M/S. Hcg Stock & Share Brokers Ltd. vs Sebi

BEFORE THE SECURITIES APPELLATE TRIBUNAL MUMBAI

Date of Decision: 16.1.2019

Misc. Application No.100 of 2018 And Appeal No.120 of 2018

M/s. HCG Stock & Share Brokers Ltd. 45/47, Mumbai Samachar Marg, Mumbai - 400 001. ..... Appellant

Versus

1.

Securities and Exchange Board of India SEBI Bhavan, Plot No.C4-A, "G" Block, Bandra Kurla Complex, Bandra (East) Mumbai - 400 051.

2. National Stock Exchange of India Ltd.

"Exchange Plaza"

Bandra Kurla Complex, Bandra (East) Mumbai - 400 051. ..... Respondents

Mr. Pravin G. Pillay, Advocate for the Appellant.

Mr. Vishal Kanade, Advocate with Ms. Vidhi Jhawar, Advocate for the Respondent no.1.

None for Respondent no. 2.

CORAM: Justice Tarun Agarwala, Presiding Officer Dr. C.K.G. Nair, Member

Per : Justice Tarun Agarwala (Oral)

1. This appeal has been filed challenging the communications dated 23rd

March, 2018, 3rd April, 2018, 17th April, 2018 and email dated 19th April, 2018

issued by the Securities and Exchange Board of India (SEBI). By the said

communications, appellant was directed to pay the outstanding fee and interest

to SEBI latest by April 23, 2018.

2

2. Learned counsel Shri Pravin G. Pillay appearing on behalf of the

appellant submits that the appellant paid the entire amount of fee alongwith the

applicable amount of interest @ 20 percent (after availing the 80% rebate on

interest as an incentive offered by SEBI during the one time settlement

window) on 13th November, 2004. This payment was done through Demand

Draft dated 13th November, 2004 for Rs.5,52,611/- drawn on Canara Bank

favouring SEBI. As such the entire payment due was made by the appellant

within the stipulated time specified by SEBI and, therefore, the appellant

rightly availed the benefit under the scheme.

3. Shri Vishal Kanade appearing for the respondent SEBI submits that the

calculation made by the appellant in page 85 of the Appeal Memo is not

correct. In fact the basis of that calculation itself is not clear. While as per the

statement of fee and interest issued by Respondent no.2 NSE on October 12,

2004 (page 82 and 83 of the Appeal Memo) a total amount of more than 11

lakh rupees (9.85 lakh as principal and 1.46 lakh as interest) was demanded,

the appellant paid an amount of Rs.5,52,611 only. Though the demand raised

vide letter dated 12th October, 2004 was without considering the fee continuity

benefit on which the Hon'ble Supreme Court later in 2015 rejected SEBI's

stance the appellant still had to pay Rs.10,000 as principal. Since the full

amount was not paid in 2004 during the stipulated time appellant is not eligible

for the interest waiver. Hence an additional amount of Rs.3,88,778 is

demanded out of which Rs.10,000 as principal and the remaining as interest.

4. We do not find any merit in the submissions made by the respondent

SEBI. Various documents on record show complete lack of consistency

relating to the facts. For instance the amount demanded is Rs.3,88,653 on 23rd

March, 2018 and Rs.3,88,778 on 3rd April, 2018 but Rs.3,88,153 on April 17,

2018 which belies logic. Similarly, in these communications the amount of

principal outstanding is shown as Rs.10,000 while in para 15(b) at page 8 of 3

the affidavit-in-reply the principal amount outstanding is stated as only

Rs.5,000. Similarly, at page 36 of the affidavit-in- reply it is stated that the

amount 'short by to qualify for waiver of 80% interest' is Rs.1209. All these

indicate that the respondent SEBI itself is not clear about the exact amount of

money due from the appellant. At the same time what is more striking is that

the demand for the balance amount of principal outstanding has been raised on

23rd March, 2018, when the appellant had made the payment on 13th

November, 2004. We cannot accept the argument of SEBI that such an

inordinate delay of 14 years has happened solely because the matter was

pending before the Hon'ble Supreme Court since even after the order of the

Apex Court dated 3rd November, 2015 there is a delay of more than two years

in issuing the impugned demand notices. Public Authorities such as SEBI

shall be much more conscious of the law of limitation while discharging their

functions.

5. For the reasons stated aforesaid the impugned notices dated 23rd March,

2018, 3rd April, 2018, 17th April, 2018 and email dated 19th April, 2018 raising

a demand against the appellant are all quashed. The appeal is allowed.

6. Consequently, Misc. Application no.100 of 2018 seeking stay has

become infructuous and the same is also disposed of. No orders on costs.

Sd/-

Justice Tarun Agarwala Presiding Officer

Sd/-

Dr. C.K.G. Nair Member

16.1.2019 Prepared and compared by RHN