Ratnabali Capitals Markets Ltd. Vs. Securities and Exchange Board of India and anr.

Decided On : Oct-23-2007

Court : Supreme Court of India

Notice (8): Undefined index: topics [APP/View/Case/meta.ctp, line 36]
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			'acts' => '<a href="/act/51885/securities-and-exchange-board-of-india-act-1992-complete-act">Securities and Exchange Board of India Act, 1992</a> - Sections 11(2), 11B, 15Z and 32; Securities and Exchange Board of India (Stock-brokers and Sub-brokers) Regulations, 1992 - Regulation 10; <a href="/act/51006/companies-act-1956-complete-act">Companies Act, 1956</a> - Sections 153 and 389 to 396; Banking Companies Act, 1949 - Sections 37, 37(3), 38 and 45D; <a href="/act/133312/companies-act-1913-complete-act">Companies Act, 1913</a>; Bankruptcy Act, 1869 - Sections 125 and 126',
			'appealno' => 'Civil Appeal No. 4945 of 2007 (D. No. 18381/07) and Civil Appeal No. 3674 of 2007',
			'appellant' => 'Ratnabali Capitals Markets Ltd.',
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			'casename' => 'Ratnabali Capitals Markets Ltd. Vs. Securities and Exchange Board of India and anr.',
			'casenote' => 'Company - Registration fees - Securities and Exchange Board of India Act, 1992 - X was a registered broker with NSE - It paid registration fee for first year and thereafter paid fees on turnover basis for subsequent four years - SEBI adopted recommendations of committee under which no broker worth less than 3 crores would be allowed to trade as a broker in derivative segment of Stock exchange - X firm merged with Appellant's firm under which all rights, licenses, assets, properties and registrations of X stood transferred to Appellant firm - After merger X with Appellant SEBI demanded registration fees on turnover basis - Appellant claimed benefit of initial registration of X as a stock broker on ground that after merger all assets and liabilities including benefits in form of licenses obtained by RSL stood transferred to RCML - Claim rejected by SEBI - Hence, present appeal - Whether Appellant on amalgamation duly sanctioned by High Court was entitled to claim the benefit of Fee Continuity - Whether the demand made by SEBI imposing fresh turnover/registration fees on the merged entity  constituted an act in derogation of the provisions of any other law - Held, it cannot be said that raising an amount of Rs three crores constituted legal compulsion for X to merge with Appellant - Main function of SEBI is to regulate the trade which takes place in the securities market and for that purpose it is entitled to charge registration fees - After merger a new entity had emerged - Thus SEBI was entitled to charge registration fees - Appeal dismissed  - [S.H.Kapadia & B.Sudershan Reddy, JJ] Scheme of amalgamation   Held, Each Scheme under Section 391 cannot  be construed as alternative to liquidation. It depends on facts of each case. -- SECURITIES AND  EXCHANGE BOARD OF INDIA ACT, 1992 [C.A. No. 15/1992]. Section 11(2): SEBI (Stock-brokers and Sub-brokers) Regulations (1992), Schedule 3 - Circular DD 30.09.2002, Para 7  Registration fee for stock brokers  Benefit of the continuity under circular  Held, As a regulator, SEBI is entitled to charge registration fees for enabling it to carry out the functions stipulated in Section 11(2) of the 1992 Act. There is a dichotomy between functions of the stock exchange and the functions performed by SEBI. The licenses given by the stock exchange enables the stock-broker to buy and sell securities on the exchange whereas the regulation of the trade per se is done by SEBI for which it is entitled to charge requisite registration fees. In the instant case, on merger of the two companies RSL, RCML, a new entity stood emerged/constituted, which was given a right to operate in the derivative segment and, therefore, it had to pay fresh registration fees on the turnover basis. That new entity (RCML) was not entitled to the benefit of continuity of fees deposited earlier by RSL, which got merged into RCML.  Under circular dated 30.09.2002 what SEBI intends to say is that fresh turnover/ registration fees would not be payable by a company which goes for amalgamation/ merger as an alternative to liquidation. In other words, if the companys net worth is negative and if that company is on the brink of liquidation, which compels it to go for a scheme under Section 391, then in such cases, SEBI exempts such companies from payment of fresh turnover / registration fees. Such is not the case herein. On the contrary, in the present case, amalgamation has taken place in order to increase the reserves component of the net worth. The difference between the amount recorded as fresh share capital issued by the Transferee Company on amalgamation and the amount of shares capital of the Transferor Company to be reflected in the Revenue reserve(s) of the Transferee Company was the sole object behind amalgamation. Therefore, SEBI was right, in refusing to give the benefit of exemption to the transferee companies. These transferee companies were not on the brink of liquidation. The scheme under Section 391 was not an alternative to liquidation. Hence, the transferee companies were not entitled to claim the benefit of Circular dated. 30.09.2002. It cannot be said that the demand raised by SEBI for fresh turnover/registration fees constituted an act derogatory of the provisions of the Companies Act. On the emergence of a new entity, which was entitled to operate in derivative market, SEBI was certainly entitled to regulate its trade in the derivative segment for which it was entitled to charge requisite fees.  -  I am, therefore, satisfied that this Court has jurisdiction to entertain the petition and to pass appropriate order in view of the provisions of Section 392 of the Companies Act read with Section 391. 17. We make it clear that it would depend on the facts of each case whether a scheme under Section 391 could be construed as an alternative to liquidation. The point to be noted is that Gupta Committee recommended the net worth of rupees three crores in order to secure the interests of investors and traders who regularly play in derivatives. As stated above, the Government decided to vest SEBI with statutory powers in order to deal effectively with all matters relating to capital market.',
			'caseanalysis' => null,
			'casesref' => 'Sm. Bhagwanti v. New Bank of India Ltd.;',
			'citingcases' => '',
			'counselplain' => ' R.F. Nariman and; Ranjeet Kumar, Sr. Advs.,; Ratnako Banerjee',
			'counseldef' => '',
			'court' => 'Supreme Court of India',
			'court_type' => 'SC',
			'decidedon' => '2007-10-23',
			'deposition' => 'Appeal dismissed',
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			'judge' => ' S.H. Kapadia and; B. Sudershan Reddy, JJ.',
			'judgement' => '</p><p style="text-align: justify;">S.H. Kapadia, J.</p><p style="text-align: justify;">1. Delay condoned.</p><p style="text-align: justify;">2. Admit.</p><p style="text-align: justify;">3. The above two civil appeals are directed against the decisions dated 18.5.2006 and 4.5.2007 delivered by the Securities Appellate Tribunal, Mumbai in appeal Nos. 267/04 and 245/04 respectively.</p><p style="text-align: justify;">4. The short question that arises for our consideration in these civil appeals filed under Section 15Z of the <a href="/act/51885/securities-and-exchange-board-of-india-act-1992-complete-act">Securities and Exchange Board of India Act, 1992</a> (for short the '1992 Act') is whether the appellants were entitled to the benefit of fee continuity under para 7 of Circular dated 30.9.2002 issued by SEBI.</p><p style="text-align: justify;">5. For the sake of convenience, we may mention hereinafter the facts in the case of Ratnabali Capital Markets Ltd. ('RCML') which are as under.</p><p style="text-align: justify;">6. In 1995 Ratnabali Securities Ltd. ('RSL') was registered as a broker with National Stock Exchange ('NSE'). In terms of Schedule III of SEBI (Stock-brokers and Sub-brokers) Regulations, 1992 ('the Regulations'), RSL had paid initial registration fees for the first year and thereafter it had paid fees on turnover basis for subsequent four years. No further fees on turnover basis was paid by RSL under the said Regulations for continuation of registration except a fee of rupees five thousand for a block of next five years. RSL operated in cash and spot market.</p><p style="text-align: justify;">7. SEBI adopted recommendations of Gupta Committee stating that no company whose net worth was less than rupees three crores would be allowed to trade as a broker in the derivative segment of the Stock Exchange. To meet this net worth criteria, RSL and RCML merged under the Scheme of Amalgamation sanctioned by the order of the Calcutta High Court. Under that order, all rights, licences, assets, properties and registrations of RSL stood transferred by operation of law to RCML.</p><p style="text-align: justify;">8. On 30.9.2002 SEBI issued a circular stating that in the case of merger carried out as a result of compulsion of law, fees would not have to be paid afresh by a transferee entity provided that majority shareholders of transferor entity (RSL) continues to hold majority shareholding in the transferee entity (RCML).</p><p style="text-align: justify;">9. After the merger of RSL with RCML, a demand was made by SEBI for registration fees on turnover basis. Under the said Regulations, no stock-broker can buy, sell or deal in securities unless he holds a certificate granted by SEBI under its Regulations. Under the said Regulations, the stock-broker is required to pay fees for registration in the manner provided in the Regulations. Under Regulation 10, every applicant eligible for grant of a certificate has to pay fees in the manner specified in Schedule III. Under that Schedule, every stock-broker whose annual turnover does not exceed rupees one crore during any financial year has to pay rupees five thousand as registration fees for each financial year and whereas the annual turnover exceeds rupees one crore during any financial year he has to pay rupees five thousand plus one hundredth of one per cent of the turnover in excess of rupees one crore for each financial year. We quote hereinbelow Clause (c) of para 1 of Schedule III, which reads as under:</p><p style="text-align: justify;">After the expiry of five financial years from the date of initial registration as a stock-broker, he shall pay a sum of rupees five thousand for every block of five financial years commencing from the sixth financial year after the date of grant of initial registration to keep his registration in force </p><p style="text-align: justify;">A reading of Clause (c) makes it clear that where the stock-broker has paid registration fees either under Clause (a) or Clause (b) he shall have to pay rupees five thousand for every block of five financial years commencing from the sixth financial year after the date of initial registration in order to keep his registration in force.</p><p style="text-align: justify;">10. What RCML is now claiming is the benefit of initial registration of RSL as a stock-broker. According to RCML, when the above two companies stood merged on 9.2.2000, which merger was approved by Calcutta High Court, all assets and liabilities, including benefits in the form of licences obtained by RSL, stood transferred by operation of law in the hands of RCML. According to RCML, the concept of merger constitutes transfer by operation of law. According to RCML, the concept of merger operates on account of legal compulsion or compulsion in law. According to RCML, in the case of merger, which takes place after complying with the procedure prescribed by Sections 391 to 394 of the Companies Act, duly approved by the High Court, the assets and liabilities of the transferor company comes into the hands of RCML on account of legal compulsion. There is nothing voluntary in such cases of merger. According to RCML, the registration fees once paid by RSL should be given the benefit of continuity vide para 7 of Circular dated 30.9.2002 issued by SEBI. In other words, RCML now claims that it is entitled to the benefit of registration fees which RSL had paid from time to time as a broker in the cash and spot market. This claim of RCML has been rejected by the impugned decision. Hence, this civil appeal.</p><p style="text-align: justify;">11. In the present case, the two companies merged because after 2000, derivative markets opened out. RSL basically operated under the licences in cash and spot markets. They did not operate in the derivative markets. When the two companies merged, a new entity emerged. That entity was RCML. At this stage, it is important to bear in mind that licence from NSE/BSE only provided a platform to RSL/RCML to carry on the business of buying and selling shares on the stock exchange. However, trade had to be regulated by SEBI. The Companies Act has been enacted with a view to consolidate and amend the law relating to companies and certain other associations. On the other hand, the 1992 Act has been enacted to provide for the establishment of a Board to protect the investors' interests in securities and to regulate the securities market and for matters connected thereto. Under the said 1992 Act, SEBI is required to provide for regulating the business in stock exchanges, registering and regulating the working of stock brokers and numerous other functions which are enlisted in Section 11(2) of the said 1992 Act. Under Section 11B of the 1992 Act, SEBI is also empowered to issue directions inter alia to any person associated with the securities market. As a regulator, therefore, SEBI is entitled to charge registration fees for enabling it to carry out the functions stipulated in Section 11(2) of the 1992 Act. We repeat that there is a dichotomy between functions of the stock exchange and the functions performed by SEBI. The licences given by the stock exchange enables the stock- broker to buy and sell securities on the exchange whereas the regulation of the trade per se is done by SEBI for which it is entitled to charge requisite registration fees. In the present case, we have no doubt in our mind that, on merger of the above two companies, a new entity stood emerged/constituted, which was given a right to operate in the derivative segment and, therefore, it had to pay fresh registration fees on the turnover basis. That new entity (RCML) was not entitled to the benefit of continuity of fees deposited earlier by RSL, which got merged into RCML. According to RCML, the two companies were required to merge because of acceptance of recommendations of Gupta Committee by SEBI. According to the report of the said Committee, if a broker desires to enter derivative market then he is required to have a net worth of at least rupees three crores. According to RCML, the said requirement constituted a pre-condition for entering the derivative market. According to RCML, this pre-condition of possessing net worth of rupees three crores constituted compulsion of law, which made RSL merged into RCML and, in the circumstances, the appellants were entitled to the benefit of Circular dated 30.9.2002 issued by SEBI. Under the said circular, mergers/amalgamations carried out as a result of compulsion of law stood excluded from payment of fees afresh.</p><p style="text-align: justify;">12. We quote hereinbelow the said provision, which reads as under:</p><p style="text-align: justify;">Merger/Amalgamations</p><p style="text-align: justify;">Where mergers/amalgamations are carried out as a result of compulsion of law, fees would not have to be paid afresh to hold majority shareholding in transferee entity. The Exchange would have to enumerate what constitutes 'compulsion of law' resulting in such merger/amalgamations, for consideration of SEBI.</p><p style="text-align: justify;">13. Placing reliance on the aforesaid clause, RCML contended that, in the present case, RSL had merged into RCML on account of compulsion of law and, therefore, they were entitled to the benefit of continuity of fees earlier paid by RSL. According to RCML, but for the recommendations of Gupta Committee, RSL would not have merged into RCML. According to RCML, because of Gupta Committee prescribing the net worth of rupees three crores for entering into derivative market, RSL had to merge in RCML, which, according to the appellant, constituted legal compulsion. </p><p style="text-align: justify;">14. We do not find any merit in the above arguments. Two points arises for determination in the present case. They are interconnected. Firstly, whether RCML, on amalgamation, duly sanctioned by Calcutta High Court, was entitled to claim the benefit of Fee Continuity and, secondly, whether the demand made by SEBI imposing fresh turnover/registration fees on the merged entity (RCML) constituted an act in derogation of the provisions of any other law for the time being in force in terms of Section 32 of the said 1992 Act.