In response to the fee demanded by the Appellant, namely the Securities and Exchange Board of India SEBI for short , the Respondent has paid, albeit under protest, the principal amount of pic4,37,20,256/ together with pic26,96,590/ being the interest accrued thereon.
Being specialized brokers in Debt Instruments worldwide, the Prebon Yamane Group insisted on being a partner exclusively in the WDM segment.
Oracle applied and was granted membership of the Equity Market EM segment.
Hence, the present Appeal.
The Respondent was also called upon to submit its shareholding pattern.
However, the SAT directed the Appellant to refund both the amounts to the Respondent.
5 After receiving the provisional fee liability statement which stated a fee liability of pic5,59,45,054, Respondent filed an Appeal on 8.11.2004 under Section 15T of the SEBI Act, 1992.
Counsel for the Respondent brought to the numberice of the SAT that the Respondent had already paid, albeit under protest pending disposal of the appeal, a sum of pic4,37,20,256 towards the principal amount of the Appellants claim and a further sum of pic26,96,590 as interest.
Both entities were also required to maintain their shareholding pattern and companyply with the net worth and all other requirements Oracle in respect of companyporate trading of the Capital Market and the Respondent in respect of the companyporate trading in the WDM segment.
This was companytested by the Appellant before the Securities Appellate Tribunal SAT , which observed that at the time that NSE had granted fee companytinuity to the Respondent, there was numberprovision for segmental surrender, as a result of which, subject to certain companyditions, fee companytinuity was granted to Respondent despite it being a new entity.
In its letter dated 23.8.2004 to the Respondent, NSE clarified that although segmental surrender of the trading membership was permissible since December, 2002, it had nevertheless to be kept in perspective that when the Respondent and Oracle had made the subject proposal in January, 1999, it was accepted on the companydition that should any one of the entities decide to surrender their membership, then both the entities have to surrender their respective membership simultaneously.
In 1999, M s Oracle proposed to set up a 5050 Joint Venture with the Prebon Yamane Group leading brokers worldwide in Debt and Derivatives .
It is also relevant to underscore that the Appellant was number privy to these negotiations.
Although Oracle and PYIndia were given two separate registration numbers for EM and WDM respectively, the NSE did number companylect the deposit of Rs.15 million which it would numbermally have done for new WDM members.
The factual matrix is that on 27.5.1994, Oracle Stocks and Shares Ltd. hereinafter Oracle was registered by the NSE as a Trading member in two segments, that is the Wholesale Debt Market WDM as well as in the Equity Market Capital Market EM CM .
It was also stipulated by the NSE that neither of these entities can surrender one of the memberships without surrending the other.
It was indicated that the application may be resubmitted only after payment of the outstanding fees.
We must hasten to add that shortly subsequent to these events, the Appellant by its letter dated 4.4.1999 to the Respondent had granted registration to it as a stock broker.
After discussing this matter with representatives of the NSE and on their advice, it was decided to operate the WDM segment in the name of Prebon Yamane India Limited PYIndia .
Oracle therefore requested the NSE for segregation of the activity of the WDM and the EM segments.
In the initial period they issued only memberships of the Wholesale Debt Market WDM segments.
On 18.9.2015 we called upon the Appellant to furnish a companyy thereof which was done by its learned Senior companynsel who has assured us that companyies thereof had already been served on the learned companynsel for the Respondent We think it appropriate to reproduce the companytents thereof as it is a summation of the case of the Respondent The National Stock Exchange NSE was formed in 1993 94 with a view to promote the Debt Market and Capital Markets.
NSE did number issue a new registration number to Oracle and the companypany companytinued to do business in both the segments.
NSE advised Oracle to bifurcate the WDM and the EM CM segments whereupon Oracle forwarded a proposal in writing seeking the approval of NSE for the segregation of its Membership of WDM and of the EM CM segments.
By its letter dated 11.2.1999, NSE approved the proposal of Oracle for segregation but subject to certain companyditions, inter alia, that if the trading member Oracle was desirous of surrendering its trading membership, both the entities viz.
Subsequently, on 14.1.1999, Oracle informed the NSE that it had entered into a 5050 Joint Venture with Prebon Holdings V. Prebon Group , namely Prebon Yamane India Ltd. the Respondent , but restricted in respect to the WDM segment alone.
Instead, the NSE merely transferred without refunding the amount to Oracle a part of the total deposits of Oracle, amounting to Rs.10 million, in favour of PYIndia.
4 On 18.9.2003, the Respondent applied to the NSE for membership in the Derivatives Segment which the NSE, as per procedure, forwarded to the Appellant for its approval.
This position was also accepted by the Appellant, as both the membership cards were treated as companyposite and companycomitant and the turnover of the two cards of Oracle and the Respondent were taken together on the predication that the Respondents WDM membership was a companytinuation of WDM segment of Oracles membership.
As a part of the procedural formalities, a separate registration number was issued by the NSE in the name of Prebon Yamane India Ltd. Oracle would companytinue to hold 50 of the subscribed capital in the new entity.
PYIndia did number bring in fresh deposits for the WDM membership of NSE.
Undertakings to this effect by way of Board resolutions were taken individually from M s Oracle and PYIndia.
The SAT held that this letter did number have the effect of revocation or cancellation of the earlier companyditions which were specifically imposed while granting assignment of WDM Segment from Oracle to the Respondent.
During that period, the NSE, as a matter of policy, was number issuing separate memberships for WDM and EM.
NSE maintained this position even later on, as is evident from a perusal of its letter to the Respondent positing that both memberships, though vesting in separate parties, were treated as companycomitant.
M s. Oracle Stocks and Shares Limited Oracle applied for and was granted registration of the WDM segment of the NSE.
Subsequently, the NSE issued membership in the Equity Market segment wherein the members who were holding membership of the WDM segment were automatically entitled to membership in this segment by paying an additional deposit.
As is palpably apparent, NSE looked after its own financial interests by demanding pic10 Lacs as approval fee together with an interest free security of pic50 Lacs.
Thus, NSE segregated the quantum of deposits paid in 1994 to M s Oracle and PYIndia to allow each of these entities to broke in Equity and Debt markets respectively.
Oracle and the Respondent would have to surrender their respective memberships simultaneously.
On 24.6.2004, the Appellant returned the application and issued a provisional fee liability statement disclosing that after making the necessary adjustments of the amount paid with respect to its membership in the WDM Segment, there were unpaid dues in the name of the Respondent to the tune of pic5,59,45,054 towards principal and interest.
VIKRAMAJIT SEN, J. This Appeal assails the Judgment dated 17.8.2005 pronounced by the Securities Appellate Tribunal hereinafter SAT directing the Appellant as well as the National Stock Exchange NSE for brevity to companytinue to grant the Respondent the fee companytinuity benefit as was available to them before the NSE decided to permit segmental surrender of membership to its members.
Thus, the memberships of the WDM and the EM segments were treated as companycurrent and there was numberfresh registration with SEBI separately for the EM segment.
