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Judgment
Tarun Agarwala, Presiding Officer
In this group of appeals, the appellants have prayed that a direction be issued to Securities and Exchange Board of India (hereinafter referred to as 'SEBI') to correct the errors in the fee liability statement as per the certificate of auditor and turnover certified by Delhi Stock Exchange (hereinafter referred to as 'DSE') and refund the excess amount alongwith interest. Basically the prayer is that the fee liability statement should be recomputed by SEBI and the excess amount should be refunded alongwith interest.
The facts leading to the filing of the present appeals is, that Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992 (hereinafter referred to as 'Stockbrokers Regulations') was promulgated through which SEBI was empowered to collect a fee from the stockbrokers based on their previous turnover. SEBI issued a circular on March 28, 2002 through which stockbrokers were required to submit their turnover data duly certified by their auditors to DSE who, in turn, were required to submit the same to SEBI after due verification and certification at their end of the turnover data supplied by the appellants.
Pursuant to the aforesaid circular, the appellants duly supplied the data certified by their auditor and the same was verified and thereafter forwarded to SEBI. SEBI thereafter prepared the fee liability statement and directed the appellants to deposit the fee as per the fee liability statement alongwith interest. This fee liability statement contained errors and consequently, the quantum of fee levied was incorrect. The appellants accordingly raised objection based on which a second liability statement was prepared by SEBI on October 13, 2004 wherein interest was waived as per Securities and Exchange Board of India (Interest Liability Regulation) Scheme, 2004.
According to the appellants, there were still mistakes in the calculation of the turnover and accordingly the appellants filed several representations requesting SEBI to recalculate the turnover. This remained pending for several years and eventually respondent No. 2, namely, DSE asked the appellants again to resubmit the turnover details on August 29, 2011 for the financial years 1991-92 to 1995-96. These details were duly supplied and thereafter without addressing the grievance of the appellants, SEBI recovered the outstanding fee liability in the year 2016 without addressing the veracity of the turnover data calculated by them. Accordingly, the present appeals were filed praying for a direction to SEBI to recalculate the fee.
During the pendency of the appeals, some proposal was given by the appellants which was considered and SEBI by letter dated May 3, 2021 quantified the amounts which was liable to be refunded but required the appellants to submit an indemnity cum undertaking. The respondent has given details of the amount in para 5 (e) of the common reply that has been calculated and which is required to be refunded and which is extracted hereunder :-
Sr. No.
Name of Appellant
Refund due to / payable by Appellant (In Rupees)
Refund due to DSE on behalf of the Appellant (In Rupees)
1.
Kuber Securities Limited
4,70,683
59,24,121
2.
LNS Stock Holdings P. Ltd.
-11,37,021
26,06,126
3.
Subhash & Co.
250
76,26,281
4.
VK Dua & Co.
3,08,940
18,19,187
5.
M/s. Virendra Kumar Jain
-227764
19,91,901
Total :
1,99,67,616*
We have heard Mr. Bharat B. Merchant, the learned counsel with Mr. Nadeem M. Shama, the learned counsel and Mr. Maheshwari, authorised representative for the appellants and Mr. Pradeep Sancheti, the learned senior counsel with Mr. Sumit Rai, Mr. Kumar Desai, the learned counsel alongwith Mr. Manish Chhangani, Mr. Ravishekhar Pandey, Mr. Abhiraj Arora, Ms. Rashi Dalmia, Mr. Karthik Narayan, the learned counsel for the respondent Nos. 1 and Mr. Prakash Shah, the learned counsel alongwith Mr. Kushal Shah, Chartered Accountant for the respondent Nos. 2 through video conference.
The contention of the appellants is, that SEBI in their reply has accepted that a refund is to be paid and that refund has to be paid only to the appellants and, therefore, there is no reason why this amount is not being released by SEBI. On the other hand, the learned senior counsel for SEBI submitted that the amount has been calculated of the appellants except in the case of C. R. Jain & Co. and submitted that certain amounts are required to be paid to DSE and the bifurcation is not known nor the parties are coming forward to quantify the exact amount. In this regard, Mr. Prakash Shah, the learned counsel for DSE submitted that certain amount is required to be refunded to them by SEBI. In rejoinder, Mr. Maheshwari, authorized representative for the appellants reiterated that as per the admission of SEBI no amount is to be paid to DSE.
In view of the aforesaid, we find that during the pendency of the proceedings even though certain amounts have been calculated qua some of the appellants the matter has not been completely resolved inter se between the parties.
In view of the aforesaid, it is not possible for this Tribunal to quantify the shares of the appellants and DSE. Consequently, we dispose of all the appeals with a direction to SEBI to calculate the quantum of the refund of each of the appellants with regard to the refund of excess fee paid by them, if any. Upon calculation, SEBI will decide as to how much amount is to be paid to the appellants and how much amount is required to be paid to DSE, if any. Further, SEBI shall decide the matters within four months from today. The aforesaid direction is being made since we find that this controversy is pending since long for more than two decades. In the circumstances of the case, parties shall bear their own costs.
The present matter was heard through video conference due to Covid-19 pandemic. At this stage, it is not possible to sign a copy of this order nor a certified copy of this order could be issued by the Registry. In these circumstances, this order will be digitally signed by the Private Secretary on behalf of the bench and all concerned parties are directed to act on the digitally signed copy of this order. Parties will act on production of a digitally signed copy sent by fax and/or email.