</p><p style="text-align: justify;">15. As stated above, on 30.9.2002 SEBI had issued a circular stating that in the case of amalgamation/merger carried out as a result of compulsion of law, fresh turnover/registration fees would not have to be paid afresh by a transferee entity. We are concerned with the expression 'compulsion of law' in that circular. It is true that, in the present case, RSL had merged into RCML after complying with the provisions of Sections 391 to 394 of the Companies Act. It is equally true that the Scheme of Amalgamation has been approved by the Calcutta High Court. However, what is 'compulsion of law' has not been defined by SEBI. The reason is obvious. Under Section 391 of the Companies Act, a compromise or arrangement is proposed generally as an alternative to liquidation. Where a scheme appears to be feasible and workable, it should be preferred to a winding up order.</p><p style="text-align: justify;">16. In the case of Himalaya Bank Ltd. v. L. Roshan Lal Mehra reported in it has been held vide para 6 that the scheme of arrangement under Section 391 is an alternative to liquidation. We quote hereinbelow para 6 of the said judgment:</p><p style="text-align: justify;">(6) Mr. D.N. Avasthy, learned Counsel for the bank has next drawn my attention to Section 37 of the Banking Companies Act which provides that the High Court may on the application of a banking company which is temporarily unable to meet its obligations, make an order staying commencement or continuance of all actions and proceedings against the company for a fixed period of time on such terms and conditions as it shall think fit and proper.</p><p style="text-align: justify;">The High Court is empowered under Section 37(3) to appoint a special officer who is required to take into custody or control the assets, books etc., including actionable claims to which the banking company may be entitled. Section 38 empowers the High Court to order the winding up of banking company if it is unable to pay its debts. Mr. D.N. Avasthy also maintains that the scheme of arrangement is an alternative mode of winding up and, therefore, such powers as the High Court possesses under Section 45-D of the Banking Companies Act, 1949, will also entitle it to exercise the same powers for enforcement of the scheme of arrangement etc. </p><p style="text-align: justify;">He has rested his argument on three decisions reported in Madan Gopal v. Peoples Bank of Northern India Ltd. AIR 1935 Lah 779 (SB), Motilal Kanji and Co. v. Natwarlal M. Jhaveri AIR 1932 Bom 78, In re Travancore National and Quilon Bank Ltd. AIR 1939 Mad 318. In AIR 1935 Lah 779 (SB), Tek Chand J. said:</p><p style="text-align: justify;">Section 153, Companies Act, makes provision not merely for schemes for the 'resuscitation' or 're-organisation' of companies, but it also provides for 'schemes of arrangement', which in the words of Vaughan Williams J. (used in reference to the corresponding section of the English Act) provide an alternative mode of liquidation, which the law allows the statutory majority of creditors to substitute for winding-up whether voluntary or under the Court. In re London Chartered Bank of Australia (1893) 3 Ch. 540 .On the strength of these decisions, it was argued that the scheme of arrangement was an alternative mode of liquidation. This does not appear to be so either under the <a href="/act/51006/companies-act-1956-complete-act">Companies Act, 1956</a>, or under the Indian <a href="/act/133312/companies-act-1913-complete-act">Companies Act, 1913</a>, which preceded the present statute. Provisions of the Companies Act relating to 'Arbitration, Compromises, Arrangements and Reconstruction' covered by Sections 389 to 396 are placed in Chapter V of Part VI which deals with Management and Administration. Part VII is devoted to Winding Up. A scheme, therefore, cannot be said to be an alternative mode of liquidation but only an alternative to liquidation. The incidents of scheme of arrangement and of winding up are distinct both in principle and in consequences.</p><p style="text-align: justify;">The dictum of Vaughan Williams, J., which was cited in the three decisions referred to above, was examined by a Full Bench of this Court in Sm. Bhagwanti v. New Bank of India Ltd., Amritsar AIR 1950 EP 111. It was held by the Full Bench that in the corresponding English Act all the sections relating to the scheme were contained within the bar dealing with winding-up; and, therefore, a scheme of that particular kind was correctly described as an alternative mode of winding up. That particular provision which was being considered was applicable only to a company in liquidation.</p><p style="text-align: justify;">This is also clear from the observations of Vaughan Williams, J., only a portion of which was noticed in the three decisions referred to above. He said:</p><p style="text-align: justify;">The scheme of arrangement under the Act of 1879 is -- as I have had occasion to point out in several cases -- an alternative mode of liquidation which the law allows the statutory majority of Creditors to substitute for the pending winding-up, whether voluntary or under the Court, just as the Bankruptcy Act, 1869, allowed the creditors the substituted liquidation by arrangement under Section 125, or composition under Section 126, of that Act, for a pending bankruptcy....In view of this, I am not persuaded by this argument of the learned Counsel for the bank, that the scheme of arrangement should be treated as a specie of liquidation. I am, therefore, satisfied that this Court has jurisdiction to entertain the petition and to pass appropriate order in view of the provisions of Section 392 of the Companies Act read with Section 391.</p><p style="text-align: justify;">17. We make it clear that it would depend on the facts of each case whether a scheme under Section 391 could be construed as an alternative to liquidation. It is not in every matter that the scheme under Section 391 would constitute an alternative to liquidation. Therefore, it would depend on the facts of each case. Under circular dated 30.9.2002 what SEBI intends to say is that fresh turnover/registration fees would not be payable by a company which goes for amalgamation/merger as an alternative to liquidation. In other words, if the company's net worth is negative and if that company is on the brink of liquidation, which compels it to go for a scheme under Section 391, then in such cases SEBI exempts such companies from payment of fresh turnover/ registration fees. Such is not the case herein. On the contrary, in the present case, amalgamation has taken place in order to increase the 'reserves' component of the net worth. The difference between the amount recorded as fresh share capital issued by the transferee company on amalgamation and the amount of share capital of the transferor company to be reflected in the Revenue Reserve(s) of the transferee company was the sole object behind amalgamation. (see page 429 of vol. II in civil appeal No. 3674/07). Therefore, SEBI was right, in the present case, in refusing to give the benefit of exemption to the transferee companies. These transferee companies were not on the brink of liquidation. The scheme under Section 391 was not an alternative to liquidation. Hence, the transferee companies were not entitled to claim the benefit of Circular dated 30.9.2002. Further, we do not find any merit in the argument that the demand raised by SEBI for fresh turnover/registration fees constituted an act derogatory of the provisions of the Companies Act. In our view, on the emergence of a new entity, which was entitled to operate in derivative market, SEBI was certainly entitled to regulate its trade in the derivative segment for which it was entitled to charge requisite fees. Under the 1992 Act, a duty is cast on SEBI to protect the interest of investors in securities and to regulate the trade in securities on the Stock Exchange. Such Regulation is not a part of the Companies Act. Derivative market is highly speculative. It carries lot of risks. In fact, history shows that many investors and traders lost money earlier when badla transactions were prevalent. Derivative market, to a certain extent, replaces badla. The point to be noted is that Gupta Committee recommended the net worth of rupees three crores in order to secure the interests of investors and traders who regularly play in derivatives. In the circumstances, it cannot be said that raising of an amount of rupees three crores as net worth constituted legal compulsion for RSL to merge into RCML. As stated above, the Government decided to vest SEBI with statutory powers in order to deal effectively with all matters relating to capital market. The main function of SEBI is to regulate the trade which takes place in the securities market and for that purpose it is entitled to charge registration fees. In the present case, we are concerned with merger of two distinct independent companies. In the present case, we are not concerned with merger of firms. In the present case, we are not concerned with joint ventures. After the merger of RSL into RCML a new entity has emerged. In the circumstances, SEBI was entitled to charge the stipulated fees. For the aforestated reasons, we find no merit in these two civil appeals.</p><p style="text-align: justify;">18. Before concluding, we may note that, according to the appellants, in the past SEBI has not charged registration charges at the rates prescribed in case of two other companies. According to the appellants, SKP Securities Ltd. and BNK Securities Pvt. Ltd. were given in the past the benefit of fee continuity under para 7 of Circular dated 30.9.2002 whereas the said benefit has been denied to RCML. We do not know all the facts of those transactions. Be that as it may, we are concerned with the position in law. We reiterate that there is no merit in these civil appeals.</p><p style="text-align: justify;">19. For the aforestated reasons, we see no reason to interfere with the impugned orders passed by the Securities Appellate Tribunal, Mumbai. Accordingly, both the civil appeals stand dismissed with no order as to costs.',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => 'From the Judgment and final Order dated 4.5.2007 by the Securities Appellate Tribunal Mumbai in Review Petition No. 8 of 2006 in Appeal No. 267 of 2006',
			'pubs' => 'AIR2008SC290; I(2008)BC233; 2008(1)BomCR105; JT2007(12)SC233; (2008)1SCC439; 2007AIRSCW6774',
			'ratiodecidendi' => '',
			'respondent' => 'Securities and Exchange Board of India and anr.',
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$title_for_layout = 'Ratnabali Capitals Markets Ltd. Vs. Securities and Exchange Board of India and anr. Semantic Analysis'
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		(int) 3 => 'Ratnabali Capital Markets Ltd.',
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$desc = array(
	'Judgement' => array(
		'id' => '678281',
		'acts' => '<a href="/act/51885/securities-and-exchange-board-of-india-act-1992-complete-act">Securities and Exchange Board of India Act, 1992</a> - Sections 11(2), 11B, 15Z and 32; Securities and Exchange Board of India (Stock-brokers and Sub-brokers) Regulations, 1992 - Regulation 10; <a href="/act/51006/companies-act-1956-complete-act">Companies Act, 1956</a> - Sections 153 and 389 to 396; Banking Companies Act, 1949 - Sections 37, 37(3), 38 and 45D; <a href="/act/133312/companies-act-1913-complete-act">Companies Act, 1913</a>; Bankruptcy Act, 1869 - Sections 125 and 126',
		'appealno' => 'Civil Appeal No. 4945 of 2007 (D. No. 18381/07) and Civil Appeal No. 3674 of 2007',
		'appellant' => 'Ratnabali Capitals Markets Ltd.',
		'authreffered' => '',
		'casename' => 'Ratnabali Capitals Markets Ltd. Vs. Securities and Exchange Board of India and anr.',
		'casenote' => 'Company - Registration fees - Securities and Exchange Board of India Act, 1992 - X was a registered broker with NSE - It paid registration fee for first year and thereafter paid fees on turnover basis for subsequent four years - SEBI adopted recommendations of committee under which no broker worth less than 3 crores would be allowed to trade as a broker in derivative segment of Stock exchange - X firm merged with Appellant's firm under which all rights, licenses, assets, properties and registrations of X stood transferred to Appellant firm - After merger X with Appellant SEBI demanded registration fees on turnover basis - Appellant claimed benefit of initial registration of X as a stock broker on ground that after merger all assets and liabilities including benefits in form of licenses obtained by RSL stood transferred to RCML - Claim rejected by SEBI - Hence, present appeal - Whether Appellant on amalgamation duly sanctioned by High Court was entitled to claim the benefit of Fee Continuity - Whether the demand made by SEBI imposing fresh turnover/registration fees on the merged entity  constituted an act in derogation of the provisions of any other law - Held, it cannot be said that raising an amount of Rs three crores constituted legal compulsion for X to merge with Appellant - Main function of SEBI is to regulate the trade which takes place in the securities market and for that purpose it is entitled to charge registration fees - After merger a new entity had emerged - Thus SEBI was entitled to charge registration fees - Appeal dismissed  - [S.H.Kapadia & B.Sudershan Reddy, JJ] Scheme of amalgamation   Held, Each Scheme under Section 391 cannot  be construed as alternative to liquidation. It depends on facts of each case. -- SECURITIES AND  EXCHANGE BOARD OF INDIA ACT, 1992 [C.A. No. 15/1992]. Section 11(2): SEBI (Stock-brokers and Sub-brokers) Regulations (1992), Schedule 3 - Circular DD 30.09.2002, Para 7  Registration fee for stock brokers  Benefit of the continuity under circular  Held, As a regulator, SEBI is entitled to charge registration fees for enabling it to carry out the functions stipulated in Section 11(2) of the 1992 Act. There is a dichotomy between functions of the stock exchange and the functions performed by SEBI. The licenses given by the stock exchange enables the stock-broker to buy and sell securities on the exchange whereas the regulation of the trade per se is done by SEBI for which it is entitled to charge requisite registration fees. In the instant case, on merger of the two companies RSL, RCML, a new entity stood emerged/constituted, which was given a right to operate in the derivative segment and, therefore, it had to pay fresh registration fees on the turnover basis. That new entity (RCML) was not entitled to the benefit of continuity of fees deposited earlier by RSL, which got merged into RCML.  Under circular dated 30.09.2002 what SEBI intends to say is that fresh turnover/ registration fees would not be payable by a company which goes for amalgamation/ merger as an alternative to liquidation. In other words, if the companys net worth is negative and if that company is on the brink of liquidation, which compels it to go for a scheme under Section 391, then in such cases, SEBI exempts such companies from payment of fresh turnover / registration fees. Such is not the case herein. On the contrary, in the present case, amalgamation has taken place in order to increase the reserves component of the net worth. The difference between the amount recorded as fresh share capital issued by the Transferee Company on amalgamation and the amount of shares capital of the Transferor Company to be reflected in the Revenue reserve(s) of the Transferee Company was the sole object behind amalgamation. Therefore, SEBI was right, in refusing to give the benefit of exemption to the transferee companies. These transferee companies were not on the brink of liquidation. The scheme under Section 391 was not an alternative to liquidation. Hence, the transferee companies were not entitled to claim the benefit of Circular dated. 30.09.2002. It cannot be said that the demand raised by SEBI for fresh turnover/registration fees constituted an act derogatory of the provisions of the Companies Act. On the emergence of a new entity, which was entitled to operate in derivative market, SEBI was certainly entitled to regulate its trade in the derivative segment for which it was entitled to charge requisite fees.  -  I am, therefore, satisfied that this Court has jurisdiction to entertain the petition and to pass appropriate order in view of the provisions of Section 392 of the Companies Act read with Section 391. 17. We make it clear that it would depend on the facts of each case whether a scheme under Section 391 could be construed as an alternative to liquidation. The point to be noted is that Gupta Committee recommended the net worth of rupees three crores in order to secure the interests of investors and traders who regularly play in derivatives. As stated above, the Government decided to vest SEBI with statutory powers in order to deal effectively with all matters relating to capital market.',
