Order in the matter of summary proceedings against Surendra Nath Sharma
- Order No.WTM/MSS/MIRSD/68/2010
Ratio decidendi
The rule this decision rests on
1. A stock broker who fails to pay the registration fees prescribed under the Regulations no longer fulfils the condition on which registration is granted, since registration is conditional on payment of fees in the manner the Regulations provide. He is therefore liable to action under the regulation authorising suspension of registration for non-payment of fees. 2. Where the show cause notice cannot be delivered to a stock broker, including because he refuses to receive it, the regulator may proceed by publishing a public notice calling on him to reply within a stated period. 3. A stock broker's plea of personal hardship, such as having no means of livelihood, does not answer proceedings for suspension of registration where he does not dispute that the registration fees are payable. 4. Proceedings for suspension of registration for non-payment of fees are governed by the regulations in force at the time of the order, and the power to suspend is exercised under the statutory power to issue directions together with the suspension provisions of the 2008 Intermediaries Regulations, notwithstanding that the earlier enquiry regulations under which the officer was appointed have since been repealed. Suspension operates until the outstanding fees are paid in full.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
1. Vide Order dated August 11, 2005 under Regulation 16(1) of the extant SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002, SEBI had appointed an Officer to conduct summary proceeding against Surendra Nath Sharma (SEBI Regn. No. INB101000812) (Surendra) who had defaulted in the payment of registration fees as a stock broker. The Officer submitted the report recommending suspension of the certificate of registration granted to Surendra for a period of six months or till such time the outstanding registration fees is paid, whichever is later.
2. I have considered the recommendation of the Officer. I note that several attempts were made to deliver the show cause notice to Surendra. It could not be delivered for various reasons, including refusal by Surendra to receive the same. Therefore, a public notice was issued in Hindustan Times on November 17, 2009 advising Surendra to reply within 15 days from the date of publication of the notice. Surendra replied to the public notice stating that he has no means of livelihood because of an accident. He, however, did not contest the registration fees payable.
3. I note that Regulation 10(1) of the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992 requires every stock broker to pay the fees as specified in the Schedule. Regulation 10(2) authorizes SEBI to suspend the registration of a stock broker who fails to pay the fees required under the Regulations. In terms of Regulation 6A (1), registration granted to a stock broker is subject to condition that it pays the fees in the manner provided in the regulations. Since Surendra has failed to pay the fees, he no more fulfils the condition of registration and he is, therefore, liable for the action under Regulation 10(2) read with Regulation 27(vii).
4. I note that the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002 have since been repealed and replaced by the SEBI (Intermediaries) Regulations, 2008.
5. In the facts and circumstances of the case, I, in exercise of the powers conferred upon me under Section 19 of the SEBI Act, 1992 read with Regulation 33B (5) and (6) of the SEBI (Intermediaries) Regulations, 2008, hereby suspend the certificate of registration of Surendra Nath Sharma (SEBI Regn. No. INB101000812) till the time outstanding registration fees is fully paid.
6. A copy of this Order shall be served on the Uttar Pradesh Stock Exchange of which Surendra Nath is a member for necessary action.
7. This Order shall come into force on the expiry of 21 days from the date of this Order.
DATE: September 17, 2010 M. S. SAHOO PLACE: MUMBAI WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA
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