SECURITIES & EXCHANGE BOARD OF INDIAversusM/S. PREBON YAMANE (I) LTD.

                      [2015] 10 S.C.R. 250


A        SECURITIES.& EXCHANGE BOARD OF INDIA
                                v.
                MIS. PREBON YAMANE (I) LTD.
                  Civil Appeal No. 7607 of 2005
B·
                      NOVEMBER 03, 2015
       [VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ.]
         Securities & Exchange Board of India (Stock Brokers
c and Sub-Brokers) Regulations, 1992: Regulation 1O;
  Schedule Ill clause 4- Fee Continuity benefit- SEBI issue ·
  a provisional fee liability statement - Payment under protest
  by respondent- SAT directed SEBI to refund the amounts-
  Held: Respondent was not an entity as envisaged in clause
D 4 of Schedule Ill - Hence not entitled to fee continuity benefit
  - Securities & Exchange Board of India Act, 1992.

          Allowing the appeal, the Court

E        HELD: As per Clause 4 of Schedule Ill, the
  Respondent was not an 'entity' as envisaged in the
  Regulations as would be entitled to "fee continuity" or
  exemption from payment of fees. The Regulation clearly
  refers to a newly formed entity through conversion from
F either a sole proprietorship or a partnership to a limited
  Company, which alone has been bestowed the benefit
  of continuity. Given that the Respondent is barred by the
  provisions, the Appellant's internal file notings are of no
  consequence and the Appellant is not estopped from
G coming to a contrary conclusion. The Respondent's
  argument that the Appellant experienced a change of
  heart after the issuance of the Circular dated 28.3.2002
  is untenable, because if that was indeed what the
  Respondent believed, it would not have written a letter
H requesting fee continuity on 4.2.2002, a date prior to the
                              250
 SECURITIES & EXCHANGE BOARD OF INDIA v. M/S.                251
            PREBON YAMANE (I) LTD.

issuance of the circular dated 28.3.2002. Thus, the A
Respondent has failed to prove that it believed it was
granted fee continuity, in light of its letter to the Appellant
requesting the same. Further, it appears that the
Respondent was an entity quite distinct from Oracle, with
the consequence that it would be bound to pay the fee B
in accordance with Schedule Ill, Clause (a) or (b) as the
case may be, and would not be entitled to claim the
advantage of Clause (c). In fact, this is the very
understanding of the Respondent since fees were
deposited by them under Clause (a) in sharp C
contradistinction of Clause (c). [Para 13] [264-C-H]

     B.S.E. Brokers Forum vs. SEBI (2001) 3 SCC
     482; Sethi Auto Service Station vs. Delhi
     Development Authority 2009 (1) SCC 180: 2008            D
     (14) SCR 598 - referred to.

                   Case Law Reference

(2001) 3 sec 482           referred to.        Para 7        E
2008 (14) SCR 598          referred to.        Para 8

      elVILAPPELLATE JURISDICTION: Civil Appeal No.
7607 of2005
                                                             F
       From the Judgment and Order dated 17.08.2005 of the
Securities Appellate Tribunal Mumbai in Appeal No. 338 of
2004.

       Chander Uday Singh, Dhaval Mehrotra, Bhargava V.      G
Desai, Saumya Mehrotra, Rishi Gautam for the Appellant.

      C. A. Sundaram, Mayank Mishra, Tishampati Sen,
Dheeraj Nair for the Respondent.

      The Judgment of the Court was delivered by             H
252         SUPREME COURT REPORTS                    [2015) 10 S.C.R.


