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Securities and Exchange Board of India v. M/s Prebon Yamane (India) Ltd.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 7607 of 2005)Decided 3 Nov 2015
Civil Appeal No. 7607 of 2005
Justice Vikramajit Sen · Justice Shiva Kirti Singh

Background

Oracle Stocks and Shares Ltd., a member of the National Stock Exchange (NSE), formed a 50:50 joint venture in 1999, Prebon Yamane (India) Ltd., which took over Oracle's debt-market (WDM) membership. Prebon asked SEBI to treat its membership as a continuation of Oracle's, so that it would not have to pay fresh registration fees ("fee continuity"). SEBI instead demanded unpaid fees of about Rs. 5.59 crore, and the Securities Appellate Tribunal ordered SEBI to refund the amount Prebon had already paid.

Decision Breakdown

The Supreme Court allowed SEBI's appeal and set aside the Tribunal's refund order. The fee exemption in the Regulations (Schedule III, clause 4) applies only where an individual or partnership membership is converted into a corporate entity, which was not the case here. NSE's letters and SEBI's internal file notings did not create a right, because an internal note is not a decision until it is approved and communicated to the affected party. Prebon was a distinct entity that had itself paid fees under the ordinary clause, so it was not entitled to the benefit and no refund was due.

Lesson Learnt

Informal views from a regulator's staff, or from a market institution, do not bind the regulator; only a formal decision that is communicated counts. Businesses restructuring their registrations should check the fee rules directly rather than rely on informal assurances.

Official source (sci.gov.in)View Judgment (PDF)

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