		'caseanalysis' => null,
		'casesref' => 'Sm. Bhagwanti v. New Bank of India Ltd.;',
		'citingcases' => '',
		'counselplain' => ' R.F. Nariman and; Ranjeet Kumar, Sr. Advs.,; Ratnako Banerjee',
		'counseldef' => '',
		'court' => 'Supreme Court of India',
		'court_type' => 'SC',
		'decidedon' => '2007-10-23',
		'deposition' => 'Appeal dismissed',
		'favorof' => null,
		'findings' => null,
		'judge' => ' S.H. Kapadia and; B. Sudershan Reddy, JJ.',
		'judgement' => '</p><p style="text-align: justify;">S.H. Kapadia, J.</p><p style="text-align: justify;">1. Delay condoned.</p><p style="text-align: justify;">2. Admit.</p><p style="text-align: justify;">3. The above two civil appeals are directed against the decisions dated 18.5.2006 and 4.5.2007 delivered by the Securities Appellate Tribunal, Mumbai in appeal Nos. 267/04 and 245/04 respectively.</p><p style="text-align: justify;">4. The short question that arises for our consideration in these civil appeals filed under Section 15Z of the <a href="/act/51885/securities-and-exchange-board-of-india-act-1992-complete-act">Securities and Exchange Board of India Act, 1992</a> (for short the '1992 Act') is whether the appellants were entitled to the benefit of fee continuity under para 7 of Circular dated 30.9.2002 issued by SEBI.</p><p style="text-align: justify;">5. For the sake of convenience, we may mention hereinafter the facts in the case of Ratnabali Capital Markets Ltd. ('RCML') which are as under.</p><p style="text-align: justify;">6. In 1995 Ratnabali Securities Ltd. ('RSL') was registered as a broker with National Stock Exchange ('NSE'). In terms of Schedule III of SEBI (Stock-brokers and Sub-brokers) Regulations, 1992 ('the Regulations'), RSL had paid initial registration fees for the first year and thereafter it had paid fees on turnover basis for subsequent four years. No further fees on turnover basis was paid by RSL under the said Regulations for continuation of registration except a fee of rupees five thousand for a block of next five years. RSL operated in cash and spot market.</p><p style="text-align: justify;">7. SEBI adopted recommendations of Gupta Committee stating that no company whose net worth was less than rupees three crores would be allowed to trade as a broker in the derivative segment of the Stock Exchange. To meet this net worth criteria, RSL and RCML merged under the Scheme of Amalgamation sanctioned by the order of the Calcutta High Court. Under that order, all rights, licences, assets, properties and registrations of RSL stood transferred by operation of law to RCML.</p><p style="text-align: justify;">8. On 30.9.2002 SEBI issued a circular stating that in the case of merger carried out as a result of compulsion of law, fees would not have to be paid afresh by a transferee entity provided that majority shareholders of transferor entity (RSL) continues to hold majority shareholding in the transferee entity (RCML).</p><p style="text-align: justify;">9. After the merger of RSL with RCML, a demand was made by SEBI for registration fees on turnover basis. Under the said Regulations, no stock-broker can buy, sell or deal in securities unless he holds a certificate granted by SEBI under its Regulations. Under the said Regulations, the stock-broker is required to pay fees for registration in the manner provided in the Regulations. Under Regulation 10, every applicant eligible for grant of a certificate has to pay fees in the manner specified in Schedule III. Under that Schedule, every stock-broker whose annual turnover does not exceed rupees one crore during any financial year has to pay rupees five thousand as registration fees for each financial year and whereas the annual turnover exceeds rupees one crore during any financial year he has to pay rupees five thousand plus one hundredth of one per cent of the turnover in excess of rupees one crore for each financial year. We quote hereinbelow Clause (c) of para 1 of Schedule III, which reads as under:</p><p style="text-align: justify;">After the expiry of five financial years from the date of initial registration as a stock-broker, he shall pay a sum of rupees five thousand for every block of five financial years commencing from the sixth financial year after the date of grant of initial registration to keep his registration in force </p><p style="text-align: justify;">A reading of Clause (c) makes it clear that where the stock-broker has paid registration fees either under Clause (a) or Clause (b) he shall have to pay rupees five thousand for every block of five financial years commencing from the sixth financial year after the date of initial registration in order to keep his registration in force.</p><p style="text-align: justify;">10. What RCML is now claiming is the benefit of initial registration of RSL as a stock-broker. According to RCML, when the above two companies stood merged on 9.2.2000, which merger was approved by Calcutta High Court, all assets and liabilities, including benefits in the form of licences obtained by RSL, stood transferred by operation of law in the hands of RCML. According to RCML, the concept of merger constitutes transfer by operation of law. According to RCML, the concept of merger operates on account of legal compulsion or compulsion in law. According to RCML, in the case of merger, which takes place after complying with the procedure prescribed by Sections 391 to 394 of the Companies Act, duly approved by the High Court, the assets and liabilities of the transferor company comes into the hands of RCML on account of legal compulsion. There is nothing voluntary in such cases of merger. According to RCML, the registration fees once paid by RSL should be given the benefit of continuity vide para 7 of Circular dated 30.9.2002 issued by SEBI. In other words, RCML now claims that it is entitled to the benefit of registration fees which RSL had paid from time to time as a broker in the cash and spot market. This claim of RCML has been rejected by the impugned decision. Hence, this civil appeal.</p><p style="text-align: justify;">11. In the present case, the two companies merged because after 2000, derivative markets opened out. RSL basically operated under the licences in cash and spot markets. They did not operate in the derivative markets. When the two companies merged, a new entity emerged. That entity was RCML. At this stage, it is important to bear in mind that licence from NSE/BSE only provided a platform to RSL/RCML to carry on the business of buying and selling shares on the stock exchange. However, trade had to be regulated by SEBI. The Companies Act has been enacted with a view to consolidate and amend the law relating to companies and certain other associations. On the other hand, the 1992 Act has been enacted to provide for the establishment of a Board to protect the investors' interests in securities and to regulate the securities market and for matters connected thereto. Under the said 1992 Act, SEBI is required to provide for regulating the business in stock exchanges, registering and regulating the working of stock brokers and numerous other functions which are enlisted in Section 11(2) of the said 1992 Act. Under Section 11B of the 1992 Act, SEBI is also empowered to issue directions inter alia to any person associated with the securities market. As a regulator, therefore, SEBI is entitled to charge registration fees for enabling it to carry out the functions stipulated in Section 11(2) of the 1992 Act. We repeat that there is a dichotomy between functions of the stock exchange and the functions performed by SEBI. The licences given by the stock exchange enables the stock- broker to buy and sell securities on the exchange whereas the regulation of the trade per se is done by SEBI for which it is entitled to charge requisite registration fees. In the present case, we have no doubt in our mind that, on merger of the above two companies, a new entity stood emerged/constituted, which was given a right to operate in the derivative segment and, therefore, it had to pay fresh registration fees on the turnover basis. That new entity (RCML) was not entitled to the benefit of continuity of fees deposited earlier by RSL, which got merged into RCML. According to RCML, the two companies were required to merge because of acceptance of recommendations of Gupta Committee by SEBI. According to the report of the said Committee, if a broker desires to enter derivative market then he is required to have a net worth of at least rupees three crores. According to RCML, the said requirement constituted a pre-condition for entering the derivative market. According to RCML, this pre-condition of possessing net worth of rupees three crores constituted compulsion of law, which made RSL merged into RCML and, in the circumstances, the appellants were entitled to the benefit of Circular dated 30.9.2002 issued by SEBI. Under the said circular, mergers/amalgamations carried out as a result of compulsion of law stood excluded from payment of fees afresh.</p><p style="text-align: justify;">12. We quote hereinbelow the said provision, which reads as under:</p><p style="text-align: justify;">Merger/Amalgamations</p><p style="text-align: justify;">Where mergers/amalgamations are carried out as a result of compulsion of law, fees would not have to be paid afresh to hold majority shareholding in transferee entity. The Exchange would have to enumerate what constitutes 'compulsion of law' resulting in such merger/amalgamations, for consideration of SEBI.</p><p style="text-align: justify;">13. Placing reliance on the aforesaid clause, RCML contended that, in the present case, RSL had merged into RCML on account of compulsion of law and, therefore, they were entitled to the benefit of continuity of fees earlier paid by RSL. According to RCML, but for the recommendations of Gupta Committee, RSL would not have merged into RCML. According to RCML, because of Gupta Committee prescribing the net worth of rupees three crores for entering into derivative market, RSL had to merge in RCML, which, according to the appellant, constituted legal compulsion. </p><p style="text-align: justify;">14. We do not find any merit in the above arguments. Two points arises for determination in the present case. They are interconnected. Firstly, whether RCML, on amalgamation, duly sanctioned by Calcutta High Court, was entitled to claim the benefit of Fee Continuity and, secondly, whether the demand made by SEBI imposing fresh turnover/registration fees on the merged entity (RCML) constituted an act in derogation of the provisions of any other law for the time being in force in terms of Section 32 of the said 1992 Act.</p><p style="text-align: justify;">15. As stated above, on 30.9.2002 SEBI had issued a circular stating that in the case of amalgamation/merger carried out as a result of compulsion of law, fresh turnover/registration fees would not have to be paid afresh by a transferee entity. We are concerned with the expression 'compulsion of law' in that circular. It is true that, in the present case, RSL had merged into RCML after complying with the provisions of Sections 391 to 394 of the Companies Act. It is equally true that the Scheme of Amalgamation has been approved by the Calcutta High Court. However, what is 'compulsion of law' has not been defined by SEBI. The reason is obvious. Under Section 391 of the Companies Act, a compromise or arrangement is proposed generally as an alternative to liquidation. Where a scheme appears to be feasible and workable, it should be preferred to a winding up order.</p><p style="text-align: justify;">16. In the case of Himalaya Bank Ltd. v. L. Roshan Lal Mehra reported in it has been held vide para 6 that the scheme of arrangement under Section 391 is an alternative to liquidation. We quote hereinbelow para 6 of the said judgment:</p><p style="text-align: justify;">(6) Mr. D.N. Avasthy, learned Counsel for the bank has next drawn my attention to Section 37 of the Banking Companies Act which provides that the High Court may on the application of a banking company which is temporarily unable to meet its obligations, make an order staying commencement or continuance of all actions and proceedings against the company for a fixed period of time on such terms and conditions as it shall think fit and proper.</p><p style="text-align: justify;">The High Court is empowered under Section 37(3) to appoint a special officer who is required to take into custody or control the assets, books etc., including actionable claims to which the banking company may be entitled. Section 38 empowers the High Court to order the winding up of banking company if it is unable to pay its debts. Mr. D.N. Avasthy also maintains that the scheme of arrangement is an alternative mode of winding up and, therefore, such powers as the High Court possesses under Section 45-D of the Banking Companies Act, 1949, will also entitle it to exercise the same powers for enforcement of the scheme of arrangement etc. </p><p style="text-align: justify;">He has rested his argument on three decisions reported in Madan Gopal v. Peoples Bank of Northern India Ltd. AIR 1935 Lah 779 (SB), Motilal Kanji and Co. v. Natwarlal M. Jhaveri AIR 1932 Bom 78, In re Travancore National and Quilon Bank Ltd. AIR 1939 Mad 318. In AIR 1935 Lah 779 (SB), Tek Chand J. said:</p><p style="text-align: justify;">Section 153, Companies Act, makes provision not merely for schemes for the 'resuscitation' or 're-organisation' of companies, but it also provides for 'schemes of arrangement', which in the words of Vaughan Williams J. (used in reference to the corresponding section of the English Act) provide an alternative mode of liquidation, which the law allows the statutory majority of creditors to substitute for winding-up whether voluntary or under the Court. In re London Chartered Bank of Australia (1893) 3 Ch. 540 .On the strength of these decisions, it was argued that the scheme of arrangement was an alternative mode of liquidation. This does not appear to be so either under the <a href="/act/51006/companies-act-1956-complete-act">Companies Act, 1956</a>, or under the Indian <a href="/act/133312/companies-act-1913-complete-act">Companies Act, 1913</a>, which preceded the present statute. Provisions of the Companies Act relating to 'Arbitration, Compromises, Arrangements and Reconstruction' covered by Sections 389 to 396 are placed in Chapter V of Part VI which deals with Management and Administration. Part VII is devoted to Winding Up. A scheme, therefore, cannot be said to be an alternative mode of liquidation but only an alternative to liquidation. The incidents of scheme of arrangement and of winding up are distinct both in principle and in consequences.</p><p style="text-align: justify;">The dictum of Vaughan Williams, J., which was cited in the three decisions referred to above, was examined by a Full Bench of this Court in Sm. Bhagwanti v. New Bank of India Ltd., Amritsar AIR 1950 EP 111. It was held by the Full Bench that in the corresponding English Act all the sections relating to the scheme were contained within the bar dealing with winding-up; and, therefore, a scheme of that particular kind was correctly described as an alternative mode of winding up. That particular provision which was being considered was applicable only to a company in liquidation.