A              VIKRAMAJIT SEN, J. 1. This Appeal assails the
      Judgment dated 17.8.2005 pronounced by the Securities
      Appellate Tribunal (hereinafter 'SAT') directing the Appellant
      as well as the National Stock Exchange (NSE for brevity) to
      continue to grant the Respondent the "fee continuity benefit"
 B    as was available to them before the NSE decided to permit
      segmental surrender of membership to its members. In
      response to the fee demanded by the Appellant, namely the
      Securities and Exchange Board of India (SEBI for short), the
      Respondent has paid, albeit under protest, the principal
 C    amount of {4,37,20,256/- together with 26,96,590/- being the
      interest accrued thereon. The factual matrix is that on
      27 .5.1994, Oracle Stocks and Shares Ltd. (hereinafter 'Oracle')
      was registered by the NSE as a Trading member in two
      segments, that is the Wholesale Debt Market (WDM) as well
 0
      as in the Equity Market/Capital Marke.t (EM/CM).
      Subsequently, on 14.1.1999, Oracle informed the NSE that it
      had entered into a 50:50 Joint Venture with Prebon Holdings
      B.V. (Prebon Group), namely Prebon Yamane (India) Ltd. (the
 E    Respondent), but restricted in respect to the WDM segment
      alone. NSE advised Oracle to bifurcate the WDM and the
      EM/CM segments whereupon Oracle forwarded a proposal
      in writing seeking the approval of NSE for the segreg~tion of
      its Membership of\/VDM and of the EM/CM segments. By its
 F    letter dated 11.2 .1999, NSE approved the proposal of Oracle
      for segregation but subject to certain conditions, inter alia, that
      if the trading member Oracle was desirous of surrendering its
      trading membership, both the entities viz. Oracle and the
      Respondent would have to surrender their respective
 G    memberships simultaneously. As is palpably apparent, NSE
      looked after its own financial interests by demanding ~10 Lacs
      as approval fee together with an interest free security of ~50
      Lacs. Both entities were also required to maintain their
      shareholding pattern and comply with the net worth and all other
 H    requirements - Oracle in respect of corporate trading of the
 SECURITIES & EXCHANGE BOARD OF INDIA v. M/S.                     253
   PREBON YAMANE (I) LTD. [VIKRAMAJIT SEN, J.]

Capital Market and the Respondent in respect of the corporate A
trading in the WDM segment. The Respondent was also called
upon to submit its shareholding pattern. It seems facially
obvious to us that even the NSE was alive to the possibility of
Oracle hiving off or transferring its WDM operations to the
Respondent without complying with all the applicable Rules B
and Regulations. NSE maintained this position even later on,
as is evident from a perusal of its letter to the Respondent
positing that both memberships, though vesting in separate
parties, were treated as 'concomitant'. It is also relevant to
underscore that the Appellant was not pr~vy to these C
negotiations.

        2. We must hasten to add that shortly subsequent to
these events, the Appellant by its letter dated 4.4.1999 to the
Respondent had granted registration to it "as a stock broker".    D
The Appellant made its permission conditional inter alia, upon
payment of fees for registration provided in the Securities and
Exchange Board of India [Stock-Brokers and Sub-Brokers]
Regulations, 1992, the salient parts of which we shall extract
for ease of reference. However, the relevant terms contained      E
in the letter dated 4.4.1999 are these -

     2 d) It shall pay the amount fees for registration in the
     manner Jjrovided in the Securities and Exchange Board
     of India [Stock Brokers and Sub Brokers] Regulations,        F
     1992;and

     5. You are now, in terms of clause [d] of the conditions of
     grant of registration certificate, required to pay the fees
     in accordance with regulation 10[1] read with Schedule- G
     Ill of the Securities and Exchange Board of India [Stock
     Brokers and Sub Brokers] Regulations, 1992 and remit
     the same through the stock exchange of which you are a
     member. All the stock exchange have been separately
                                                                  H
254       SUPREME COURT REPORTS                   [2015] 1OS.C.R.


A        given necessary instructions in regard to collection of fees
         from the stock brokers and remittance thereof to the
         Board.

