancellation of membership on October 29, 2010. The Tribunal ruled that the appellant was liable to pay the enhanced fees as the membership continued until the cancellation application was made.Comparison with Arbitration Proceedings:The Tribunal dismissed the appellant's reliance on arbitration proceedings, clarifying that the arbitration award did not cover the refund of Rs. 33,076. The liability to pay annual membership fees to the respondent was independent of the arbitration outcome and continued irrespective of trading activity. The Tribunal emphasized that the appellant's obligation to pay annual fees persisted until the formal cancellation of membership.Conclusion:The appeal was dismissed with no order as to costs. The Tribunal found no fault with the respondent's actions and upheld the deductions and lack of interest on the refunded amount. The appellant's arguments were deemed without merit, and the Tribunal reinforced the obligation to pay membership fees as long as the membership existed.