</p><p style="text-align: justify;">This is also clear from the observations of Vaughan Williams, J., only a portion of which was noticed in the three decisions referred to above. He said:</p><p style="text-align: justify;">The scheme of arrangement under the Act of 1879 is -- as I have had occasion to point out in several cases -- an alternative mode of liquidation which the law allows the statutory majority of Creditors to substitute for the pending winding-up, whether voluntary or under the Court, just as the Bankruptcy Act, 1869, allowed the creditors the substituted liquidation by arrangement under Section 125, or composition under Section 126, of that Act, for a pending bankruptcy....In view of this, I am not persuaded by this argument of the learned Counsel for the bank, that the scheme of arrangement should be treated as a specie of liquidation. I am, therefore, satisfied that this Court has jurisdiction to entertain the petition and to pass appropriate order in view of the provisions of Section 392 of the Companies Act read with Section 391.</p><p style="text-align: justify;">17. We make it clear that it would depend on the facts of each case whether a scheme under Section 391 could be construed as an alternative to liquidation. It is not in every matter that the scheme under Section 391 would constitute an alternative to liquidation. Therefore, it would depend on the facts of each case. Under circular dated 30.9.2002 what SEBI intends to say is that fresh turnover/registration fees would not be payable by a company which goes for amalgamation/merger as an alternative to liquidation. In other words, if the company's net worth is negative and if that company is on the brink of liquidation, which compels it to go for a scheme under Section 391, then in such cases SEBI exempts such companies from payment of fresh turnover/ registration fees. Such is not the case herein. On the contrary, in the present case, amalgamation has taken place in order to increase the 'reserves' component of the net worth. The difference between the amount recorded as fresh share capital issued by the transferee company on amalgamation and the amount of share capital of the transferor company to be reflected in the Revenue Reserve(s) of the transferee company was the sole object behind amalgamation. (see page 429 of vol. II in civil appeal No. 3674/07). Therefore, SEBI was right, in the present case, in refusing to give the benefit of exemption to the transferee companies. These transferee companies were not on the brink of liquidation. The scheme under Section 391 was not an alternative to liquidation. Hence, the transferee companies were not entitled to claim the benefit of Circular dated 30.9.2002. Further, we do not find any merit in the argument that the demand raised by SEBI for fresh turnover/registration fees constituted an act derogatory of the provisions of the Companies Act. In our view, on the emergence of a new entity, which was entitled to operate in derivative market, SEBI was certainly entitled to regulate its trade in the derivative segment for which it was entitled to charge requisite fees. Under the 1992 Act, a duty is cast on SEBI to protect the interest of investors in securities and to regulate the trade in securities on the Stock Exchange. Such Regulation is not a part of the Companies Act. Derivative market is highly speculative. It carries lot of risks. In fact, history shows that many investors and traders lost money earlier when badla transactions were prevalent. Derivative market, to a certain extent, replaces badla. The point to be noted is that Gupta Committee recommended the net worth of rupees three crores in order to secure the interests of investors and traders who regularly play in derivatives. In the circumstances, it cannot be said that raising of an amount of rupees three crores as net worth constituted legal compulsion for RSL to merge into RCML. As stated above, the Government decided to vest SEBI with statutory powers in order to deal effectively with all matters relating to capital market. The main function of SEBI is to regulate the trade which takes place in the securities market and for that purpose it is entitled to charge registration fees. In the present case, we are concerned with merger of two distinct independent companies. In the present case, we are not concerned with merger of firms. In the present case, we are not concerned with joint ventures. After the merger of RSL into RCML a new entity has emerged. In the circumstances, SEBI was entitled to charge the stipulated fees. For the aforestated reasons, we find no merit in these two civil appeals.</p><p style="text-align: justify;">18. Before concluding, we may note that, according to the appellants, in the past SEBI has not charged registration charges at the rates prescribed in case of two other companies. According to the appellants, SKP Securities Ltd. and BNK Securities Pvt. Ltd. were given in the past the benefit of fee continuity under para 7 of Circular dated 30.9.2002 whereas the said benefit has been denied to RCML. We do not know all the facts of those transactions. Be that as it may, we are concerned with the position in law. We reiterate that there is no merit in these civil appeals.</p><p style="text-align: justify;">19. For the aforestated reasons, we see no reason to interfere with the impugned orders passed by the Securities Appellate Tribunal, Mumbai. Accordingly, both the civil appeals stand dismissed with no order as to costs.',
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			(int) 60 => 'Management and Administration',
			(int) 61 => 'Court',
			(int) 62 => 'New Bank of India Ltd.',
			(int) 63 => 'Amritsar AIR',
			(int) 64 => 'Creditors',
			(int) 65 => 'Court',
			(int) 66 => 'Court',
			(int) 67 => 'the Revenue Reserve(s',
			(int) 68 => 'Circular',
			(int) 69 => 'the Stock Exchange',
			(int) 70 => 'Gupta Committee',
			(int) 71 => 'RSL',
			(int) 72 => 'RSL',
			(int) 73 => 'SKP Securities Ltd.',
			(int) 74 => 'BNK Securities Pvt. Ltd.',
			(int) 75 => 'Circular',
			(int) 76 => 'the Securities Appellate Tribunal'
		),
		'GPE' => array(
			(int) 0 => 'Mumbai',
			(int) 1 => 'force.10',
			(int) 2 => 'Counsel',
			(int) 3 => 'Sm',
			(int) 4 => 'Mumbai'
		),
		'WORK_OF_ART' => array(
			(int) 0 => 'Regulations'
		),
		'MONEY' => array(
			(int) 0 => 'one per cent',
			(int) 1 => '1992 Act'
		),
		'EVENT' => array(
			(int) 0 => 'the 1992 Act',
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		'ORDINAL' => array(
			(int) 0 => 'Firstly',
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		),
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			(int) 0 => 'a Full Bench'
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	'desc' => array(
		'Judgement' => array(
			'id' => '678281',
			'acts' => '<a href="/act/51885/securities-and-exchange-board-of-india-act-1992-complete-act">Securities and Exchange Board of India Act, 1992</a> - Sections 11(2), 11B, 15Z and 32; Securities and Exchange Board of India (Stock-brokers and Sub-brokers) Regulations, 1992 - Regulation 10; <a href="/act/51006/companies-act-1956-complete-act">Companies Act, 1956</a> - Sections 153 and 389 to 396; Banking Companies Act, 1949 - Sections 37, 37(3), 38 and 45D; <a href="/act/133312/companies-act-1913-complete-act">Companies Act, 1913</a>; Bankruptcy Act, 1869 - Sections 125 and 126',
			'appealno' => 'Civil Appeal No. 4945 of 2007 (D. No. 18381/07) and Civil Appeal No. 3674 of 2007',
			'appellant' => 'Ratnabali Capitals Markets Ltd.',
			'authreffered' => '',
			'casename' => 'Ratnabali Capitals Markets Ltd. Vs. Securities and Exchange Board of India and anr.',
			'casenote' => 'Company - Registration fees - Securities and Exchange Board of India Act, 1992 - X was a registered broker with NSE - It paid registration fee for first year and thereafter paid fees on turnover basis for subsequent four years - SEBI adopted recommendations of committee under which no broker worth less than 3 crores would be allowed to trade as a broker in derivative segment of Stock exchange - X firm merged with Appellant's firm under which all rights, licenses, assets, properties and registrations of X stood transferred to Appellant firm - After merger X with Appellant SEBI demanded registration fees on turnover basis - Appellant claimed benefit of initial registration of X as a stock broker on ground that after merger all assets and liabilities including benefits in form of licenses obtained by RSL stood transferred to RCML - Claim rejected by SEBI - Hence, present appeal - Whether Appellant on amalgamation duly sanctioned by High Court was entitled to claim the benefit of Fee Continuity - Whether the demand made by SEBI imposing fresh turnover/registration fees on the merged entity  constituted an act in derogation of the provisions of any other law - Held, it cannot be said that raising an amount of Rs three crores constituted legal compulsion for X to merge with Appellant - Main function of SEBI is to regulate the trade which takes place in the securities market and for that purpose it is entitled to charge registration fees - After merger a new entity had emerged - Thus SEBI was entitled to charge registration fees - Appeal dismissed  - [S.H.Kapadia & B.Sudershan Reddy, JJ] Scheme of amalgamation   Held, Each Scheme under Section 391 cannot  be construed as alternative to liquidation. It depends on facts of each case. -- SECURITIES AND  EXCHANGE BOARD OF INDIA ACT, 1992 [C.A. No. 15/1992]. Section 11(2): SEBI (Stock-brokers and Sub-brokers) Regulations (1992), Schedule 3 - Circular DD 30.09.2002, Para 7  Registration fee for stock brokers  Benefit of the continuity under circular  Held, As a regulator, SEBI is entitled to charge registration fees for enabling it to carry out the functions stipulated in Section 11(2) of the 1992 Act. There is a dichotomy between functions of the stock exchange and the functions performed by SEBI. The licenses given by the stock exchange enables the stock-broker to buy and sell securities on the exchange whereas the regulation of the trade per se is done by SEBI for which it is entitled to charge requisite registration fees. In the instant case, on merger of the two companies RSL, RCML, a new entity stood emerged/constituted, which was given a right to operate in the derivative segment and, therefore, it had to pay fresh registration fees on the turnover basis. That new entity (RCML) was not entitled to the benefit of continuity of fees deposited earlier by RSL, which got merged into RCML.  Under circular dated 30.09.2002 what SEBI intends to say is that fresh turnover/ registration fees would not be payable by a company which goes for amalgamation/ merger as an alternative to liquidation. In other words, if the companys net worth is negative and if that company is on the brink of liquidation, which compels it to go for a scheme under Section 391, then in such cases, SEBI exempts such companies from payment of fresh turnover / registration fees. Such is not the case herein. On the contrary, in the present case, amalgamation has taken place in order to increase the reserves component of the net worth. The difference between the amount recorded as fresh share capital issued by the Transferee Company on amalgamation and the amount of shares capital of the Transferor Company to be reflected in the Revenue reserve(s) of the Transferee Company was the sole object behind amalgamation. Therefore, SEBI was right, in refusing to give the benefit of exemption to the transferee companies. These transferee companies were not on the brink of liquidation. The scheme under Section 391 was not an alternative to liquidation. Hence, the transferee companies were not entitled to claim the benefit of Circular dated. 30.09.2002. It cannot be said that the demand raised by SEBI for fresh turnover/registration fees constituted an act derogatory of the provisions of the Companies Act. On the emergence of a new entity, which was entitled to operate in derivative market, SEBI was certainly entitled to regulate its trade in the derivative segment for which it was entitled to charge requisite fees.  -  I am, therefore, satisfied that this Court has jurisdiction to entertain the petition and to pass appropriate order in view of the provisions of Section 392 of the Companies Act read with Section 391. 17. We make it clear that it would depend on the facts of each case whether a scheme under Section 391 could be construed as an alternative to liquidation. The point to be noted is that Gupta Committee recommended the net worth of rupees three crores in order to secure the interests of investors and traders who regularly play in derivatives. As stated above, the Government decided to vest SEBI with statutory powers in order to deal effectively with all matters relating to capital market.',
			'caseanalysis' => null,
			'casesref' => 'Sm. Bhagwanti v. New Bank of India Ltd.;',
			'citingcases' => '',
			'counselplain' => ' R.F. Nariman and; Ranjeet Kumar, Sr. Advs.,; Ratnako Banerjee',
			'counseldef' => '',
			'court' => 'Supreme Court of India',
			'court_type' => 'SC',
			'decidedon' => '2007-10-23',
			'deposition' => 'Appeal dismissed',
			'favorof' => null,
			'findings' => null,
			'judge' => ' S.H. Kapadia and; B. Sudershan Reddy, JJ.',
			'judgement' => '</p><p style="text-align: justify;">S.H. Kapadia, J.</p><p style="text-align: justify;">1. Delay condoned.</p><p style="text-align: justify;">2. Admit.</p><p style="text-align: justify;">3. The above two civil appeals are directed against the decisions dated 18.5.2006 and 4.5.2007 delivered by the Securities Appellate Tribunal, Mumbai in appeal Nos. 267/04 and 245/04 respectively.</p><p style="text-align: justify;">4. The short question that arises for our consideration in these civil appeals filed under Section 15Z of the <a href="/act/51885/securities-and-exchange-board-of-india-act-1992-complete-act">Securities and Exchange Board of India Act, 1992</a> (for short the '1992 Act') is whether the appellants were entitled to the benefit of fee continuity under para 7 of Circular dated 30.9.2002 issued by SEBI.</p><p style="text-align: justify;">5. For the sake of convenience, we may mention hereinafter the facts in the case of Ratnabali Capital Markets Ltd. ('RCML') which are as under.</p><p style="text-align: justify;">6. In 1995 Ratnabali Securities Ltd. ('RSL') was registered as a broker with National Stock Exchange ('NSE'). In terms of Schedule III of SEBI (Stock-brokers and Sub-brokers) Regulations, 1992 ('the Regulations'), RSL had paid initial registration fees for the first year and thereafter it had paid fees on turnover basis for subsequent four years. No further fees on turnover basis was paid by RSL under the said Regulations for continuation of registration except a fee of rupees five thousand for a block of next five years. RSL operated in cash and spot market.</p><p style="text-align: justify;">7. SEBI adopted recommendations of Gupta Committee stating that no company whose net worth was less than rupees three crores would be allowed to trade as a broker in the derivative segment of the Stock Exchange. To meet this net worth criteria, RSL and RCML merged under the Scheme of Amalgamation sanctioned by the order of the Calcutta High Court. Under that order, all rights, licences, assets, properties and registrations of RSL stood transferred by operation of law to RCML.</p><p style="text-align: justify;">8. On 30.9.2002 SEBI issued a circular stating that in the case of merger carried out as a result of compulsion of law, fees would not have to be paid afresh by a transferee entity provided that majority shareholders of transferor entity (RSL) continues to hold majority shareholding in the transferee entity (RCML).</p><p style="text-align: justify;">9. After the merger of RSL with RCML, a demand was made by SEBI for registration fees on turnover basis. Under the said Regulations, no stock-broker can buy, sell or deal in securities unless he holds a certificate granted by SEBI under its Regulations. Under the said Regulations, the stock-broker is required to pay fees for registration in the manner provided in the Regulations. Under Regulation 10, every applicant eligible for grant of a certificate has to pay fees in the manner specified in Schedule III. Under that Schedule, every stock-broker whose annual turnover does not exceed rupees one crore during any financial year has to pay rupees five thousand as registration fees for each financial year and whereas the annual turnover exceeds rupees one crore during any financial year he has to pay rupees five thousand plus one hundredth of one per cent of the turnover in excess of rupees one crore for each financial year. We quote hereinbelow Clause (c) of para 1 of Schedule III, which reads as under:</p><p style="text-align: justify;">After the expiry of five financial years from the date of initial registration as a stock-broker, he shall pay a sum of rupees five thousand for every block of five financial years commencing from the sixth financial year after the date of grant of initial registration to keep his registration in force </p><p style="text-align: justify;">A reading of Clause (c) makes it clear that where the stock-broker has paid registration fees either under Clause (a) or Clause (b) he shall have to pay rupees five thousand for every block of five financial years commencing from the sixth financial year after the date of initial registration in order to keep his registration in force.