2023 (3) TMI 1078

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e converted to the corporate entity MFL. 2. The brief facts of the case culled out are that one Srikant Mantri became a member of the Calcutta Stock Exchange(hereinafter being referred to as the "CSE") and was granted registration as a stock broker on 30th November, 1992. Sometime in the year 1997, he decided to transfer his membership card of CSE in favour of Mantri Finance Ltd.the appellant herein(hereinafter being referred to as the "Company"). It is not in dispute that the company was registered with the Registrar of Companies, Calcutta on 27th December, 1998 under the name and style of Ushagram Properties and Finance Ltd. Later, it changed its name to Mantri Finance Ltd. on 13th November, 1992. The Company had started the business of stock broking in 1995 and became a member of NSE and thereafter sought registration with the Board as a stock broker and obtained membership of NSE as a stock broker on 17th October, 1995. Thereafter, when the membership card of Srikant Mantri was transferred in the name of the Company, the latter became a member of CSE and was registered as a stock broker of CSE on 1st April, 1998. 3. After obtaining the membership of CSE on transfer of the car....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e first instance, was the sole proprietor of the firm M/s. Govind Prasad Shrikant & Co. which was registered with the Board since 30th January, 1992. Under Para 4 to Schedule III, it applies for conversion of membership to a corporate entity and membership of the old entity, i.e., M/s. Govind Prasad Shrikant & Co. (SEBI Registration No. INB030054715) was converted into a corporate entity w.e.f. 1st April, 1998. Accordingly, the appellant fulfils the preconditions as indicated in para 4 of Schedule III annexed to the Regulations and this is the apparent error which has been committed by the Board in the first instance and the factual matrix has not been appreciated by the Tribunal as well. 10. Learned counsel further submits that para 4 was added to Schedule III pursuant to Board's policy to corporatize individual stock brokers, and to institutionalize the stock broking activity and further submits that the interpretation ought to be in consonance with the intent and purport of the policy to which para 4 was added to Schedule III. 11. Learned counsel further submits that in the case of conversion, the individual registration has been converted into a corporate registration and, th....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ra in view of the judgment of this Court wherein it has been held as under: " 47. Thus, in our considered view, the conjoint reading of the expression "a certificate" as referred to in Section 12(1) of the Act read with the scheme of Rules, 1992 and Regulations 1992, leads to an inevitable conclusion that the stock broker not only has to obtain a certificate of registration from SEBI for each of the stock exchange where he operates, at the same time, has to pay ad valorem fee prescribed in terms of Part III annexed to Regulation 10 of the Regulations, 1992 in reference to each certificate of registration from SEBI in terms of the computation prescribed under Circular dated 28th March, 2002 and fee is to be paid as a guiding principle by the stock broker which is in conformity with the scheme of Regulations 1992." 16. The issue involved in the instant appeal confines as to whether the appellant Company is entitled to fee continuity benefits under Para 4 of Schedule III of the Regulations 1992. 17. To examine the said issue no. (ii), it will be apposite to first take note of para 4 of Schedule III of Regulations, 1992 which is as follows : " Where a corporate entity has been f....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

..... The Board adopted a policy to encourage the brokers to corporatize themselves so that their working becomes more transparent as corporate entities have more and better regulatory controls as compared to individuals and partnerships. With this object in view, the Board introduced paragraph 4 in Schedule III to the Regulations with effect from 21.1.1998 and it decided to give the benefit of the fee already paid by the individual or partnership prior to its becoming a corporate entity. In the case before us the Board has found that when Srikant Mantri transferred his membership card of CSE to the company, he was not a whole time director therein but was only a director. This fact is being disputed by the appellant before us. It is not necessary for us to record a finding in this regard because we are of the view that the company is not entitled to the benefit under paragraph 4 of the Schedule because there is no continuity. As already noticed, the corporate entity is not entitled to claim exemption from the payment of registration fee only if the individual or partnership had been converted into a corporate entity. In the instant case, Srikant Mantri did not convert himself into a c....