HC rejects plea against Sebi diktat on SE membership fee

New Delhi, Oct 29 | Updated: Oct 30 2004, 05:30am hrs
The Delhi high court dismissed the petition filed by the National Stock Exchange Members Association challenging the Securities Exchange Board of Indias (Sebi) circular requiring members to pay separate registration fee to Sebi for memberships with more than one stock exchanges.

While dismissing the petition on no merit, Justice SK Kaul said: In view of the nature of regulatory functions to be performed by the respondents, the mode and manner of the levy of fee has to be levied.... Once this power is accepted there cannot be a challenge to the methodology adopted for quantification of the fee specially when it cannot be doubted that in case of a stock broker registered with more than one stock exchange, the regulatory mechanism and supervision would be required for more than one stock exchange and for trading of that person on multiple SEs.

The petitioner, an association of the trading members of NSE, had sought quashing of the Sebi circular on the ground that its clarification is contrary to the Sebi regulations.

The circular provided for fee payable by composite corporate member and requires that where stock brokers hold more than one registration with Sebi, separate fee would be required to be paid for each registration.

Sebi regulation provided for Rs 5,000 to be paid as registration fee for turnover up to Rs 1 crore and for turnover exceeding Rs 1 crore it is Rs 5,000 plus one hundredth of 1% (.01%) of the turnover in excess of Rs 1 crore for each financial year.

The impunged circular of 28-3-02 intravires the regulations and clarifies the mode and manner of calculation of the fee. It appears that the present writ petition is only an attempt on part of the petitioner to further reduce the incidence of fee having failed to succeed in the challenge to the imposition of the fee, the judge said.