</p><p style="text-align: justify;">10. What RCML is now claiming is the benefit of initial registration of RSL as a stock-broker. According to RCML, when the above two companies stood merged on 9.2.2000, which merger was approved by Calcutta High Court, all assets and liabilities, including benefits in the form of licences obtained by RSL, stood transferred by operation of law in the hands of RCML. According to RCML, the concept of merger constitutes transfer by operation of law. According to RCML, the concept of merger operates on account of legal compulsion or compulsion in law. According to RCML, in the case of merger, which takes place after complying with the procedure prescribed by Sections 391 to 394 of the Companies Act, duly approved by the High Court, the assets and liabilities of the transferor company comes into the hands of RCML on account of legal compulsion. There is nothing voluntary in such cases of merger. According to RCML, the registration fees once paid by RSL should be given the benefit of continuity vide para 7 of Circular dated 30.9.2002 issued by SEBI. In other words, RCML now claims that it is entitled to the benefit of registration fees which RSL had paid from time to time as a broker in the cash and spot market. This claim of RCML has been rejected by the impugned decision. Hence, this civil appeal.</p><p style="text-align: justify;">11. In the present case, the two companies merged because after 2000, derivative markets opened out. RSL basically operated under the licences in cash and spot markets. They did not operate in the derivative markets. When the two companies merged, a new entity emerged. That entity was RCML. At this stage, it is important to bear in mind that licence from NSE/BSE only provided a platform to RSL/RCML to carry on the business of buying and selling shares on the stock exchange. However, trade had to be regulated by SEBI. The Companies Act has been enacted with a view to consolidate and amend the law relating to companies and certain other associations. On the other hand, the 1992 Act has been enacted to provide for the establishment of a Board to protect the investors' interests in securities and to regulate the securities market and for matters connected thereto. Under the said 1992 Act, SEBI is required to provide for regulating the business in stock exchanges, registering and regulating the working of stock brokers and numerous other functions which are enlisted in Section 11(2) of the said 1992 Act. Under Section 11B of the 1992 Act, SEBI is also empowered to issue directions inter alia to any person associated with the securities market. As a regulator, therefore, SEBI is entitled to charge registration fees for enabling it to carry out the functions stipulated in Section 11(2) of the 1992 Act. We repeat that there is a dichotomy between functions of the stock exchange and the functions performed by SEBI. The licences given by the stock exchange enables the stock- broker to buy and sell securities on the exchange whereas the regulation of the trade per se is done by SEBI for which it is entitled to charge requisite registration fees. In the present case, we have no doubt in our mind that, on merger of the above two companies, a new entity stood emerged/constituted, which was given a right to operate in the derivative segment and, therefore, it had to pay fresh registration fees on the turnover basis. That new entity (RCML) was not entitled to the benefit of continuity of fees deposited earlier by RSL, which got merged into RCML. According to RCML, the two companies were required to merge because of acceptance of recommendations of Gupta Committee by SEBI. According to the report of the said Committee, if a broker desires to enter derivative market then he is required to have a net worth of at least rupees three crores. According to RCML, the said requirement constituted a pre-condition for entering the derivative market. According to RCML, this pre-condition of possessing net worth of rupees three crores constituted compulsion of law, which made RSL merged into RCML and, in the circumstances, the appellants were entitled to the benefit of Circular dated 30.9.2002 issued by SEBI. Under the said circular, mergers/amalgamations carried out as a result of compulsion of law stood excluded from payment of fees afresh.</p><p style="text-align: justify;">12. We quote hereinbelow the said provision, which reads as under:</p><p style="text-align: justify;">Merger/Amalgamations</p><p style="text-align: justify;">Where mergers/amalgamations are carried out as a result of compulsion of law, fees would not have to be paid afresh to hold majority shareholding in transferee entity. The Exchange would have to enumerate what constitutes 'compulsion of law' resulting in such merger/amalgamations, for consideration of SEBI.</p><p style="text-align: justify;">13. Placing reliance on the aforesaid clause, RCML contended that, in the present case, RSL had merged into RCML on account of compulsion of law and, therefore, they were entitled to the benefit of continuity of fees earlier paid by RSL. According to RCML, but for the recommendations of Gupta Committee, RSL would not have merged into RCML. According to RCML, because of Gupta Committee prescribing the net worth of rupees three crores for entering into derivative market, RSL had to merge in RCML, which, according to the appellant, constituted legal compulsion. </p><p style="text-align: justify;">14. We do not find any merit in the above arguments. Two points arises for determination in the present case. They are interconnected. Firstly, whether RCML, on amalgamation, duly sanctioned by Calcutta High Court, was entitled to claim the benefit of Fee Continuity and, secondly, whether the demand made by SEBI imposing fresh turnover/registration fees on the merged entity (RCML) constituted an act in derogation of the provisions of any other law for the time being in force in terms of Section 32 of the said 1992 Act.</p><p style="text-align: justify;">15. As stated above, on 30.9.2002 SEBI had issued a circular stating that in the case of amalgamation/merger carried out as a result of compulsion of law, fresh turnover/registration fees would not have to be paid afresh by a transferee entity. We are concerned with the expression 'compulsion of law' in that circular. It is true that, in the present case, RSL had merged into RCML after complying with the provisions of Sections 391 to 394 of the Companies Act. It is equally true that the Scheme of Amalgamation has been approved by the Calcutta High Court. However, what is 'compulsion of law' has not been defined by SEBI. The reason is obvious. Under Section 391 of the Companies Act, a compromise or arrangement is proposed generally as an alternative to liquidation. Where a scheme appears to be feasible and workable, it should be preferred to a winding up order.</p><p style="text-align: justify;">16. In the case of Himalaya Bank Ltd. v. L. Roshan Lal Mehra reported in it has been held vide para 6 that the scheme of arrangement under Section 391 is an alternative to liquidation. We quote hereinbelow para 6 of the said judgment:</p><p style="text-align: justify;">(6) Mr. D.N. Avasthy, learned Counsel for the bank has next drawn my attention to Section 37 of the Banking Companies Act which provides that the High Court may on the application of a banking company which is temporarily unable to meet its obligations, make an order staying commencement or continuance of all actions and proceedings against the company for a fixed period of time on such terms and conditions as it shall think fit and proper.</p><p style="text-align: justify;">The High Court is empowered under Section 37(3) to appoint a special officer who is required to take into custody or control the assets, books etc., including actionable claims to which the banking company may be entitled. Section 38 empowers the High Court to order the winding up of banking company if it is unable to pay its debts. Mr. D.N. Avasthy also maintains that the scheme of arrangement is an alternative mode of winding up and, therefore, such powers as the High Court possesses under Section 45-D of the Banking Companies Act, 1949, will also entitle it to exercise the same powers for enforcement of the scheme of arrangement etc. </p><p style="text-align: justify;">He has rested his argument on three decisions reported in Madan Gopal v. Peoples Bank of Northern India Ltd. AIR 1935 Lah 779 (SB), Motilal Kanji and Co. v. Natwarlal M. Jhaveri AIR 1932 Bom 78, In re Travancore National and Quilon Bank Ltd. AIR 1939 Mad 318. In AIR 1935 Lah 779 (SB), Tek Chand J. said:</p><p style="text-align: justify;">Section 153, Companies Act, makes provision not merely for schemes for the 'resuscitation' or 're-organisation' of companies, but it also provides for 'schemes of arrangement', which in the words of Vaughan Williams J. (used in reference to the corresponding section of the English Act) provide an alternative mode of liquidation, which the law allows the statutory majority of creditors to substitute for winding-up whether voluntary or under the Court. In re London Chartered Bank of Australia (1893) 3 Ch. 540 .On the strength of these decisions, it was argued that the scheme of arrangement was an alternative mode of liquidation. This does not appear to be so either under the <a href="/act/51006/companies-act-1956-complete-act">Companies Act, 1956</a>, or under the Indian <a href="/act/133312/companies-act-1913-complete-act">Companies Act, 1913</a>, which preceded the present statute. Provisions of the Companies Act relating to 'Arbitration, Compromises, Arrangements and Reconstruction' covered by Sections 389 to 396 are placed in Chapter V of Part VI which deals with Management and Administration. Part VII is devoted to Winding Up. A scheme, therefore, cannot be said to be an alternative mode of liquidation but only an alternative to liquidation. The incidents of scheme of arrangement and of winding up are distinct both in principle and in consequences.</p><p style="text-align: justify;">The dictum of Vaughan Williams, J., which was cited in the three decisions referred to above, was examined by a Full Bench of this Court in Sm. Bhagwanti v. New Bank of India Ltd., Amritsar AIR 1950 EP 111. It was held by the Full Bench that in the corresponding English Act all the sections relating to the scheme were contained within the bar dealing with winding-up; and, therefore, a scheme of that particular kind was correctly described as an alternative mode of winding up. That particular provision which was being considered was applicable only to a company in liquidation.</p><p style="text-align: justify;">This is also clear from the observations of Vaughan Williams, J., only a portion of which was noticed in the three decisions referred to above. He said:</p><p style="text-align: justify;">The scheme of arrangement under the Act of 1879 is -- as I have had occasion to point out in several cases -- an alternative mode of liquidation which the law allows the statutory majority of Creditors to substitute for the pending winding-up, whether voluntary or under the Court, just as the Bankruptcy Act, 1869, allowed the creditors the substituted liquidation by arrangement under Section 125, or composition under Section 126, of that Act, for a pending bankruptcy....In view of this, I am not persuaded by this argument of the learned Counsel for the bank, that the scheme of arrangement should be treated as a specie of liquidation. I am, therefore, satisfied that this Court has jurisdiction to entertain the petition and to pass appropriate order in view of the provisions of Section 392 of the Companies Act read with Section 391.</p><p style="text-align: justify;">17. We make it clear that it would depend on the facts of each case whether a scheme under Section 391 could be construed as an alternative to liquidation. It is not in every matter that the scheme under Section 391 would constitute an alternative to liquidation. Therefore, it would depend on the facts of each case. Under circular dated 30.9.2002 what SEBI intends to say is that fresh turnover/registration fees would not be payable by a company which goes for amalgamation/merger as an alternative to liquidation. In other words, if the company's net worth is negative and if that company is on the brink of liquidation, which compels it to go for a scheme under Section 391, then in such cases SEBI exempts such companies from payment of fresh turnover/ registration fees. Such is not the case herein. On the contrary, in the present case, amalgamation has taken place in order to increase the 'reserves' component of the net worth. The difference between the amount recorded as fresh share capital issued by the transferee company on amalgamation and the amount of share capital of the transferor company to be reflected in the Revenue Reserve(s) of the transferee company was the sole object behind amalgamation. (see page 429 of vol. II in civil appeal No. 3674/07). Therefore, SEBI was right, in the present case, in refusing to give the benefit of exemption to the transferee companies. These transferee companies were not on the brink of liquidation. The scheme under Section 391 was not an alternative to liquidation. Hence, the transferee companies were not entitled to claim the benefit of Circular dated 30.9.2002. Further, we do not find any merit in the argument that the demand raised by SEBI for fresh turnover/registration fees constituted an act derogatory of the provisions of the Companies Act. In our view, on the emergence of a new entity, which was entitled to operate in derivative market, SEBI was certainly entitled to regulate its trade in the derivative segment for which it was entitled to charge requisite fees. Under the 1992 Act, a duty is cast on SEBI to protect the interest of investors in securities and to regulate the trade in securities on the Stock Exchange. Such Regulation is not a part of the Companies Act. Derivative market is highly speculative. It carries lot of risks. In fact, history shows that many investors and traders lost money earlier when badla transactions were prevalent. Derivative market, to a certain extent, replaces badla. The point to be noted is that Gupta Committee recommended the net worth of rupees three crores in order to secure the interests of investors and traders who regularly play in derivatives. In the circumstances, it cannot be said that raising of an amount of rupees three crores as net worth constituted legal compulsion for RSL to merge into RCML. As stated above, the Government decided to vest SEBI with statutory powers in order to deal effectively with all matters relating to capital market. The main function of SEBI is to regulate the trade which takes place in the securities market and for that purpose it is entitled to charge registration fees. In the present case, we are concerned with merger of two distinct independent companies. In the present case, we are not concerned with merger of firms. In the present case, we are not concerned with joint ventures. After the merger of RSL into RCML a new entity has emerged. In the circumstances, SEBI was entitled to charge the stipulated fees. For the aforestated reasons, we find no merit in these two civil appeals.</p><p style="text-align: justify;">18. Before concluding, we may note that, according to the appellants, in the past SEBI has not charged registration charges at the rates prescribed in case of two other companies. According to the appellants, SKP Securities Ltd. and BNK Securities Pvt. Ltd. were given in the past the benefit of fee continuity under para 7 of Circular dated 30.9.2002 whereas the said benefit has been denied to RCML. We do not know all the facts of those transactions. Be that as it may, we are concerned with the position in law. We reiterate that there is no merit in these civil appeals.</p><p style="text-align: justify;">19. For the aforestated reasons, we see no reason to interfere with the impugned orders passed by the Securities Appellate Tribunal, Mumbai. Accordingly, both the civil appeals stand dismissed with no order as to costs.',
