BEFORE THE SECURITIES APPELLATE TRIBUNAL
MUMBAI
Appeal No. 36 of 2011

Date of Decision : 11.03.2011

KNA Securities Pvt. Ltd.
626, P.J. Towers, 6th Floor,
Dalal Street, Fort,
Mumbai 400 001.

…Appellant

Versus

Securities and Exchange Board of India,
SEBI Bhavan, Plot No. C-4A, G-Block,
Bandra-Kurla Complex, Bandra (East),
Mumbai – 400 051.

…Respondent

Mr. Zal Andhyarujina, Advocate with Mr. A.A. Mukri, Advocate for the Appellant.

Dr. Poornima Advani, Advocate with Mr. Ajay Khaire and Ms. Amrita Joshi,
Advocates for the Respondent.
CORAM : Justice N.K. Sodhi, Presiding Officer
P.K. Malhotra, Member
S.S.N. Moorthy, Member

Per : Justice N.K. Sodhi, Presiding Officer (Oral)

The dispute herein is in regard to the payment of broker fee and interest
thereon. As per the show cause notice issued to the appellant, a sum of 17,72,580/- as principal amount was due from it as broker fee for the period from 1991-92 to 1996-97 and a further period of 15 years c onsisting of three block periods. The respondent Board in the show cause notice also claimed a further sum of 24,17,359/- as interest due. Feeling aggrie ved by this action of the Board, the
appellant has come up in appeal. We have heard the learned counsel for the parties.
The fact that the appellant defaulted in th e payment of broker fee is not in dispute
and, therefore, according to the Securities and Exchange Board of India

2
(Stock Brokers and Sub-brokers) Regulatio ns, 1992 it was liable to pay interest
thereon at the rate of 15 per cent. Counsel fo r the parties are agreed that the principal
amount has since been paid. It is not in dispute that in the year 2004 the respondent
Board had come out with an Interest Li ability Regularisation Scheme 2004, enabling
the stock brokers to pay the principal amount and 20 per cent of the interest due from
them in installments upon which 80 per cent of the interest stood waived. The
appellant could not avail th e benefit of this scheme as K.N. Amerchand who is
holding more than 48 per cent of the share ca pital in the appellant and is its whole
time director had been declared a no tified party on November 20, 2001 under the
provisions of the Special Court (Trial of Offences Relating to Transactions in
Securities) Act, 1992. K.N. Amerchand applied to the Special Court that he had been
wrongly notified under the aforesaid Act as he had no concern with Harshad Mehta
scam. His application was accepted and it was only on March 19, 2009 that he was
de-notified. It is common gr ound between the parties that during the period from
November 20, 2001 and March 19, 2009 the appe llant did not carry on any trading
activity. The reason is obvious. The appellant is a one man show of K.N. Amerchand
and on his being declared a notified party, hi s entire assets stood attached and vested
in the custodian. Since K.N. Amerchand was de-notified under the aforesaid Act, it is
clear that the initial declaration of his bei ng a notified party was not justified. Be that
as it may, the fact remains that the appell ant could not avail of the amnesty scheme
for regularising his interest liability for no fault of his and the circumstances were
beyond his control.

2. The learned counsel for the respondent refers to the provisions of the Stock
   Broker and Sub-brokers Regulations to c ontend that the respondent Board has no
   power to waive the interest since the am nesty scheme referred to above has since
   come to an end. She further states that in terms of the aforesaid Regulations, the
   appellant is liable to pay inte rest at the rate of 15 per cent and that the amount that
   could be waived is only upto ` 100/-. She also points out that no mercy need be
   shown to the appellant as K.N. Amerch and was declared a notified party in 3
   November 2001 whereas the dues were for th e period prior thereto. That may be so,
   but the fact remains that the benefit of th e aforesaid scheme could not be availed by
   the appellant. We are of the view that a sympathetic view needs to be taken. In the
   peculiar circumstances of this case and with a view to secure the ends of justice, we
   are inclined to exercise our powers under Rule 21 of the Securities Appellate Tribunal
   (Procedure) Rules, 2000 and reduce the interest liability to 20 per cent of the amount
   claimed from the appellant provided the sa me is deposited within four weeks from
   today. We order accordingly.
   The impugned order stands modified and the appeal is disposed of as above.
   No costs. Sd/- Justice N.K. Sodhi
   Presiding Officer Sd/- P.K. Malhotra Member Sd/- S.S.N. Moorthy Member 11.3.2011
   Prepared and compared by:
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