From the evidence led by the prosecution, it has been proved beyond reasonable doubt that the accused being the driver of the tractor was in conscious possession of the thirty three bags of poppy husk in the trolley attached to the tractor. Upon appreciation of evidence, High Court rightly reversed the acquittal and convicted the appellant under Section 15 of the NDPS Act. The occurrence was in the year 1990 and the appellant has suffered a protracted proceeding of about twenty five years. In the facts and circumstances of the case, the sentence of imprisonment imposed on the appellant is reduced from twelve years to ten years. The conviction of the appellant under Section 15 of the NDPS Act is confirmed and the sentence of imprisonment imposed on the appellant is reduced to ten years and the appeal is partly allowed. The appellant is on bail and his bail bonds are cancelled. The appellant be taken into custody forthwith to serve the remaining part of the sentence.

                                                                  REPORTABLE

                        IN THE SUPREME COURT OF INDIA

                       CRIMINAL APPELLATE JURISDICTION

                       CRIMINAL APPEAL NO.167 OF 2006



BALDEV                                                                 SINGH
...Appellant

                                   Versus

STATE                               OF                               HARYANA
...Respondent



                               J U D G M E N T



R. BANUMATHI, J.


      Challenge in this appeal is the judgment dated  29.05.2003  passed  by
the High Court of Punjab and Haryana in Criminal Appeal No.39-DBA  of  1995,
wherein the High Court reversed the judgment  of  acquittal  passed  by  the
Sessions Judge, Sirsa and convicted the appellant under Section  15  of  the
Narcotic Drugs and Psychotropic Substances Act 1985 (NDPS  Act)  on  account
of having been found in possession  of  poppy  husk  and  sentenced  him  to
undergo rigorous imprisonment  for  twelve  years  and  to  pay  a  fine  of
Rs.1,50,000/- and in  default  to  undergo  rigorous  imprisonment  for  six
months.
2.    Briefly stated case of the prosecution is that  on  16/17.09.1990  mid
night at about 12.15 a.m., Chander  Singh-SI  alongwith  Ram  Singh-ASI  and
team of police personnel with Government Jeep No. HNN  3108  and  a  private
jeep were holding Nakabandi on both sides of Kacha path leading  to  village
Kingre from G.T. Road for detection of the  contraband.   At  that  time,  a
tractor No.RJV 6299 with trolley was  heading  towards  the  road  from  the
village and the same was stopped and the appellant was  apprehended  and  he
was inquired about the gunny bags of poppy husk lying in the  trolley.   The
appellant was served with a written notice to the effect that as to  whether
he wanted to be examined before First Class Magistrate or  Gazetted  Officer
in connection with the  recovery  of  poppy  husk  from  his  trolley.   The
appellant had shown faith in Sub Inspector-Chander Singh and  as  per  rules
Sub-Inspector searched the trolley.   Thirty  three  yellow  coloured  gunny
bags containing poppy husk were  recovered  from  the  trolley  attached  to
tractor and on weighing the  bags,  each  bag  was  found  to  be  of  forty
kilograms i.e. in total about thirteen  quintals  and  twenty  kilograms  of
poppy husk was recovered.  From each bag, sample of hundred grams was  taken
out and parcels were made and remaining poppy husk lying in the  gunny  bags
were sealed with seal ‘CS’ and were seized and taken into police  possession
alongwith the said tractor with its trolley. On the  basis  of  rukka,  case
bearing No.234 dated 17.09.1990 under Sections 15, 16,  61  and  85  of  the
NDPS Act was registered at P.S. Sadar, Dabwali.  Subsequently, samples  were
sent for chemical analysis and were found to be poppy straw.  On  completion
of investigation, chargesheet was filed under Sections  15  and  16  of  the
NDPS Act.
3.    To substantiate the charges against  the  appellant,  the  prosecution
examined only one witness Ram Singh-ASI-PW-1,  affidavits  of  MHC  Mohinder
Singh and Constable Om Prakash and also the documents including  FSL  Report
were filed.   Sessions Judge,  Sirsa  vide  its  judgment  dated  22.04.1994
acquitted the appellant observing that no other witness except Ram Singh-PW-
1 was examined and that Ram Singh-PW-1’s evidence  was  not  trustworthy  to
base the conviction. Aggrieved by the verdict of acquittal, State  preferred
appeal before the High Court of Punjab and Haryana at Chandigarh.  The  High
Court  vide  impugned  judgment  reversed  the  judgment  of  acquittal  and
convicted the appellant under Section 15 of NDPS Act and  sentenced  him  to
undergo rigorous imprisonment and imposed fine as aforesaid. Aggrieved,  the
appellant has filed the instant appeal.
4.          Learned Senior Counsel for the appellant Mr. Anmol Rattan  Sidhu
submitted that Chander Singh-SI was an  important  witness  as  he  was  the
person who held the Nakabandi and  prepared  rukka  and  non-examination  of
Chander Singh is fatal to the  prosecution  case.   It  was  contended  that
testimony of Ram Singh-  PW-1 does not warrant credibility as he  could  not
have been present at two places i.e. at the place of  arrest  of  appellant-
