Markandeya Katju, C.J.
1. This Letters Patent Appeal has been filed against the impugned judgment dated 26.10.2004 in WP(C) No. 5417/2003.
2. The facts in detail have been mentioned in the judgment of the learned single Judge and hence we are not repeating them here again except where required. The short question which arises for consideration in this appeal is whether under the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as 'the Act') a stock broker has to get a certificate of registration from the Securities and Exchange Board of India (for short 'SEBI') from each of the stock exchanges where he operates, or whether a single certificate of registration from the SEBI is sufficient.
3. In this connection, we reproduce Section 12(1) of the Act:-
'12(1) No stock broker, sub-broker, share transfer agent, banker to an issue, trustee of trust deed, registrar to an issue, merchant banker, underwriter, portfolio manager, investment adviser and such other intermediary who may be associated with securities market shall buy, sell or deal in securities except under, and in accordance with, the conditions of a certificate of registration obtained from the Board in accordance with the (regulations) made under this Act:'
4. In our opinion, a bare perusal of Section 12(1) of the Act makes it clear that only one certificate of registration from the SEBI is required even if a stock broker operates from several stock exchanges in the country. In fact, Section 12(1) of the Act does not refer to any stock exchange at all. All it states is that a stock broker can do business in buying or selling securities only after getting a certificate of registration from the SEBI in accordance with the regulations made under the Act. The expression 'a certificate' means one certificate because the word'- means one. For instance, when we say we have seen a man, it means that we have seen one man, and not two or more men.
5. Mr. Jayant Bhushan, learned Senior Counsel for the appellant invited our attention to the rules and regulations made under the Act.
6. Rule 3 of the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Rules, 1992 states;-
'3. No stock broker or sub-broker shall buy, sell, deal in securities, unless he holds a certificate granted by the Board under the Regulations:
Provided that such person may continue to buy, sell or deal in securities if he has made an application for such registration till the disposal of such application.'
7. Rule 4 of the aforesaid Rules states;-
'4. The Board may grant a certificate to a stock broker subject to the following conditions, namely :-
(a)he holds membership of any stock exchange;
(b)he shall abide by the rules, regulations and bye-laws of the stock exchange or stock exchanges of which he is a member;
(c)in case of any change in the status and constitution, the stock broker shall obtain prior permission of the Board to continue to buy, sell or deal in securities in any stock exchange;
(d)he shall pay the amount of fees for registration in the manner provided in the regulations; and
(e)he shall take adequate steps for redressal of grievances of the investors within one month of the date of the receipt of the complaint and keep the Board informed about the number, nature and other particulars of the complaints received from such investors.'
8. The above quoted Rules also makes it clear that a single certificate of registration from the SEBI is sufficient and a stock broker is not required to take two or more certificates from SEBI even if he functions as a stock broker in two or more stock exchanges.
9. No doubt, a stock broker may also need to get registered in a stock exchange, but in our opinion, registration in a stock exchange is totally different from registration with the SEBI. To be a member in a stock exchange a stock broker may have to comply with the rules and regulations of that stock exchange and the stock exchange may or may not admit a stock broker as a member depending on various considerations. However, that has nothing to do with registration with the SEBI.
10. Regulation 3(1) of the Securities and Exchange Board of India (Stock Brokers and Sub-Brokers) Regulations,1992 states;-
'3(1) An application by a stock broker for grant of a certificate shall be made in 'Form A' through the stock exchange or stock exchanges, as the case may be, of which he is admitted as a member.'
11. Regulation 6 of the said Regulations states;-
'6. The Board on being satisfied that the stock broker is eligible, shall grant a certificate in 'Form D' to the stock broker and send an intimation to that effect to the stock exchange or stock exchanges as the case may be.'
12. The above Rules and Regulations also support the interpretation which we have given, namely, that only one registration with the SEBI is required and multiple registration with SEBI is not necessary for a stock broker even if he functions from several stock exchanges. We, thereforee, do not agree with the view taken by the learned single Judge in the impugned judgment.