           3. In this continuum NSE, in its letter dated 30.1.2002,
s again conveyed to the Respondent that both the memberships,
  though vesting in different entities, were 'concomitant'. This
  reiterated stand of the NSE was submitted by the Respondent
  to the Appellant with a request to grant fee continuity benefit
  on the basis of the facts of the case. The Appellant has
C admitted that on receipt of this request from the Respondent,
  it recorded in Its file notings that the two membership cards
  could be treated as composite and that the turnover of the two
  cards may be taken together for the purpose of turnover fees.
  It is not in dispute that till 2003 the Respondent had been
D availing of the benefits permissible under the fee continuity
  provisions. This position was also accepted by the Appellant,
  as both the membership cards were treated as composite and
  'concomitant' and the turnover of the two cards of Oracle and
  the Respondent were taken together on the predication that
E the Respondent's WDM membership was a continuation of
  WDM segment of Oracle's membership.

          4. On 18.9.2003, the Respondent applied to the NSE
  for membership in the Derivatives Segment which the NSE,
F as per procedure, forwarded to the Appellant for its approval.
  On 24.6.2004, the Appellant returned the application and
  issued a provisional fee liability statement disclosing that after
  making the necessary adjustments of the amount paid with
  respect to its membership in the WDM Segment, there were
G unpaid dues in the name of the Respondent to the tune of
  ~5,59,45,054 towards principal and interest. It was indicated
  that the application may be resubmitted only after payment of
  the outstanding fees. In its letter dated 23.8.2004 to the
H Respondent, NSE clarified that although segmental surrender
  of the trading membership was permissible since December,
 SECURITIES & EXCHANGE HOARD OF INDIA v. MIS.                       255
   PREBON YAMANE (I) LTD. [VIKRAMAJIT SEN, J.]

2002, it had nevertheless to be kept in perspective that when A
the Respondent and Oracle had made the subject proposal in
January, 1999, it was accepted on the condition that "should
any one of the entities deCide to surrender their membership,
then both the entities have to surrender their respective
membership simultaneously".                                   B

         5. After receiving the provisional fee liability statement
which stated a fee liability of ~5,59,45,054, Respondent filed
an Appeal on 8.11.2004 under Section 15T of the SEBI Act,
1992. This was contested by the Appellant before the C
Securities Appellate Tribunal (SAT), which observed that at
the time that NSE had granted fee continuity to the Respondent,
there was no provision for segmental surrender, as a result of
which, subject to certain conditions, fee continuity was granted
to Respondent despite it being a new entity. The SAT held that D
this letter did not have the effect of revocation or cancellation
of the earlier conditions which were specifically imposed while
granting assignment of WDM Segment from Oracle to the
Respondent. Counsel for the Respondent brought to the notice
of the SAT that the Respondent had already paid, albeit under E
protest pending disposal of the appeal, a sum of~4,37,20,~56
towards the principal amount of the Appellant's claim and a
further sum of ~26,96,590 as interest. However, the SAT
directed. the Appellant to refund both the amounts to the F
Respondent. Hence, the presentAppeal.

        6. Learned Senior Counsel for the Appellant has relied
on R~gulation 10 and Schedule 111 of the SEBI (Stock Brokers
and Sub Brokers) Regulations, 1992, which are reproduced
for the facility of reference:                                      G

      10. (1) Every applicant eligible for grant of a certificate
      shall pay such fees and in such manner as specified in
      Schedule Ill or Schedule lllA, as the case may be:
      Provided that the Board may on sufficient cause being         H
256    SUPREME COURT REPORTS                     [2015) 10 S.C.R


A.    shown permit the stockbroker to pay such fees at any
      time before the expiry of six months from the date on
      which such fees becomedue.
      (2) Where a stock-broker fails to pay the fees as provided
      in Regulation 10, the Board may suspend the registration
B
      certificate, whereupon the stock-broker shall cease to
      buy, sell or deal in securities as a stock-broker.
                                SCHEDULE Ill
                                Regulation 10
c
      I. Fees to be paid by the Stock Broker.
      1. Every stock broker shall subject to paragraphs 2 and
      3 of this Schedule pay registration fees in the manner
      set out below :
D
      (a) where the annual turnover does not exceed rupees
      one crore during any financial year, a sum of rupees five
      thousand for each financial year;
      (b) where the annual turnover of the stock-broker exceeds
E     rupees one crore during any financial year, a sum of
      rupees five thousand plus one hundredth of one per cent
      of the turnover in excess of rupees one crore for each
      financial year;
 F    )()()(           )()()(           )()()(