Baldev Singh and also  at  the  place  of  arrest  of  one  Bhoop  Singh  in
connection with another FIR bearing No.235 dated 17.09.1990  at  P.S.  Sadar
at 5.30 a.m. in which one Bhoop Singh  was  arrested  while  carrying  opium
which renders the presence of Ram Singh-ASI in the place of recovery  highly
doubtful which aspect was not properly appreciated by  the  High  Court  and
the High Court erred in convicting the appellant on the  sole  testimony  of
Ram Singh-ASI.
5.    Per contra,  learned  counsel  for  the  respondent  Mr.  Amit  Kumar,
Additional Advocate General submitted that the recovery was at odd hours  in
night, prosecution cannot be expected to  examine  independent  witness  and
public witness, who happened to reach the spot when requested  to  join  the
police party but they refused to join.  It was further  contended  that  the
sole testimony of Ram Singh-ASI is trustworthy and  the  appellant  had  not
offered any satisfactory explanation for the  huge  quantity  of  contraband
and the High Court  rightly  reversed  the  acquittal  and  the  verdict  of
conviction warrants no interference.
6.    We have carefully considered the  rival  contention  advanced  by  the
parties and perused the impugned judgment and material on record.
7.          Case of prosecution hinges on the testimony of sole witness  Ram
Singh-PW-1.  Undisputedly, Ram Singh-PW-1 was the member  of  the  Nakabandi
party headed by Chander Singh-SI on the night of 16/17.09.1990.  Admittedly,
Ram Singh signed all the documents and also witness to  the  recovery  memo.
Even after searching cross-examination, evidence of Ram  Singh-PW-1  remains
unshaken.
8.          On the midnight of 16/17.09.1990,  when  the  police  party  was
holding Nakabandi on both sides of Kacha  path  leading  to  village  Kingre
from  G.T.  Road,  the  tractor  was  intercepted  and  the  driver  of  the
tractor–appellant was apprehended under suspicion at odd hours of  midnight,
prosecution cannot be expected to  examine  independent  witnesses.  In  his
cross-examination, PW-1 stated that two persons had come  at  the  place  of
Nakabandi in the midnight and they were asked to join, but they  refused  to
join.  In  the  circumstances  of  the  case,  when  there  is  satisfactory
explanation for non-examination of independent witnesses, conviction can  be
based solely on the testimony of official  witnesses  if  evidence  of  such
official witnesses inspires confidence.
9.          The accused sought to place reliance on  the  decision  in  Gyan
Singh and Ors. v. State of U.P., 1995 Supp (4) SCC 658,  wherein this  Court
observed that conviction cannot be  based  on  uncorroborated  testimony  of
official witnesses. But this judgment has no  relevance  in  the  facts  and
circumstances of the case as  in  Gyan  Singh’s  case  (supra),  this  Court
focused on the need to have independent witnesses in the odd hours in  night
as at the distance of 100 yards there was  habitation  but  in  the  instant
case no such material is brought on record to  show  that  there  was  human
habitation in the nearby place.
10.         There is no legal proposition that evidence of police  officials
unless  supported  by  independent  evidence  is  unworthy  of   acceptance.
Evidence of police witnesses cannot be discarded merely on the  ground  that
they belong to police force and interested in the  investigation  and  their
desire to see the success of the case.   Prudence however requires that  the
evidence of police officials who  are  interested  in  the  outcome  of  the
result of the case needs  to  be  carefully  scrutinized  and  independently
appreciated.  Mere fact that they are police officials does  not  by  itself
give rise to any doubt about their creditworthiness.
11.         Observing that no infirmity is  attached  to  the  testimony  of
police officials merely  because  they  belong  to  police  force  and  that
conviction can be based on  the  testimony  of  police  officials  in  Girja
Prasad (dead) by LRs. vs. State of M.P.,  AIR 2007 SCW 5589 = (2007)  7  SCC
625, it was  held as under:-

“[24] In our judgment, the above proposition does not lay down  correct  law
on the point. It is well-settled that  credibility  of  witness  has  to  be
tested on the touchstone of truthfulness and trustworthiness.  It  is  quite
possible that in a given case, a  Court  of  Law  may  not  base  conviction
solely on the evidence of Complainant or a Police Official  but  it  is  not
the law that police witnesses should not be relied upon and  their  evidence
cannot be accepted unless it is  corroborated  in  material  particulars  by
other independent evidence. The presumption that every person acts  honestly
applies as much in favour of a Police  Official  as  any  other  person.  No
infirmity attaches to the testimony of Police Officials merely because  they
belong to Police Force. There is no rule of law  which  lays  down  that  no
conviction can be recorded on the testimony  of  Police  Officials  even  if
such evidence is otherwise reliable and trustworthy. The  rule  of  prudence
may require more careful scrutiny of their evidence. But, if  the  Court  is
convinced that what was stated by a witness has a ring of truth,  conviction
can be based on such evidence.