13. Learned counsel for the respondent has relied on the SEBI Circular No. SMD Policy Cir-11/98 dated 16.3.1998. Clause 7(e) refers to SEBI Registration numbers. On the strength of the aforesaid circular, learned counsel for the respondent submits that multiple registration with the SEBI is contemplated by the law. We do not agree.
14. It may be mentioned here that according to the theory of the eminent jurist Kelsen (The Pure Theory of Law) in every legal system there is a hierarchy of laws, and the general principle is that if there is a conflict between a norm in a higher layer of the hierarchy and a norm in a lower level of the hierarchy, then the norm in the higher layer prevails, and the norm in the lower layer becomes ultra virus (see Kelsen's 'The General Theory of Law and State').
15. In our country this hierarchy is as follows:-
(1)The Constitution of India.
(2)Statutory Law, which may be either Parliamentary Law or law made by the State Legislature.
(3)Delegated legislation which may be in the form of rules, regulations etc. made under the Act.
(4)Administrative instructions which may be in the form of GOs, Circulars etc.
16. The SEBI Act is in the second layer of this hierarchy and the rules and regulations are in the third layer, whereas the circular dated 16.3.1998 is in the fourth and the lowest layer in the hierarchy. Hence, if there is a conflict between the Act and the Rules & Regulations the Act will prevail, and if there is a conflict between the Act, Rules and Regulations on the one hand, and the circular on the other, the former will prevail and the latter becomes ultra virus vide Union of India v. Arun Kumar Roy, AIR 1986 SC 737, Shish Ram v. State of H.P : (1996)10SCC166 , Union of India v. Madras Telephone S.C & S.T Social Welfare Association : (2000)9SCC71 , etc.
17. In our opinion, Section 12(1) of the Act is very clear and it clearly envisages only one registration by the SEBI. Hence it is really not necessary to look into the Rules and Regulations in this connection, far less looking into any circular. If we accept the interpretation canvassed by Mr. Raju Ramachandran, learned Senior Counsel for the respondent that multiple registration by the SEBI is envisaged by the Act, then we will be modifying the language of Section 12(1) of the Act and instead of the words 'and in accordance with the conditions of a certificate of registration obtained from the Board', we will be substituting the words 'and in accordance with the conditions of the certificates of registration in respect of each of the stock exchanges from where it operates obtained from the Board'.
18. It is a settled principle of interpretation that the Court should neither add nor delete words from a statute. Where the words of a statute are absolutely clear and unambiguous, recourse cannot be resorted to the principles of interpretation, other than the literal rule, vide: Swedish Match AB v. Securities and Exchange Board, India : AIR2004SC4219 . As held in Prakash Nath Khanna v. C.I.T : 2004CriLJ3362 , the language employed in a statute is the determinative factor of the legislative intent. The legislature is presumed to have made no mistake. The presumption is that it intended to say what is has said. Assuming there is a defect or an omission in the words used by the legislature, the Court cannot correct or make up the deficiency, especially when a literal reading thereof produces an intelligible result, vide Delhi Financial Corporation v. Rajiv Anand : (2004)11SCC625 . Where the legislative intent is clear from the language, the Court should give effect to it, vide Government of Andhra Pradesh v. Rod Rollers owners Welfare Association : (2004)6SCC210 .
19. In Jinia Keotin v. Kumar Sitaram Manjhi : [2002]SUPP5SCR689 , the Supreme Court observed:-
'The Court cannot relegislate on the subject under the guise of interpretation against the legislative will expressed in the enactment itself.'
20. The rules of interpretation would come into play only if there is any doubt with regard to the express language used. Where the words are unequivocal, there is no scope for importing any rule of interpretation: vide: Pandian Chemicals Limited v. CIT : [2003]262ITR278(SC) .
21. It is only where the provisions of a statute are ambiguous that the Court can depart from a literal or strict construction: vide: Narsiruddin v. Sita Ram Agarwal : [2003]1SCR634 . Where the words of a statute are plain and unambiguous effect must be given to them: vide: Bhaiji v. Sub-Divisional Officer, Thandla : [2002]SUPP5SCR116 .