      (c) After the expiry of five financial years from the date of
      initial registration as a stock-broker, he shall pay a sum
      of rupees five thousand for every block of five financial
      years commencing from the sixth financial year after the
G
      date of grant of initial registration to keep his registration
      in force. (currently deleted)
               xxx     xxx              )()()(


H     4. Where a corporate entity has been formed by
      converting the individual or partnership membership card
 SECURITIES & EXCHANGE BOARD OF INDIA v. M/S.                   257
   PREBON YAMANE (I) LTD. [VIKRAMAJIT SEN, J.]

      of the exchange, such corporate entity shall be exempted A
      from payment of fee for the period for which the erstwhile
      individual or partnership member, as the case may be,
      has already paid the fees subject to the condition that
      the erstwhile individual or partner shall be the whole-time
      director of the corporate member so converted and such B
      director will continue to hold a minimum of 40 per cent
      shares of the paid-up equity capital of the corporate entity
     .for a period of at least three years from the date of such
      conversion.
                                                                 c
     Explanation: It is clarified that the conversion of individual
     or partnership membership card of the exchange into
     corporate entity shall be deemed to be in continuation of
     the old entity and no fee shall be collected again from
     the converted corporate entity for the period for which D
     the erstwhile entity has paid the fee as per the regulations.

         7. The learned senior Counsel for the Appellant has
contended that a membership of the Stock Exchang~ is an
essential pre-requisite, for which the fee prescribed in E
Regulation 10 is payable by every such member. The amount
that is payable as fee is determined as per the provisions under
Schedule Ill. Emphasis has been placed on Clause 4 of
Schedule Ill (supra) as it provides the only exception to the
payment of fees. Facially, it appears to us, this exception has F
been carved out only for the enablement of persons who are
vulnerable to unlimited personal liability in respect of their
business debts, to avail of the advantages of converting their
mode of transacting business into a corporate structure,
provided this conversion is not misused to essentially transfer G
the business and yet escape payment of transfer fees; hence
the insistence of retention of forty per cent share holding. It
also manifests that for all other transfers, fees are payable to
the Appellant, which depends on these collections for defraying
its manifold expenditures. The legal propriety of these H
258       SUPREME COURT REPORTS                    [2015] 10 S.C.R.


A pecuniary demands by SEBI have received the attention of
  the Court and have been found proper in B.S.E. Brokers Forum
  vs. SEBI (2001) 3 sec 482.

          8. Reliance has also been placed on letter dated
B 4.4.1999 issued by the Appellant to the Respondent, by which
  a certificate of registration was issued to the Respondent
  subject, inter alia, to condition (d) which provides that the
  Respondent and similarly situated entities shall pay the amount
  of fees for registration in the manner provided in SEBI (Brokers
C and Sub Brokers) Regulations, 1992. This letter also
  requested the Respondent to study the Rules and Regulations
  carefully. Learned Senior Counsel for the Appellant contended
  that the Respondent could not claim "fee continuity" on the basis
  of internal file notings. Reliance has been placed on the well
D entrenched legal principle that estoppal has no efficacy against
  a statute. Sethi Auto Service Station vs. Delhi Development
  Authority 2009 (1) SCC 180 clarifies this position thus -
         13. Thus, the first question arising for consideration is
 E       whether the recommendation of the Technical Committee
         vide minutes dated 17th May, 2002 for re-sitement of
         appellants petrol pumps constitutes an order/decision
         binding on the ODA?
         14. It is trite to state that notings in a departmental file do
 F
         not have the sanction of law to be an effective order. A
         noting by an officer is an expression of his viewpoint on
         the subject. It is no more than an opinion by an officer for
         internal use and consideration of the other officials of
         the department and for the benefit of the final decision-
 G
         making authority. Needless to add that internal notings
         are not meant for outside exposure. Notings in the file
         culminate into an executable order, affecting the rights
         of the parties, only when it reaches the final decision-
 H       making authority in the department; gets his apRroval and
         the final order is communicated to the person concerned.
 SECURITIES & EXCHANGE BOARD OF INDIA v. M/S.                         259
   PREBON YAMANE (I) LTD. [VIKRAMAJIT SEN, J.]

