At, SEBI Securities Exchange Board of India Securities Appellate Tribunal
By, CORAM: JUSTICE KUMAR RAJARATNAM
By, PRESIDING OFFICER
By, C. BHATTACHARYA
By, R.N. BHARDWAJ
Appellant – Represented by: Mr. S.D. Israni, PCS, Mr. S.S. Israni, Advocate. Respondent –Represented by: Mr. Kumar Desai, Advocate.
Per: Justice Kumar Rajaratnam, Presiding Officer
1. Appeal is taken up with consent of parties.
2. The appellant is a stock broker and is registered with the NSE and with SEBI. It appears that an enquiry has been initiated by the respondent against the appellant with respect to certain alleged manipulation of scrips. The enquiry commenced on 11.9.2001 and is still pending. The appellant also ceased to be a stock broker.
3. The grievance of the appellant is that no enquiry can be conducted against the person who ceased to be a stock broker. Regulation 27 reads as follows:
“Reg. 27 Manner of order of suspension or cancellation
No order or penalty of suspension and cancellation shall be imposed except after holding an enquiry in accordance with the procedure specified in Regulation 28.
[“Provided that the holding of such an enquiry shall not be necessary in cases where the stock broker;
a) ceases to be a member of a recognised stock exchange; or
b) is declared defaulter by the stock exchange and is not readmitted to the membership of the exchange within a period of six months from such declaration; or
c) surrenders the membership of the stock exchange; or
d) is declared insolvent by a Court; or
e) fails to pay the registration or annual fees to the Board in the manner specified in the Regulations; or
f) voluntarily surrenders certificate to the Board; or
g) is wound up by an order passed by the Court.
Provided further that no action shall be taken against the stock broker without giving an opportunity of heating of the stock broker.”] (Emphasis by Court)
4. It is also submitted by the learned representative of the appellant that some money is still with the NSE and unless SEBI disposes of the enquiry the appellant would not be able to get the money, although NSE has confirmed that there is no due and this has to be confirmed by SEBI.
5. The learned counsel for the appellant relied on a circular dated 11.3.2003. Paragraph 3 of the circular reads as follows:
“3. Based on the information and documents available with SEBI, it may cancel the certificate of registration and issue No Due Certificate, subject to the condition that the broker/exchange remits the fees, that may accrue from the date of your communication till the date of cancellation of registration by SEBI and subject to furnishing an undertaking to pay any fees/interest to be payable by such member as and when called from by SEBI to pay. Until SEBI’s dues are fully paid, the security deposit of the member should not be released by the exchange.”
6. Taking all these factors into account and also taking into account the fact that SEBI has yet to issue a No Due Certificate, it would be appropriate to direct SEBI to complete the enquiry and
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dispose of the matter within 10 weeks from the receipt of the order. SEBI is at liberty to pass appropriate orders for release of the money which is still with NSE, by taking an undertaking from the appellant in accordance with law. All contentions are left open. 7. Appeal is disposed of accordingly. No order as to costs.