SAT Asks SEBI To Recalculate Fee Levied On ICAP India
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SAT Asks SEBI To Recalculate Fee Levied On ICAP India


The Securities Appellate Tribunal on Thursday directed the Securities and Exchange Board of India to recalculate turnover fee liability on ICAP India imposed by the regulator.

Setting aside imposition of the fee on ICAP India at the rate of 0.01 percent of its turnover, the tribunal has asked SEBI to "recalculate the turnover fee liability from Oct. 20, 2000 for a period of five years at the rate of 0.001 percent of the turnover of the appellant".

The order came on an appeal filed by ICAP India against markets regulator's decision to grant the firm fresh registration and calculation of turnover fee liability after the firm had changed ownership and control in favour of a foreign firm Garban PLC.

The firm was incorporated by the name Pennar Investments Ltd. in July 1994 but became Garban Intercapital IL Ltd. after Garban PLC decided to invest in the company in April 1999. The name of the firm was further changed to ICAP India Pvt. Ltd. in July 2003.

It was noted that the firm is a trading member in the wholesale debt market segment.

Pursuant to the change in ownership, SEBI granted fresh registration certificate in October 2000 in the name of Garban Intercapital IL Ltd. and levied the turnover fee of over Rs 37.29 crore.

The fee included principal amount calculated at the rate 0.01 percent and the interest amount, the tribunal noted.

The firm contended that the transfer of the membership should not be considered as new membership and fee continuity benefit should be given and the turnover fee should be calculated at the rate of 0.001 percent as applicable to the WDM segment.

However, the SAT held that "appellant's claim of fee continuity benefit is devoid of any merit and is dismissed".

"The appellant was dealing only in WDM segment and the turnover fee applicable to WDM segment was only 0.001 percent, it was not appropriate for SEBI to impose a turnover fee at the rate of 0.01 percent thereby imposing such a huge burden on the appellant without any legal basis; which is highly arbitrary," the tribunal said.

The tribunal asked SEBI to recalculate the turnover fee at the rate of 0.001 percent from Oct. 20, 2000 for a period of five years.

Besides, it also said that SEBI is at liberty to impose simple interest on the firm if any outstanding amount of principal is due after adjusting payments already made by the firm.

Also read: SAT Gives Four More Weeks To NSE, Others In Co-Location Case

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