     15. In Bachhittar Singh v. The State of Punjab AIR 1963 A
     SC 395, a Constitution Bench of this Court had the
     occasion to consider the effect of an order passed by a
     Minister on a file, which order was not communicated to
     the person concerned. Referring to the Article 166(1) of
     the Constitution, the Court held that order of the Minister      B
     could not amount to an order by the State Government
     unless it was expressed in the name of the Rajpramukh,
     as required by the said Article and was then
     communicated to the party concerned. The court
     observed that business of State is a complicated one             C
     and has necessarily to be conducted through the agency
     of a large number of officials and authorities. Before an
     action is taken by the authority concerned in the name of
     the Rajpramukh, which formality is a constitutional              D
     necessity, nothing done would amount to an order
     creating rights or casting liabilities to third parties. It is
     possible, observed the Court, that after expressing one
     opinion about a particular matter at a particular stage a
     Minister or the Council of Ministers may express quite a         E.
     different opinion which may be opposed to the earlier
     opinion. In such cases, which of the two opinions can be
     regarded as the "order" of the State Government? It was
     held that opinion becomes a decision of the Government
      only when it is communicated to the person concerned.           F

     16. To the like effect are the observations of this Court
     in Laxminarayan R. Bhattad and Ors. v. State of
     Maharashtra and Anr. 2003 (3) SCR 409, wherein it was
     said that a right created under an order of a statutory G
     authority must be communicated to the person concerned
     so as to confer an enforceable right.

         9. The manner in which the Respondent understood
its role and participation in the Wholesale Debt Market (WDM)         H
260       SUPREME COURT REPORTS                  [2015] 10 S.C.R.


A segment along with Oracle is comprehensively contained in
  the Respondent's letter dated February 4, 2002. (This letter,
  although copiously relied upon by the parties in the course of
  argument was not available on the Court records. On
  18 .9 .2015 we called upon the Appellant to furnish a copy thereof
B which was done by its learned Senior counsel who has assured
  us that copies thereof had already been served on the learned
  counsel for the Respondent) We think it appropriate to
  reproduce the contents thereof as it is a summation of the case
  of the Respondent:
c
         'The National Stock Exchange (NSE) was formed in
         1993-94 with a view to promote the Debt Market and
         Capital Markets. In the initial period they issued only
         memberships of the Wholesale Debt Market (WDM)
 D       segments. M/s. Oracle Stocks and Shares Limited
         (Oracle) applied for and was granted registration of the
         WDM segment of the NSE. Subsequently, the NSE
         issued membership in the Equity Market segment
         wherein the members who were holding membership of .
 E       the WDM segment were automatically entitled to
         membership in this segment by paying an additional
         deposit.
         Oracle applied and was granted membership of the
 F       Equity Market (EM) segment. NSE did not issue a new
         registration number to Oracle and the company
         continued to do business in both the segments. Thus,
         the memberships of the WDM and the EM segments
         were treated as concurrent and there was no fresh
G        registration with SEBI separately for the EM segment.
         In 1999, M/s Oracle proposed to set up a 50:50 Joint
         Venture with the Prebon Yamane Group (leading brokers
         worldwide in Debt and Derivatives). Being specialized
         brokers in Debt Instruments worldwide, the Prebon
 H
         Yamane Group insisted on being a partner exclusively
SECURITIES & EXCHANGE BOARD OF INDIA v. MIS.                       261
  PREBON YAMANE (I) LTD. [VIKRAMAJIT SEN, J.]

