TaxTMI 
TaxTMI 
2001 (3) TMI 2
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.... exchange that they were unable to meet the liabilities of the deceased. The Governing Board of the stock exchange is said to have passed a resolution dated February 12, 1994, declaring Rajesh Shah, the deceased member, as a deemed defaulter and further resolving that his membership rights vested in the stock exchange be disposed of by inviting offers within a minimum floor price of Rs. 25 lakhs. A provisional attachment order dated February 15, 1994, under section 281B of the Income-tax Act, 1961, was issued by the Assistant Commissioner of Income-tax (respondent) in respect of the stock exchange card in the name of Rajesh Shah and margin money and security deposits kept by him with the stock exchange. The stock exchange on February 16, 1....
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....stock exchange filed a writ petition in the High Court challenging the orders of provisional attachment and the garnishee notice. The writ petition has been dismissed by the High Court. (see [1998] 231 ITR 906) which judgment is under challenge in this appeal. Under section 281B, provisional attachment for the purpose of protecting the interested of the Revenue can be ordered in respect of any property belonging to the assessee. The legal representatives of the deceased shall, for the purposes of the Income-tax Act, be deemed to be an assessee [section 159(3)]. The question for determination is as to the nature of the rights of the deceased or his legal representatives in the stock exchange card. On the facts of the case, whether the said ....
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....less than seven years' standing who desires to resign may nominate a person eligible under the rules for admission in his place. Under a proviso to rule 11(a), a member of less than seven years' standing who desires to resign may with the sanction of the Governing Board nominate his own son eligible under the rules for admission to membership of the exchange as a candidate for admission in his place. Under rule 11(b), however, the legal representatives of a deceased member or his heirs or the persons mentioned in Appendix-C to the Rules may with the sanction of the Governing Board nominate any person eligible under the rules for admission to membership of the exchange as a candidate for admission in place of the deceased member. In consider....
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....ouse: (i) first--the payment of such subscriptions, debts, fines, fees, charges and other monies as shall have been determined by the Governing Board to be due to the exchange or to the clearing house by the former member whose right of membership vests in the exchange; Liabilities relating to contracts: (ii) second--the payment of such debts, liabilities, obligations and claims arising out of any contracts made by such former member subject to the rules, bye-laws and regulations of the exchange as shall have been admitted by the Governing Board : provided that if the amount available be insufficient to pay and satisfy all such debts, liabilities, obligations and claims in full they shall be paid and satisfied pro rata, and Surplus: (i....
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....eges of membership but the rights of his creditor members against him shall remain unimpaired and under rule 54 a member's right of membership shall lapse to and vest in the exchange immediately be is declared a defaulter. The stock exchange rules, bye-laws and regulations have been approved by the Government of India under the Securities Contracts (Regulation) Act, 1956. There is no challenge to these rules. The question whether right of membership confers upon the member any right of property is, therefore, to be examined within the framework of the rules, bye-laws and regulations of the exchange. On a plain and combined reading of the rules, it is clear that the right of membership is merely a personal privilege granted to a member, it ....
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....vested in the exchange and his legal representatives and heirs did not exercise the right of nomination by expressing their inability to meet the liabilities of the deceased. In Vinay Bubna v. Stock Exchange [1999] 97 Comp Cas 874 (SC), on consideration of similar rules in respect of the Bombay Stock Exchange this court held that the membership of the stock exchange is a personal permission from the exchange to exercise the rights and privileges attached thereto. It is not a private asset. That was a case of a defaulter but in principle it would make no difference as under the rules both in the case of the death or default of a member, his right of nomination ceases and vests in the stock exchange. The heirs and legal representatives of R....