TaxTMI 
TaxTMI 
2015 (11) TMI 382
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....s a Trading member in two segments, that is the Wholesale Debt Market (WDM) as well as in the Equity Market/Capital Market (EM/CM). Subsequently, on 14.1.1999, Oracle informed the NSE that it had entered into a 50:50 Joint Venture with Prebon Holdings B.V. (Prebon Group), namely Prebon Yamane (India) Ltd. (the Respondent), but restricted in respect to the WDM segment alone. NSE advised Oracle to bifurcate the WDM and the EM/CM segments whereupon Oracle forwarded a proposal in writing seeking the approval of NSE for the segregation of its Membership of WDM and of the EM/CM segments. By its letter dated 11.2.1999, NSE approved the proposal of Oracle for segregation but subject to certain conditions, inter alia, that if the trading member Oracle was desirous of surrendering its trading membership, both the entities viz. Oracle and the Respondent would have to surrender their respective memberships simultaneously. As is palpably apparent, NSE looked after its own financial interests by demanding Rs. 10 Lacs as approval fee together with an interest free security of Rs. 50 Lacs. Both entities were also required to maintain their shareholding pattern and comply with the net worth and all....
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....ent, it recorded in its file notings that the two membership cards could be treated as composite and that the turnover of the two cards may be taken together for the purpose of turnover fees. It is not in dispute that till 2003 the Respondent had been availing of the benefits permissible under the fee continuity provisions. This position was also accepted by the Appellant, as both the membership cards were treated as composite and 'concomitant' and the turnover of the two cards of Oracle and the Respondent were taken together on the predication that the Respondent's WDM membership was a continuation of WDM segment of Oracle's membership. 4. On 18.9.2003, the Respondent applied to the NSE for membership in the Derivatives Segment which the NSE, as per procedure, forwarded to the Appellant for its approval. On 24.6.2004, the Appellant returned the application and issued a provisional fee liability statement disclosing that after making the necessary adjustments of the amount paid with respect to its membership in the WDM Segment, there were unpaid dues in the name of the Respondent to the tune of Rs. 5,59,45,054 towards principal and interest. It was indicated that the application....
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....hereupon the stock-broker shall cease to buy, sell or deal in securities as a stock-broker. SCHEDULE III Regulation 10 I. Fees to be paid by the Stock Broker. 1. Every stock broker shall subject to paragraphs 2 and 3 of this Schedule pay registration fees in the manner set out below : (a) where the annual turnover does not exceed rupees one crore during any financial year, a sum of rupees five thousand for each financial year; (b) where the annual turnover of the stock-broker exceeds rupees one crore during any financial year, a sum of rupees five thousand plus one hundredth of one per cent of the turnover in excess of rupees one crore for each financial year; xxx xxx xxx (c) After the expiry of five financial years from the date of initial registration as a stock-broker, he shall pay a sum of rupees five thousand for every block of five financial years commencing from the sixth financial year after the date of grant of initial registration to keep his registration in force. (currently deleted) xxx xxx xxx 4. Where a corporate entity has been formed by converting the individual or partnership membership c....
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....ll pay the amount of fees for registration in the manner provided in SEBI (Brokers and Sub Brokers) Regulations, 1992. This letter also requested the Respondent to study the Rules and Regulations carefully. Learned Senior Counsel for the Appellant contended that the Respondent could not claim "fee continuity" on the basis of internal file notings. Reliance has been placed on the well entrenched legal principle that estoppel has no efficacy against a statute. Sethi Auto Service Station vs. Delhi Development Authority 2009 (1) SCC 180 clarifies this position thus - 13. Thus, the first question arising for consideration is whether the recommendation of the Technical Committee vide minutes dated 17th May, 2002 for re-sitement of appellants petrol pumps constitutes an order/decision binding on the DDA? 14. It is trite to state that notings in a departmental file do not have the sanction of law to be an effective order. A noting by an officer is an expression of his viewpoint on the subject. It is no more than an opinion by an officer for internal use and consideration of the other officials of the department and for the benefit of the final decision-making authority. N....
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....ellant to furnish a copy thereof which was done by its learned Senior counsel who has assured us that copies thereof had already been served on the learned counsel for the Respondent) We think it appropriate to reproduce the contents thereof as it is a summation of the case of the Respondent: "The National Stock Exchange (NSE) was formed in 1993-94 with a view to promote the Debt Market and Capital Markets. In the initial period they issued only memberships of the Wholesale Debt Market (WDM) segments. M/s. Oracle Stocks and Shares Limited (Oracle) applied for and was granted registration of the WDM segment of the NSE. Subsequently, the NSE issued membership in the Equity Market segment wherein the members who were holding membership of the WDM segment were automatically entitled to membership in this segment by paying an additional deposit. Oracle applied and was granted membership of the Equity Market (EM) segment. NSE did not issue a new registration number to Oracle and the company continued to do business in both the segments. Thus, the memberships of the WDM and the EM segments were treated as concurrent and there was no fresh registration with SEBI separatel....
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....f fee continuity to the composite membership taken by M/s Oracle and PYIndia. In other words, if Oracle has paid turnover fees from 1994, and the broking business has commenced from 1994, any fees be levied in either Oracle and/or PYIndia for the balance period, as a composite entity." 10. Learned Senior Counsel for the Respondent has contended that transfer from one juristic person to another is not the appropriate test and that since the Regulations employ the term "entity", it is necessary to determine whether the entities are essentially the same. Senior Counsel has submitted that since Oracle, who was an existing member, had a 50% stake in the Respondent, in effect the Respondent was another manifestation or avatar of Oracle. Further, the Appellant had conducted inspections of the Respondent but had not raised any issue or recorded any objections at that time. Reliance has been placed on the letter dated 30.1.2002 issued by the NSE to the Respondent, which had stated that as per the policies of the NSE, segmental surrender of trading membership was not permitted, and therefore the assignment of WDM segment to the Respondent has been treated as a continuation of the....