   in ti1e WDM segment. Oracle therefore requested the A
   NSE for segregation of the activity of the WDM and the
   EM segments. During that period, the NSE, as a matter
   of policy, was not issuing separate memberships for
   WDM and EM. After discussing this matter with
   representatives of the NSE and on their advice, it was B
   decided to operate the WDM segment in the name of
   Prebon Yamane (India) Limited (PYlndia). As a part of.
   the procedural formalities, a separate registration number
   was issued by the NSE (in the name of Prebon Yamane
   India Ltd.). Oracle would continue to hold 50% of the C
   subscribed capital in the new entity.
   Although Oracle and PYlndia were given two separate
   registration numbers for EM and WDM respectively, the
   NSE did not collect the deposit of Rs.15 million which it       D
   would normally have done for new WDM members.
   Instead, the NSE merely transferred (without refunding
   the amount to Oracle) a part of the total deposits of Oracle,
   amounting to Rs.10 million, in favour of PYlndia. PYlndia
   did not bring in fresh deposits for the WDM membership          E
   ofNSE.
   Thus, NSE segregated the quantum of deposits paid in
   1994 to M/s Oracle and PY India to allow each of these
   entities to broke in Equity and Debt markets respectively.      F
   It was also stipulated by the NSE that neither of these
   entities can surrender one of the memberships without
   surrending the other. Undertakings to this effect by way
   of Board resolutions were taken individually from M/s
   Oracle and PYlndia. Thus, in essence, the NSE treated           G
   both these companies as one composite member with
   the same promoter group.
   The NSE treats the induction of the Prebon Group and
   the consequent assignment of the WDM segment of
   Oracle Stocks & Shares Ltd. to Prebon Yamane India              H
262       SUPREME COURT REPORTS                  [2015) 10 S.C.R.


A        Ltd. as a continuation of the original WDM membership
         that was granted to M/s Oracle Stocks & Shares Ltd.
         The view of the NSE in this regard, confirming that both
         the memberships are concomitant, is enclosed herewith.
         In view of the facts mentioned above and the NSE's view
B
         in this regard, we would request you to give the status of
         fee continuity to the composite membership taken by M/
         s Oracle and PYlndia.
         In other words, if Oracle has paid turnover fees from 1994,
c        and the broking business has commenced from 1994,
         any fees be levied in either Oracle and/or PYlndia for the
         balance period, as a composite entity."

           10. Learned Senior Counsel for the Respondent has
o contended that transfer from one juristic person to another is
  not the appropriate test and that since the Regulations employ
  the term "entity", it is necessary to determine whether the
  entities are essentially the same. Senior Counsel has submitted
  that since Oracle, who was an existing member, had a 50%
E stake in the Respondent, in effect the Respondent was another
  manifestation or avatar of Oracle. Further, the Appellant had
  conducted inspections of the Respondent but had not raised
  any issue or recorded any objections at that time. Reliance
  has been placed on the letter dated 30.1.2002 issued by the
F NSE to the Respondent, which had stated that as per the
  policies of the NSE, segmental surrende1 of trading
  membership was not permitted, and therefore the assignment
  of WDM segment to the Respondent has been treated as a
  continuation of the WDM membership that was originally
G granted to Oracle. It has been strenuously contended that the
  Appellant had a change of mind and heart consequent upon
  the issuance of its Circular dated 28.3.2002 which stated that
  in case a broker had more than one registration certificate
H from any stock exchange, he would be required to pay fees as
  per the Regulations for each and every certificate that he held.
 SECURITIES & EXCHANGE BOARD OF INDIA v. MIS.                    263
   PREBON YAMANE (I) LTD. [VIKRAMAJIT SEN, J.]