			'observations' => null,
			'overruledby' => null,
			'prhistory' => 'From the Judgment and final Order dated 4.5.2007 by the Securities Appellate Tribunal Mumbai in Review Petition No. 8 of 2006 in Appeal No. 267 of 2006',
			'pubs' => 'AIR2008SC290; I(2008)BC233; 2008(1)BomCR105; JT2007(12)SC233; (2008)1SCC439; 2007AIRSCW6774',
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$title_for_layout = 'Ratnabali Capitals Markets Ltd. Vs. Securities and Exchange Board of India and anr. Semantic Analysis'
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		(int) 23 => 'two',
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		(int) 25 => 'two',
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		(int) 28 => 'three',
		(int) 29 => '30.9.2002',
		(int) 30 => 'transferee',
		(int) 31 => 'three',
		(int) 32 => '14',
		(int) 33 => 'Two',
		(int) 34 => '30.9.2002',
		(int) 35 => 'transferee',
		(int) 36 => '391 to 394',
		(int) 37 => '6',
		(int) 38 => '6',
		(int) 39 => 'three',
		(int) 40 => '779',
		(int) 41 => '318',
		(int) 42 => '779',
		(int) 43 => '3',
		(int) 44 => '540',
		(int) 45 => '389',
		(int) 46 => '396',
		(int) 47 => 'three',
		(int) 48 => '111',
		(int) 49 => 'three',
		(int) 50 => '30.9.2002',
		(int) 51 => 'transferee',
		(int) 52 => 'transferee',
		(int) 53 => '429',
		(int) 54 => '3674/07',
		(int) 55 => 'transferee',
		(int) 56 => 'transferee',
		(int) 57 => 'transferee',
		(int) 58 => '30.9.2002',
		(int) 59 => 'three',
		(int) 60 => 'three',
		(int) 61 => 'two',
		(int) 62 => 'two',
		(int) 63 => 'two',
		(int) 64 => '7',
		(int) 65 => '30.9.2002'
	),
	'DATE' => array(
		(int) 0 => '18.5.2006',
		(int) 1 => '267/04',
		(int) 2 => '1992',
		(int) 3 => '1995',
		(int) 4 => '1992',
		(int) 5 => 'the first year',
		(int) 6 => 'four years',
		(int) 7 => 'next five years',
		(int) 8 => 'annual',
		(int) 9 => 'any financial year',
		(int) 10 => 'each financial year',
		(int) 11 => 'annual',
		(int) 12 => 'any financial year',
		(int) 13 => 'each financial year',
		(int) 14 => 'five financial years',
		(int) 15 => 'five financial years',
		(int) 16 => 'the sixth financial year',
		(int) 17 => 'five financial years',
		(int) 18 => 'the sixth financial year',
		(int) 19 => 'appeal.11',
		(int) 20 => '2000',
		(int) 21 => '1992',
		(int) 22 => '1992',
		(int) 23 => '1949',
		(int) 24 => '1932 Bom 78',
		(int) 25 => '1939',
		(int) 26 => '1893',
		(int) 27 => '1956',
		(int) 28 => '1913',
		(int) 29 => '1950',
		(int) 30 => '1879',
		(int) 31 => '1869'
	),
	'ORG' => array(
		(int) 0 => 'the Securities Appellate Tribunal',
		(int) 1 => 'the Securities and Exchange Board',
		(int) 2 => 'Circular',
		(int) 3 => 'Ratnabali Capital Markets Ltd.',
		(int) 4 => 'Ratnabali Securities Ltd.',
		(int) 5 => 'RSL',
		(int) 6 => 'National Stock Exchange',
		(int) 7 => 'RSL',
		(int) 8 => 'RSL',
		(int) 9 => 'RSL',
		(int) 10 => 'Gupta Committee',
		(int) 11 => 'the Stock Exchange',
		(int) 12 => 'RSL',
		(int) 13 => 'the Calcutta High Court',
		(int) 14 => 'RSL',
		(int) 15 => 'RSL',
		(int) 16 => 'RSL',
		(int) 17 => 'RSL',
		(int) 18 => 'Calcutta High Court',
		(int) 19 => 'RSL',
		(int) 20 => 'the High Court',
		(int) 21 => 'RSL',
		(int) 22 => 'Circular',
		(int) 23 => 'RSL',
		(int) 24 => 'RSL',
		(int) 25 => 'Board',
		(int) 26 => 'RSL',
		(int) 27 => 'Gupta Committee',
		(int) 28 => 'Committee',
		(int) 29 => 'RSL',
		(int) 30 => 'Circular',
		(int) 31 => 'Exchange',
		(int) 32 => 'RSL',
		(int) 33 => 'RSL',
		(int) 34 => 'Gupta Committee',
		(int) 35 => 'RSL',
		(int) 36 => 'Gupta Committee',
		(int) 37 => 'RSL',
		(int) 38 => 'Calcutta High Court',
		(int) 39 => 'Fee Continuity',
		(int) 40 => 'RSL',
		(int) 41 => 'the Scheme of Amalgamation',
		(int) 42 => 'the Calcutta High Court',
		(int) 43 => 'Himalaya Bank Ltd.',
		(int) 44 => 'judgment:(6',
		(int) 45 => 'the High Court',
		(int) 46 => 'The High Court',
		(int) 47 => 'the High Court',
		(int) 48 => 'High Court',
		(int) 49 => 'Peoples Bank of Northern India Ltd.',
		(int) 50 => 'AIR 1935',
		(int) 51 => 'SB',
		(int) 52 => 'Co.',
		(int) 53 => 'Travancore National',
		(int) 54 => 'Quilon Bank Ltd.',
		(int) 55 => 'AIR 1935',
		(int) 56 => 'SB',
		(int) 57 => 'Court',
		(int) 58 => 'London Chartered Bank of Australia',
		(int) 59 => 'Reconstruction',
		(int) 60 => 'Management and Administration',
		(int) 61 => 'Court',
		(int) 62 => 'New Bank of India Ltd.',
		(int) 63 => 'Amritsar AIR',
		(int) 64 => 'Creditors',
		(int) 65 => 'Court',
		(int) 66 => 'Court',
		(int) 67 => 'the Revenue Reserve(s',
		(int) 68 => 'Circular',
		(int) 69 => 'the Stock Exchange',
		(int) 70 => 'Gupta Committee',
		(int) 71 => 'RSL',
		(int) 72 => 'RSL',
		(int) 73 => 'SKP Securities Ltd.',
		(int) 74 => 'BNK Securities Pvt. Ltd.',
		(int) 75 => 'Circular',
		(int) 76 => 'the Securities Appellate Tribunal'
	),
	'GPE' => array(
		(int) 0 => 'Mumbai',
		(int) 1 => 'force.10',
		(int) 2 => 'Counsel',
		(int) 3 => 'Sm',
		(int) 4 => 'Mumbai'
	),
	'WORK_OF_ART' => array(
		(int) 0 => 'Regulations'
	),
	'MONEY' => array(
		(int) 0 => 'one per cent',
		(int) 1 => '1992 Act'
	),
	'EVENT' => array(
		(int) 0 => 'the 1992 Act',
		(int) 1 => 'English Act'
	),
	'ORDINAL' => array(
		(int) 0 => 'Firstly',
		(int) 1 => 'secondly'
	),
	'TIME' => array(
		(int) 0 => 'the English Act'
	),
	'PRODUCT' => array(
		(int) 0 => 'a Full Bench'
	)
)
$desc = array(
	'Judgement' => array(
		'id' => '678281',
		'acts' => '<a href="/act/51885/securities-and-exchange-board-of-india-act-1992-complete-act">Securities and Exchange Board of India Act, 1992</a> - Sections 11(2), 11B, 15Z and 32; Securities and Exchange Board of India (Stock-brokers and Sub-brokers) Regulations, 1992 - Regulation 10; <a href="/act/51006/companies-act-1956-complete-act">Companies Act, 1956</a> - Sections 153 and 389 to 396; Banking Companies Act, 1949 - Sections 37, 37(3), 38 and 45D; <a href="/act/133312/companies-act-1913-complete-act">Companies Act, 1913</a>; Bankruptcy Act, 1869 - Sections 125 and 126',
		'appealno' => 'Civil Appeal No. 4945 of 2007 (D. No. 18381/07) and Civil Appeal No. 3674 of 2007',
		'appellant' => 'Ratnabali Capitals Markets Ltd.',
		'authreffered' => '',
		'casename' => 'Ratnabali Capitals Markets Ltd. Vs. Securities and Exchange Board of India and anr.',
		'casenote' => 'Company - Registration fees - Securities and Exchange Board of India Act, 1992 - X was a registered broker with NSE - It paid registration fee for first year and thereafter paid fees on turnover basis for subsequent four years - SEBI adopted recommendations of committee under which no broker worth less than 3 crores would be allowed to trade as a broker in derivative segment of Stock exchange - X firm merged with Appellant's firm under which all rights, licenses, assets, properties and registrations of X stood transferred to Appellant firm - After merger X with Appellant SEBI demanded registration fees on turnover basis - Appellant claimed benefit of initial registration of X as a stock broker on ground that after merger all assets and liabilities including benefits in form of licenses obtained by RSL stood transferred to RCML - Claim rejected by SEBI - Hence, present appeal - Whether Appellant on amalgamation duly sanctioned by High Court was entitled to claim the benefit of Fee Continuity - Whether the demand made by SEBI imposing fresh turnover/registration fees on the merged entity  constituted an act in derogation of the provisions of any other law - Held, it cannot be said that raising an amount of Rs three crores constituted legal compulsion for X to merge with Appellant - Main function of SEBI is to regulate the trade which takes place in the securities market and for that purpose it is entitled to charge registration fees - After merger a new entity had emerged - Thus SEBI was entitled to charge registration fees - Appeal dismissed  - [S.H.Kapadia & B.Sudershan Reddy, JJ] Scheme of amalgamation   Held, Each Scheme under Section 391 cannot  be construed as alternative to liquidation. It depends on facts of each case. -- SECURITIES AND  EXCHANGE BOARD OF INDIA ACT, 1992 [C.A. No. 15/1992]. Section 11(2): SEBI (Stock-brokers and Sub-brokers) Regulations (1992), Schedule 3 - Circular DD 30.09.2002, Para 7  Registration fee for stock brokers  Benefit of the continuity under circular  Held, As a regulator, SEBI is entitled to charge registration fees for enabling it to carry out the functions stipulated in Section 11(2) of the 1992 Act. There is a dichotomy between functions of the stock exchange and the functions performed by SEBI. The licenses given by the stock exchange enables the stock-broker to buy and sell securities on the exchange whereas the regulation of the trade per se is done by SEBI for which it is entitled to charge requisite registration fees. In the instant case, on merger of the two companies RSL, RCML, a new entity stood emerged/constituted, which was given a right to operate in the derivative segment and, therefore, it had to pay fresh registration fees on the turnover basis. That new entity (RCML) was not entitled to the benefit of continuity of fees deposited earlier by RSL, which got merged into RCML.  Under circular dated 30.09.2002 what SEBI intends to say is that fresh turnover/ registration fees would not be payable by a company which goes for amalgamation/ merger as an alternative to liquidation. In other words, if the companys net worth is negative and if that company is on the brink of liquidation, which compels it to go for a scheme under Section 391, then in such cases, SEBI exempts such companies from payment of fresh turnover / registration fees. Such is not the case herein. On the contrary, in the present case, amalgamation has taken place in order to increase the reserves component of the net worth. The difference between the amount recorded as fresh share capital issued by the Transferee Company on amalgamation and the amount of shares capital of the Transferor Company to be reflected in the Revenue reserve(s) of the Transferee Company was the sole object behind amalgamation. Therefore, SEBI was right, in refusing to give the benefit of exemption to the transferee companies. These transferee companies were not on the brink of liquidation. The scheme under Section 391 was not an alternative to liquidation. Hence, the transferee companies were not entitled to claim the benefit of Circular dated. 30.09.2002. It cannot be said that the demand raised by SEBI for fresh turnover/registration fees constituted an act derogatory of the provisions of the Companies Act. On the emergence of a new entity, which was entitled to operate in derivative market, SEBI was certainly entitled to regulate its trade in the derivative segment for which it was entitled to charge requisite fees.  -  I am, therefore, satisfied that this Court has jurisdiction to entertain the petition and to pass appropriate order in view of the provisions of Section 392 of the Companies Act read with Section 391. 17. We make it clear that it would depend on the facts of each case whether a scheme under Section 391 could be construed as an alternative to liquidation. The point to be noted is that Gupta Committee recommended the net worth of rupees three crores in order to secure the interests of investors and traders who regularly play in derivatives. As stated above, the Government decided to vest SEBI with statutory powers in order to deal effectively with all matters relating to capital market.',
		'caseanalysis' => null,
		'casesref' => 'Sm. Bhagwanti v. New Bank of India Ltd.;',
		'citingcases' => '',
		'counselplain' => ' R.F. Nariman and; Ranjeet Kumar, Sr. Advs.,; Ratnako Banerjee',
		'counseldef' => '',
		'court' => 'Supreme Court of India',
		'court_type' => 'SC',
		'decidedon' => '2007-10-23',
		'deposition' => 'Appeal dismissed',
		'favorof' => null,
		'findings' => null,
		'judge' => ' S.H. Kapadia and; B. Sudershan Reddy, JJ.',
		'judgement' => '</p><p style="text-align: justify;">S.H. Kapadia, J.</p><p style="text-align: justify;">1. Delay condoned.</p><p style="text-align: justify;">2. Admit.</p><p style="text-align: justify;">3. The above two civil appeals are directed against the decisions dated 18.5.2006 and 4.5.2007 delivered by the Securities Appellate Tribunal, Mumbai in appeal Nos. 267/04 and 245/04 respectively.</p><p style="text-align: justify;">4. The short question that arises for our consideration in these civil appeals filed under Section 15Z of the <a href="/act/51885/securities-and-exchange-board-of-india-act-1992-complete-act">Securities and Exchange Board of India Act, 1992</a> (for short the '1992 Act') is whether the appellants were entitled to the benefit of fee continuity under para 7 of Circular dated 30.9.2002 issued by SEBI.</p><p style="text-align: justify;">5. For the sake of convenience, we may mention hereinafter the facts in the case of Ratnabali Capital Markets Ltd. ('RCML') which are as under.</p><p style="text-align: justify;">6. In 1995 Ratnabali Securities Ltd. ('RSL') was registered as a broker with National Stock Exchange ('NSE'). In terms of Schedule III of SEBI (Stock-brokers and Sub-brokers) Regulations, 1992 ('the Regulations'), RSL had paid initial registration fees for the first year and thereafter it had paid fees on turnover basis for subsequent four years. No further fees on turnover basis was paid by RSL under the said Regulations for continuation of registration except a fee of rupees five thousand for a block of next five years. RSL operated in cash and spot market.</p><p style="text-align: justify;">7. SEBI adopted recommendations of Gupta Committee stating that no company whose net worth was less than rupees three crores would be allowed to trade as a broker in the derivative segment of the Stock Exchange. To meet this net worth criteria, RSL and RCML merged under the Scheme of Amalgamation sanctioned by the order of the Calcutta High Court. Under that order, all rights, licences, assets, properties and registrations of RSL stood transferred by operation of law to RCML.</p><p style="text-align: justify;">8. On 30.9.2002 SEBI issued a circular stating that in the case of merger carried out as a result of compulsion of law, fees would not have to be paid afresh by a transferee entity provided that majority shareholders of transferor entity (RSL) continues to hold majority shareholding in the transferee entity (RCML).</p><p style="text-align: justify;">9. After the merger of RSL with RCML, a demand was made by SEBI for registration fees on turnover basis. Under the said Regulations, no stock-broker can buy, sell or deal in securities unless he holds a certificate granted by SEBI under its Regulations. Under the said Regulations, the stock-broker is required to pay fees for registration in the manner provided in the Regulations. Under Regulation 10, every applicant eligible for grant of a certificate has to pay fees in the manner specified in Schedule III. Under that Schedule, every stock-broker whose annual turnover does not exceed rupees one crore during any financial year has to pay rupees five thousand as registration fees for each financial year and whereas the annual turnover exceeds rupees one crore during any financial year he has to pay rupees five thousand plus one hundredth of one per cent of the turnover in excess of rupees one crore for each financial year. We quote hereinbelow Clause (c) of para 1 of Schedule III, which reads as under:</p><p style="text-align: justify;">After the expiry of five financial years from the date of initial registration as a stock-broker, he shall pay a sum of rupees five thousand for every block of five financial years commencing from the sixth financial year after the date of grant of initial registration to keep his registration in force </p><p style="text-align: justify;">A reading of Clause (c) makes it clear that where the stock-broker has paid registration fees either under Clause (a) or Clause (b) he shall have to pay rupees five thousand for every block of five financial years commencing from the sixth financial year after the date of initial registration in order to keep his registration in force.