TaxTMI 
TaxTMI 
2015 (12) TMI 465
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....tive the factual matrix in Civil Appeal No. 3682 of 2006, in which the arguments in the main have been addressed. 2. Premium Capital Market & Investments Pvt. Ltd. was incorporated on 24.6.1992, which on 9.2.1994 changed its name to Premium Capital Market & Investments Ltd (hereinafter 'PCMIL', Appellant No. 3). On an application for Trading Membership of National Stock Exchange of India Ltd. (hereinafter 'NSE') in the Capital Markets Segment by PCMIL, vide letter dated 16.5.1994, NSE sent them an offer of membership subject to certain conditions enclosed in Annexure 'A'. In its letter dated 4.10.1994 SEBI made observations on the Draft Prospectus for Public Offer submitted by PCMIL, including the conditions for NSE membership, namely that....
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....only receiving lease amounts. 4. Thereafter on 4.4.2000 a fresh application was made for transfer of membership to PGSL and the NSE approved the aforesaid application on 12.4.2000 without any transfer fees. Steps for registration with SEBI were initiated and PGSL was issued the Registration Certificate on 20.9.2000. Meanwhile PCMIL received a letter from the NSE Disciplinary Committee dated 7.6.2000 directing PCMIL to cease all business in the nature of fund-based activities and to initiate steps to segregate it within two months. Alternatively the Committee also advised that PCMIL could set up a separate subsidiary to take up the broking activity. 5. On 30.9.2002 SEBI issued a Circular on Fee Continuity benefits. The relevant portions of....
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....ility Regularisation) Scheme 2004 came into force. The Scheme envisaged a waiver of 80% outstanding interest if the broker paid the outstanding principal along with 20% outstanding interest during a specified period. SEBI issued a Provisional Fee Liability Statement demanding payment of fees and NSE along with its cover letter sent it to PGSL and PGSL filed an appeal before the SAT. 7. The primary issue before SAT was whether the Appellants were under any compulsion of law to transfer their brokerage business to a subsidiary. SAT ruled in favour of SEBI stating that since the Appellants were subject to the bar in Rule 8(1)(f) they were therefore required to sever themselves from their fund-based activities to keep in line with the provisio....
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....r the membership to PGSL. 9. Mr. S Ganesh, learned Senior Counsel for the Appellant, has relied on Ratnabali Capital Markets Ltd. v. Securities Exchange Board of India (2008) 1 SCC 439, where the term 'compulsion of law' for the first time came to be discussed in light of the SEBI Circular dated 30.9.2002. The appellants in Ratnabali Capital Markets Ltd. underwent an amalgamation in order to increase their reserves and qualify themselves to enter the derivatives market. On the prevailing facts it was held that raising money to qualify for membership of a segment did not constitute a compulsion of law for the said merger. Mr. Ganesh submitted that in Ratnabali Capital Markets Ltd. this Court clearly demarcated that any action taken by the b....
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....any. He submits that the mere existence of other options means that there was no compulsion imposed by law to follow this specific course and the Appellants' plea of impossibility is neither a compulsion of law nor has it been raised earlier. Mr. Singh placed reliance on Rules 8(1)(f) and 8(3)(f) of the 1957 Rules to submit that right from the start, the Appellants were under the restriction to not engage themselves in a business other than that of securities. He further brought to our attention 'Annexure A' of the letter of acceptance of membership to the Capital Market Segment of the NSE which placed certain conditions on Appellants to be fulfilled within three months and one of which was the requirement to sever all fund based activities....
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....ntitled to charge registration fees for enabling it to carry out its functions as stipulated in Section 11(2) of the SEBI Act, 1992. However it appears at present that SEBI has pounced at the opportunity to charge fresh registration fees choosing to ignore the exemptions assured by it. 13. We find merit in the arguments furnished by the Appellants. In our opinion, the restriction imposed was to not have fund-based and trading activities together under one roof. Thus any action taken by the Appellants to comply with restriction of not participating in both the activities simultaneously would be under compulsion of law. The Respondents would have us say that only one line of action was compulsion of law but that would have the effect of addi....