The Circular further stated that in the event of a broker holding A
only one Registration Certificate b.ut more than one card on
any Exchange, registration fee would be payable on the
registration certificate and not on the number of cards held by
the broker, and the broker's turnover would be reckoned as
the aggregate turnover of all cards. It appears thatthis provision B
had been relied upon in the Judgment dated 3.6.2010 in WP
(C) No.17349/2004, which was struck down by the Delhi High
Court in Association for Welfare of Delhi Stock Brokers vs.
Uriion of India, and an Appeal thereagainst is pending before
this Court. However, we find that issue which were in C
contemplation in those proceeding are dissimilar to what we
have in hand.

         11. Reliance has also been placed on the affidavit filed
by the Appellant before the SAT. Therein the Appellant admitted D
that the Respondent had applied for fee continuity vide letter
dated 4.2.2002 which had enclosed the lette~ of the NSE
confirming that both the memberships had been considered
concomitant by it. The Appellant, based on the same, approved
in the file that the two cards could be treated as composite for E
all practical purposes and the turnover of the two cards may
be taken together for the purpose of ad-valorem fee. We have
already noted that Sethi Auto Service Station enunciates
that file notings cannot be relied upon with the intent of binding F
the concerned Authority or Department.

         12. Counsel for the Appellant has pointed out that the
Respondent has not paid fee as per Schedule Ill, Clause 1(c).
The Resporident only paid the basic fee indicating that its
turnover for the financial year was not beyond 1 Crore. However, G
the fixed basic fee of 5000 was paid by the Respondent in
1999, 2000 and 2001. Had the Respondent indeed believed
that it had been granted continuity, then as per Clause 1(c) of
Regulation 10, the Respondent would have paid 5000 only
once, for the block of 5 years. ·Furthermore, to prove that the H
264          SUPREME COURT REPORTS                    [2015] 10 S.C.R.


A Respondent was under no misconception with regard to it not
  having been granted "fee continuity", reference was made to
  two letters dated 4.2.2002 and 18.9.2003. Both these letters
  were applications seeking grant of fee continuity. Thus, the
  Respondent was never under an understanding that it had been
B granted fee continuity.
                                               ,.
               13. After considering the submissions of the learned
      Senior Counsel for both parties and appreciating the facts of
      the case, it is evident to us that as per Clause 4 of Schedule Ill,
C     the Respondent was not an 'entity' as envisaged in the
      Regulations as would be entitled to "fee continuity" or
      exemption from payment of fees. The Regulation 4 clearly
      refers to a newly formed entity through conversion from either
      a sole proprietorship or a partnership to a limited Company,
D     which alone has been bestowed the benefit of continuity. Given
      thatthe Respondent is barred by the provisions, theAppellant's
      internal file n9tings are of no consequence and the Appellant
      is not estopped from coming to a contrary conclusion'. The
      Respondent's argument that the Appellant experienced a
 E    change of heart after the issuance of the Circular dated
      28.3.2002 is untenable, because if that was indeed whatthe
      Respondent believed, it would not have written a letter
      requesting fee continuity on 4.2.2002, a date prior to the
 F    issuance of the circular dated 28.3.2002. Thus, the Respondent
      has failed to prove that it believed it was granted fee continuity,
      in light of its letter to the Appellant requesting the same. Further,
      it appears to us that the Respondent was an entity quite distinct
      from Oracle, with the consequence that it would be bound to
G     pay the fee in accordance with Schedule Ill, Clause (a) or (b)
      as the case may be, and would not be entitled to claim the
      advantage of Clause (c). In fact, this is the very understanding
      of the Respondent since fees were d~posited by them under
      Clause (a) in sharp contradistinction of Clause (c).
 H
 SECURITIES & EXCHANGE BOARD OF INDIA v. M/S.                     265
   PREBON YAMANE (I) LTD. [VIKRAMAJIT SEN, J.]

        14. The amounts deposited by the Respondent have A
been properly calculated. The Respondent is not entitled to
any refund therefrom. The Appeal is accordingly allov1ed. The
Interim Order granted by the Court stands recalled.

Devika Gujral                                   Appeal allowed.   B