</p><p style="text-align: justify;">10. What RCML is now claiming is the benefit of initial registration of RSL as a stock-broker. According to RCML, when the above two companies stood merged on 9.2.2000, which merger was approved by Calcutta High Court, all assets and liabilities, including benefits in the form of licences obtained by RSL, stood transferred by operation of law in the hands of RCML. According to RCML, the concept of merger constitutes transfer by operation of law. According to RCML, the concept of merger operates on account of legal compulsion or compulsion in law. According to RCML, in the case of merger, which takes place after complying with the procedure prescribed by Sections 391 to 394 of the Companies Act, duly approved by the High Court, the assets and liabilities of the transferor company comes into the hands of RCML on account of legal compulsion. There is nothing voluntary in such cases of merger. According to RCML, the registration fees once paid by RSL should be given the benefit of continuity vide para 7 of Circular dated 30.9.2002 issued by SEBI. In other words, RCML now claims that it is entitled to the benefit of registration fees which RSL had paid from time to time as a broker in the cash and spot market. This claim of RCML has been rejected by the impugned decision. Hence, this civil appeal.</p><p style="text-align: justify;">11. In the present case, the two companies merged because after 2000, derivative markets opened out. RSL basically operated under the licences in cash and spot markets. They did not operate in the derivative markets. When the two companies merged, a new entity emerged. That entity was RCML. At this stage, it is important to bear in mind that licence from NSE/BSE only provided a platform to RSL/RCML to carry on the business of buying and selling shares on the stock exchange. However, trade had to be regulated by SEBI. The Companies Act has been enacted with a view to consolidate and amend the law relating to companies and certain other associations. On the other hand, the 1992 Act has been enacted to provide for the establishment of a Board to protect the investors' interests in securities and to regulate the securities market and for matters connected thereto. Under the said 1992 Act, SEBI is required to provide for regulating the business in stock exchanges, registering and regulating the working of stock brokers and numerous other functions which are enlisted in Section 11(2) of the said 1992 Act. Under Section 11B of the 1992 Act, SEBI is also empowered to issue directions inter alia to any person associated with the securities market. As a regulator, therefore, SEBI is entitled to charge registration fees for enabling it to carry out the functions stipulated in Section 11(2) of the 1992 Act. We repeat that there is a dichotomy between functions of the stock exchange and the functions performed by SEBI. The licences given by the stock exchange enables the stock- broker to buy and sell securities on the exchange whereas the regulation of the trade per se is done by SEBI for which it is entitled to charge requisite registration fees. In the present case, we have no doubt in our mind that, on merger of the above two companies, a new entity stood emerged/constituted, which was given a right to operate in the derivative segment and, therefore, it had to pay fresh registration fees on the turnover basis. That new entity (RCML) was not entitled to the benefit of continuity of fees deposited earlier by RSL, which got merged into RCML. According to RCML, the two companies were required to merge because of acceptance of recommendations of Gupta Committee by SEBI. According to the report of the said Committee, if a broker desires to enter derivative market then he is required to have a net worth of at least rupees three crores. According to RCML, the said requirement constituted a pre-condition for entering the derivative market. According to RCML, this pre-condition of possessing net worth of rupees three crores constituted compulsion of law, which made RSL merged into RCML and, in the circumstances, the appellants were entitled to the benefit of Circular dated 30.9.2002 issued by SEBI. Under the said circular, mergers/amalgamations carried out as a result of compulsion of law stood excluded from payment of fees afresh.</p><p style="text-align: justify;">12. We quote hereinbelow the said provision, which reads as under:</p><p style="text-align: justify;">Merger/Amalgamations</p><p style="text-align: justify;">Where mergers/amalgamations are carried out as a result of compulsion of law, fees would not have to be paid afresh to hold majority shareholding in transferee entity. The Exchange would have to enumerate what constitutes 'compulsion of law' resulting in such merger/amalgamations, for consideration of SEBI.</p><p style="text-align: justify;">13. Placing reliance on the aforesaid clause, RCML contended that, in the present case, RSL had merged into RCML on account of compulsion of law and, therefore, they were entitled to the benefit of continuity of fees earlier paid by RSL. According to RCML, but for the recommendations of Gupta Committee, RSL would not have merged into RCML. According to RCML, because of Gupta Committee prescribing the net worth of rupees three crores for entering into derivative market, RSL had to merge in RCML, which, according to the appellant, constituted legal compulsion. </p><p style="text-align: justify;">14. We do not find any merit in the above arguments. Two points arises for determination in the present case. They are interconnected. Firstly, whether RCML, on amalgamation, duly sanctioned by Calcutta High Court, was entitled to claim the benefit of Fee Continuity and, secondly, whether the demand made by SEBI imposing fresh turnover/registration fees on the merged entity (RCML) constituted an act in derogation of the provisions of any other law for the time being in force in terms of Section 32 of the said 1992 Act.</p><p style="text-align: justify;">15. As stated above, on 30.9.2002 SEBI had issued a circular stating that in the case of amalgamation/merger carried out as a result of compulsion of law, fresh turnover/registration fees would not have to be paid afresh by a transferee entity. We are concerned with the expression 'compulsion of law' in that circular. It is true that, in the present case, RSL had merged into RCML after complying with the provisions of Sections 391 to 394 of the Companies Act. It is equally true that the Scheme of Amalgamation has been approved by the Calcutta High Court. However, what is 'compulsion of law' has not been defined by SEBI. The reason is obvious. Under Section 391 of the Companies Act, a compromise or arrangement is proposed generally as an alternative to liquidation. Where a scheme appears to be feasible and workable, it should be preferred to a winding up order.</p><p style="text-align: justify;">16. In the case of Himalaya Bank Ltd. v. L. Roshan Lal Mehra reported in it has been held vide para 6 that the scheme of arrangement under Section 391 is an alternative to liquidation. We quote hereinbelow para 6 of the said judgment:</p><p style="text-align: justify;">(6) Mr. D.N. Avasthy, learned Counsel for the bank has next drawn my attention to Section 37 of the Banking Companies Act which provides that the High Court may on the application of a banking company which is temporarily unable to meet its obligations, make an order staying commencement or continuance of all actions and proceedings against the company for a fixed period of time on such terms and conditions as it shall think fit and proper.</p><p style="text-align: justify;">The High Court is empowered under Section 37(3) to appoint a special officer who is required to take into custody or control the assets, books etc., including actionable claims to which the banking company may be entitled. Section 38 empowers the High Court to order the winding up of banking company if it is unable to pay its debts. Mr. D.N. Avasthy also maintains that the scheme of arrangement is an alternative mode of winding up and, therefore, such powers as the High Court possesses under Section 45-D of the Banking Companies Act, 1949, will also entitle it to exercise the same powers for enforcement of the scheme of arrangement etc. </p><p style="text-align: justify;">He has rested his argument on three decisions reported in Madan Gopal v. Peoples Bank of Northern India Ltd. AIR 1935 Lah 779 (SB), Motilal Kanji and Co. v. Natwarlal M. Jhaveri AIR 1932 Bom 78, In re Travancore National and Quilon Bank Ltd. AIR 1939 Mad 318. In AIR 1935 Lah 779 (SB), Tek Chand J. said:</p><p style="text-align: justify;">Section 153, Companies Act, makes provision not merely for schemes for the 'resuscitation' or 're-organisation' of companies, but it also provides for 'schemes of arrangement', which in the words of Vaughan Williams J. (used in reference to the corresponding section of the English Act) provide an alternative mode of liquidation, which the law allows the statutory majority of creditors to substitute for winding-up whether voluntary or under the Court. In re London Chartered Bank of Australia (1893) 3 Ch. 540 .On the strength of these decisions, it was argued that the scheme of arrangement was an alternative mode of liquidation. This does not appear to be so either under the <a href="/act/51006/companies-act-1956-complete-act">Companies Act, 1956</a>, or under the Indian <a href="/act/133312/companies-act-1913-complete-act">Companies Act, 1913</a>, which preceded the present statute. Provisions of the Companies Act relating to 'Arbitration, Compromises, Arrangements and Reconstruction' covered by Sections 389 to 396 are placed in Chapter V of Part VI which deals with Management and Administration. Part VII is devoted to Winding Up. A scheme, therefore, cannot be said to be an alternative mode of liquidation but only an alternative to liquidation. The incidents of scheme of arrangement and of winding up are distinct both in principle and in consequences.</p><p style="text-align: justify;">The dictum of Vaughan Williams, J., which was cited in the three decisions referred to above, was examined by a Full Bench of this Court in Sm. Bhagwanti v. New Bank of India Ltd., Amritsar AIR 1950 EP 111. It was held by the Full Bench that in the corresponding English Act all the sections relating to the scheme were contained within the bar dealing with winding-up; and, therefore, a scheme of that particular kind was correctly described as an alternative mode of winding up. That particular provision which was being considered was applicable only to a company in liquidation.</p><p style="text-align: justify;">This is also clear from the observations of Vaughan Williams, J., only a portion of which was noticed in the three decisions referred to above. He said:</p><p style="text-align: justify;">The scheme of arrangement under the Act of 1879 is -- as I have had occasion to point out in several cases -- an alternative mode of liquidation which the law allows the statutory majority of Creditors to substitute for the pending winding-up, whether voluntary or under the Court, just as the Bankruptcy Act, 1869, allowed the creditors the substituted liquidation by arrangement under Section 125, or composition under Section 126, of that Act, for a pending bankruptcy....In view of this, I am not persuaded by this argument of the learned Counsel for the bank, that the scheme of arrangement should be treated as a specie of liquidation. I am, therefore, satisfied that this Court has jurisdiction to entertain the petition and to pass appropriate order in view of the provisions of Section 392 of the Companies Act read with Section 391.</p><p style="text-align: justify;">17. We make it clear that it would depend on the facts of each case whether a scheme under Section 391 could be construed as an alternative to liquidation. It is not in every matter that the scheme under Section 391 would constitute an alternative to liquidation. Therefore, it would depend on the facts of each case. Under circular dated 30.9.2002 what SEBI intends to say is that fresh turnover/registration fees would not be payable by a company which goes for amalgamation/merger as an alternative to liquidation. In other words, if the company's net worth is negative and if that company is on the brink of liquidation, which compels it to go for a scheme under Section 391, then in such cases SEBI exempts such companies from payment of fresh turnover/ registration fees. Such is not the case herein. On the contrary, in the present case, amalgamation has taken place in order to increase the 'reserves' component of the net worth. The difference between the amount recorded as fresh share capital issued by the transferee company on amalgamation and the amount of share capital of the transferor company to be reflected in the Revenue Reserve(s) of the transferee company was the sole object behind amalgamation. (see page 429 of vol. II in civil appeal No. 3674/07). Therefore, SEBI was right, in the present case, in refusing to give the benefit of exemption to the transferee companies. These transferee companies were not on the brink of liquidation. The scheme under Section 391 was not an alternative to liquidation. Hence, the transferee companies were not entitled to claim the benefit of Circular dated 30.9.2002. Further, we do not find any merit in the argument that the demand raised by SEBI for fresh turnover/registration fees constituted an act derogatory of the provisions of the Companies Act. In our view, on the emergence of a new entity, which was entitled to operate in derivative market, SEBI was certainly entitled to regulate its trade in the derivative segment for which it was entitled to charge requisite fees. Under the 1992 Act, a duty is cast on SEBI to protect the interest of investors in securities and to regulate the trade in securities on the Stock Exchange. Such Regulation is not a part of the Companies Act. Derivative market is highly speculative. It carries lot of risks. In fact, history shows that many investors and traders lost money earlier when badla transactions were prevalent. Derivative market, to a certain extent, replaces badla. The point to be noted is that Gupta Committee recommended the net worth of rupees three crores in order to secure the interests of investors and traders who regularly play in derivatives. In the circumstances, it cannot be said that raising of an amount of rupees three crores as net worth constituted legal compulsion for RSL to merge into RCML. As stated above, the Government decided to vest SEBI with statutory powers in order to deal effectively with all matters relating to capital market. The main function of SEBI is to regulate the trade which takes place in the securities market and for that purpose it is entitled to charge registration fees. In the present case, we are concerned with merger of two distinct independent companies. In the present case, we are not concerned with merger of firms. In the present case, we are not concerned with joint ventures. After the merger of RSL into RCML a new entity has emerged. In the circumstances, SEBI was entitled to charge the stipulated fees. For the aforestated reasons, we find no merit in these two civil appeals.</p><p style="text-align: justify;">18. Before concluding, we may note that, according to the appellants, in the past SEBI has not charged registration charges at the rates prescribed in case of two other companies. According to the appellants, SKP Securities Ltd. and BNK Securities Pvt. Ltd. were given in the past the benefit of fee continuity under para 7 of Circular dated 30.9.2002 whereas the said benefit has been denied to RCML. We do not know all the facts of those transactions. Be that as it may, we are concerned with the position in law. We reiterate that there is no merit in these civil appeals.</p><p style="text-align: justify;">19. For the aforestated reasons, we see no reason to interfere with the impugned orders passed by the Securities Appellate Tribunal, Mumbai. Accordingly, both the civil appeals stand dismissed with no order as to costs.',
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LAW: Section 15Z, Regulation 10, the Companies Act, The Companies Act, Section 11(2, Section 11B of the 1992 Act, Section 32, the Companies Act, the Companies Act, Section 391, Section 37, Section 37(3, Section 38, Section 45-D, the Banking Companies Act, Section 153, the Companies Act, the Indian Companies Act, Chapter V of Part VI, the Full Bench, the Bankruptcy Act, Section 125, Section 126, Section 392 of the Companies Act, Section 391.17, Section 391, Section 391, Section 391, Section 391, the Companies Act, the Companies Act

