Case: Alka Securities Ltd. Vs SEBI. Securities and Exchange Board of India

Party NameAlka Securities Ltd. Vs SEBI
JudgesN.K. Sodhi, J. (Presiding Officer) and Samar Ray, Member
IssueCompany Law
Judgement DateDecember 09, 2009
CourtSecurities and Exchange Board of India


N.K. Sodhi, J. (Presiding Officer)

  1. The appellant before us is a stock broker registered with the Securities and Exchange Board of India (for short the Board) and a member of the National Stock Exchange of India Limited (NSE). The Board carried out inspection of the books of accounts and other records of the appellant during March, 2003 and noticed certain irregularities committed by the appellant. It initiated enquiry proceedings in accordance with the provisions of the Securities and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing Penalty) Regulations, 2002. The enquiry officer in his report dated May 31, 2005 found that the appellant had violated Section 12 of the Securities and Exchange Board of India Act, 1992 (fort short the Act) and different circulars issued by the Board. The enquiry officer recommended that the certificate of registration of the appellant be suspended for a period of two months. A notice dated June 15, 2005 was then issued by the Board calling upon the appellant to show cause why appropriate penalty including the penalty as recommended by the enquiry officer be not imposed against it. The appellant filed its reply and was thereafter granted an opportunity of hearing. On a consideration of the material collected during the inspection and the enquiry, the whole time member by his order dated October 30, 2009 found the appellant guilty of serious irregularities and suspended its certificate of registration as a stock broker for a period of two months. It is against this order that the present appeal has been filed.

  2. We have heard the learned Counsel for the parties. The first charge that has been established against the appellant is that it dealt with an unregistered sub broker which is prohibited under the Act. It is not in dispute that the appellant had entered into an agreement on August 14, 1998 with Optima Securities India Pvt. Ltd. in which the latter was described as a management associate of the appellant. By virtue of this agreement, the appellant practically handed over its entire business of stock broking alongwith its membership card of NSE to the associate which was not a registered entity with the Board. Reference in this regard may be made to the relevant clauses of the agreement which are reproduced hereunder:

  3. It is agreed between the Company and the Associates that from the date of execution of these presents the Associates alone shall be entitled...

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