TaxTMI 
TaxTMI 
2009 (4) TMI 452
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.... of the appellants stand as follows : (I) C.A. No. 3696 of 2005 : The respondent has acted as a sub-broker at the National Stock Exchange with 2 NSE Members, MIS PCS Securities Limited & M/s. Zen Securities Ltd. without being registered as a sub-broker with the SEBI with the said Exchange for the period from the years 2000-01, 2001-02 and from April, 2002 to May, 2002 and created the value of Rs. 403.29 crores, in breach of section 12(1) of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as the "Act") read with rule 3 of the Securities and Exchange Board of India (Stock Brokers & Sub-Brokers) Rules, 1992 (hereinafter referred to as the " Rules"). (II) C.A. No. 4640 of 2006 ( SEBI v. Shilpa Stock Broker....
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.... other hand, supports the order of the Tribunal and contends that proportional penalty can be leveled and the modification done is clearly within the scheme and framework of the Act. It is submitted that when a regulator chooses to elect a particular form of authority, amongst various available penalties which is available and it is appealable the Tribunal has the right to modify it. Reference in this context is made to section 15T of the Act. 5. There is no dispute that there was violation of the provisions of section 12(1) of the Act read with rule 3 of the Rules. 6. Sections 12, 15A, 15B, rule 3 of the Rules and regulation 25 of the Regulation are relevant and read as follows : "12. Registration of stock brokers, sub-brokers, sh....
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....ant, custodian of securities, foreign institutional investor, credit rating agency or any other intermediary associated with the securities market as the Board may by notification in this behalf specify, shall buy or sell or deal in securities except under and in accordance with the conditions of a certificate of registration obtained from the Board in accordance with the regulations made under this Act : Provided that a person buying or selling securities or otherwise dealing with the securities market as a depository, participant, custodian of securities, foreign institutional investor or credit rating agency immediately before the commencement of the Securities Laws (Amendment) Act, 1995, for which no certificate of registration was r....
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.... regulations made thereunder,- (a )to furnish any document, return or report to the Board, fails to furnish the same, he shall be liable to a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less; (b )to file any return or furnish any information, books or other documents within the time specified therefor in the regulations, fails to file return or furnish the same within the time specified therefor in the regulations, he shall be liable to a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less; (c )to maintain books of account or records, fails to maintain the same, he shall be liable to a penalty of one lakh....
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....the stand of the appellant-Board that in terms of regulation 25 which was applicable prior to the amendment with effect from 2-11-2003, it was provided that any contravention of any provisions of the Act, Rules and Regulations is to be dealt with in the manner provided in regulations 26 to 32 of the regulation prior to the amendment with effect from 27-9-2002. Therefore, regulation 25 prior to amendment with effect from 20-11-2003 is applicable which provides that any contravention of any provision of the Act, Rules and Regulation is to be dealt with under the Securities and Exchange Board of India (Procedure For Holding Enquiry By Enquiry Officer and Imposing Penalty) Regulation, 2002 (hereinafter referred to as the 2002 Regulations). 8....
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....f any provision of the Act, Rules and Regulation is to be dealt with under the 2002 Regulations. 11. As per provisions of regulation 13(1)(a)(iv ) read with regulation 13(4) of the 2002 Regulations, SEBI can impose a minor penalty of suspension of the Certificate of Registration of the concerned Stock Broker or Sub-Broker upto three months and can impose major penalty under regulation 13(1)(b)( i) of cancellation of the Certificate of Registration and suspension of the Certificate of Registration of the concerned stock Broker or Sub-Broker exceeding three months. From the above provisions, it is clear that in case of contravention of section 12(1) and/or rule 3 of the Rules, the only penalty provided under the Act and the Regulations is ....