PERSON: S.H. Kapadia, Nos, Schedule III, RCML.8, Regulations, Regulations, Schedule III, Schedule, L. Roshan Lal Mehra, D.N. Avasthy, D.N. Avasthy, Madan Gopal, Motilal Kanji, Natwarlal M. Jhaveri AIR, Tek Chand J., Vaughan Williams J., Vaughan Williams, J., Bhagwanti, Vaughan Williams, J.

NORP: J.1

CARDINAL: two, 245/04, 7, 30.9.2002, SEBI.5, five thousand, three, 30.9.2002, transferee, transferee, one, five thousand, one, five thousand plus, one, 1, five thousand, five thousand, two, 9.2.2000, 391 to 394, 7, 30.9.2002, two, two, two, two, three, three, 30.9.2002, transferee, three, 14, Two, 30.9.2002, transferee, 391 to 394, 6, 6, three, 779, 318, 779, 3, 540, 389, 396, three, 111, three, 30.9.2002, transferee, transferee, 429, 3674/07, transferee, transferee, transferee, 30.9.2002, three, three, two, two, two, 7, 30.9.2002

DATE: 18.5.2006, 267/04, 1992, 1995, 1992, the first year, four years, next five years, annual, any financial year, each financial year, annual, any financial year, each financial year, five financial years, five financial years, the sixth financial year, five financial years, the sixth financial year, appeal.11, 2000, 1992, 1992, 1949, 1932 Bom 78, 1939, 1893, 1956, 1913, 1950, 1879, 1869

ORG: the Securities Appellate Tribunal, the Securities and Exchange Board, Circular, Ratnabali Capital Markets Ltd., Ratnabali Securities Ltd., RSL, National Stock Exchange, RSL, RSL, RSL, Gupta Committee, the Stock Exchange, RSL, the Calcutta High Court, RSL, RSL, RSL, RSL, Calcutta High Court, RSL, the High Court, RSL, Circular, RSL, RSL, Board, RSL, Gupta Committee, Committee, RSL, Circular, Exchange, RSL, RSL, Gupta Committee, RSL, Gupta Committee, RSL, Calcutta High Court, Fee Continuity, RSL, the Scheme of Amalgamation, the Calcutta High Court, Himalaya Bank Ltd., judgment:(6, the High Court, The High Court, the High Court, High Court, Peoples Bank of Northern India Ltd., AIR 1935, SB, Co., Travancore National, Quilon Bank Ltd., AIR 1935, SB, Court, London Chartered Bank of Australia, Reconstruction, Management and Administration, Court, New Bank of India Ltd., Amritsar AIR, Creditors, Court, Court, the Revenue Reserve(s, Circular, the Stock Exchange, Gupta Committee, RSL, RSL, SKP Securities Ltd., BNK Securities Pvt. Ltd., Circular, the Securities Appellate Tribunal

GPE: Mumbai, force.10, Counsel, Sm, Mumbai

WORK_OF_ART: Regulations

MONEY: one per cent, 1992 Act

EVENT: the 1992 Act, English Act

ORDINAL: Firstly, secondly

TIME: the English Act

PRODUCT: a Full Bench