22. In Hiralal Ratanlal v. STO : [1973]2SCR502 the Supreme Court observed:
'In construing a statutory provision the first and foremost rule of construction is the literary construction. All that the court has to see at the very outset is what does the provision say. If the provision is unambiguous and if from the provision the legislative intent is clear, the court need not call into aid the other rules of construction of statutes. The other rules of construction are called into aid only when the legislative intent is not clear.'
The same view has been taken in CIT v. G Hyatt : [1971]80ITR177(SC) .
23. In our opinion, since the language of Section 12(1) of the Act is very clear, we need not resort to the other principles of interpretation and we must abide by the literal rule of interpretation. In our opinion the language used in Section 12(1) makes it clear that only one registration with SEBI is required. Hence it is really not necessary to look into the Rules, Regulations or circulars in this connection.
24. In Shiv Shakti Co-operative Housing Society v. Swaraj Developers : [2003]3SCR762 , the Supreme Court observed:-
'It is a well settled principle in law that the Court cannot read anything into a statutory provision which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent.'
25. Where the language is clear, the intention of the legislature has to be gathered from the language used: vide: Grasim Industries Limited v. Collector of Customs : 2002(141)ELT593(SC) and Union of India v. Hamsoli Devi : [2002]SUPP2SCR324
26. The function of the Court is only to expound the law and not to legislate vide: District Mining Officer v. Tata Iron and Steel Company : (2001)7SCC358 . If we accept the interpretation canvassed by the learned counsel for the respondent we will really be legislating because in the guise of interpretation we will be really amending Section 12(1) of the Act.
27. In Gurudevdatta VKSSS Maryadit v. State of Maharashtra : [2001]2SCR654 , the Supreme Court observed:
'It is a cardinal principle of interpretation of statute that the words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning, unless such construction leads to some absurdity or unless there is something in the context or in the object of the statute to suggest to the contrary. The golden rule is that the words of a statute must prima facie be given their ordinary meaning. It is yet another rule of construction that when the words of the statute are clear, plain and unambiguous, then the courts are bound to give effect to that meaning, irrespective of the consequences. It is said that the words themselves best declare the intention of the law-giver. The courts have adhered to the principle that efforts should be made to give meaning to each and every word used by the legislature and it is not a sound principle of construction to brush aside words in a statute as being inapposite surpluses, if they can have a proper application in circumstances conceivable within the contemplation of the statute.'
28. The same view has been taken by the Supreme Court in S. Mehta v. State of Maharashtra : 2001CriLJ4259 and Patangrao Kadam v. Prithviraj Sajirao Yadav Deshmugh : [2001]2SCR118 .
29. Mr. Raju Ramachandran, learned Senior Counsel for the respondent submitted that Section 12(1) of the Act uses the words 'a certificate of registration obtained from the Board in accordance with the regulations made under the Act'. He submitted that in view of the underlined words when read with the regulations multiple registration with SEBI is necessary. We do not agree.
30. In our opinion, the words 'in accordance with the regulations made under the Act' only refer to the procedure prescribed in the regulations for obtaining a certificate. That procedure has been mentioned in the regulations vide Regulation 3 etc. It has nothing do with the question as to whether there should be a single registration with the SEBI or multiple registration.
31. For the reasons given above, the appeal is allowed and the impugned judgment is set aside and we clarify that only a single registration with the SEBI is required even if a stock broker has membership of, and functions from, several stock exchanges. The consequence is, thereforee, that he will have to pay registration fees for registration with the SEBI only for the first registration with the SEBI, and he does not require any further registration even if he operates in several stock exchanges. If he has paid any fees to the SEBI for any subsequent registration after his first registration, the said fees has to be refunded to him by the SEBI forthwith. Paragraph vi of Part A of the Circular dated 28.3.2002 issued by the SEBI and any other part of the circular inconsistent with Section 12(1) as interpreted by us is hereby quashed.
32. The appeal is allowed with no orders as to costs.