[25] It is not necessary to refer to various  decisions  on  the  point.  We
may, however, state that before more than  half-a-century,  in  the  leading
case  of  Aher  Raja  Khima  v.  State  of  Saurashtra,  AIR  1956  SC  217,
Venkatarama Ayyar, J. stated:


"The presumption that a person acts honestly applies as much in favour of  a
police officer as of other persons, and  it  is  not  judicial  approach  to
distrust and suspect him without good grounds  therefor.  Such  an  attitude
could do neither credit to the magistracy nor good to  the  public.  It  can
only  run  down  the  prestige  of  the  police  administration".  (emphasis
supplied)


[26] In Tahir v. State (Delhi), (1996) 3 SCC 338,  dealing  with  a  similar
question, Dr. A.S. Anand, J. (as His Lordship then was) stated:


"Where the  evidence  of  the  police  officials,  after  careful  scrutiny,
inspires confidence and is found to be  trustworthy  and  reliable,  it  can
form basis of conviction and the absence of some independent witness of  the
locality to lend corroboration to  their  evidence,  does  not  in  any  way
affect the creditworthiness of the prosecution case.”

12.         Testimony  of  Ram  Singh-PW-1  and  evidence  on  record  amply
establishes physical possession of the  contraband  by  the  appellant.  The
appellant being the driver of the vehicle by  all  probabilities  must  have
been aware of the contents of the bags transported in the  trolley  attached
to the tractor.  Once the physical  possession  of  the  contraband  by  the
accused has been proved, Section 35 of the NDPS Act comes into play and  the
burden shifts  on  the  appellant-accused  to  prove  that  he  was  not  in
conscious possession of the contraband.  Section 35 of the  NDPS  Act  reads
as under:-
      35. Presumption of culpable   mental  state.—(1)  In  any  prosecution
for an offence  under this Act which requires a culpable   mental  state  of
the accused, the Court shall  presume the existence  of such  mental   state
but it shall be  a defence  for the accused to prove   the  fact    that  he
had no such mental  state with respect to the act charged as an  offence  in
that prosecution.
       Explanation.—In  this  section  “culpable  mental   state”   includes
intention, motive knowledge  of  a   fact  and  belief  in,  or  reason   to
believe, a fact.
(2)   For the purpose of this section, a fact is  said  to  be  proved  only
when the court believes it to  exist  beyond  a  reasonable  doubt  and  not
merely when its existence is established by a preponderance of  probability.


Explanation to sub-section (1)  of  Section  35  expanding  the  meaning  of
‘culpable mental state’  provides  that  ‘culpable  mental  state’  includes
intention, knowledge of a fact and believing or reason to believe  a   fact.
Sub-section (2) of Section 35 provides that for the purpose of  Section  35,
a fact is said to be proved only when the Court believes it to exist  beyond
a reasonable doubt and not merely when its existence  is  established  by  a
preponderance of the probability. Once the possession of the  contraband  by
the accused has been established, it is for the  accused  to  discharge  the
onus of proof that he was not in  conscious  possession.   Burden  of  proof
cast on the accused under Section 35 of  the  NDPS  Act  can  be  discharged
through different modes.  One of such modes is that the accused can rely  on
the materials available in the prosecution case  raising  doubts  about  the
prosecution case.  The accused may also adduce other  evidence  when  he  is
called upon to enter on his defence.  If the circumstances appearing in  the
prosecution case give reasonable assurance to the  Court  that  the  accused
could not have had the knowledge of the required intention, the burden  cast
on him under Section 35 of the NDPS Act would stand discharged even  if  the
accused had not adduced any other evidence of his  own  when  he  is  called
upon to enter on his defence.
13.         In Abdul Rashid Ibrahim Mansuri vs. State  of  Gujarat,      AIR
2000 SC 821, this Court has clearly held that where an accused  admits  that
narcotic drugs were recovered from bags that were found  in  his  possession
at the time of his apprehension,  in terms of   Section 35 of NDPS  Act  the
burden of proof is then upon him to prove that he had no knowledge that  the
bags contained such a  substance.   This  Court  then  went  further  on  to
explain as to the standard of proof that such  an  accused  is  expected  to
discharge and the modes vide which he can discharge  the  said  burden.   In
paras (21) and (22) of the said judgment, this Court held as under:-
“21. No doubt, when the  appellant  admitted  that  the  narcotic  drug  was
recovered from the gunny bags stacked in the  autorickshaw,  the  burden  of
proof is on him to prove that he had no knowledge about the fact that  those
gunny bags contained such  a  substance.  The  standard  of  such  proof  is
delineated in sub-section (2) as “beyond a reasonable doubt”. If the  court,
on an appraisal of the  entire  evidence  does  not  entertain  doubt  of  a
reasonable degree that he had real knowledge of the nature of the  substance
concealed  in  the  gunny  bags  then  the  appellant  is  not  entitled  to
acquittal. However, if the  court  entertains  strong  doubt  regarding  the
accused’s awareness about the nature of the substance in the gunny bags,  it
would be a miscarriage of criminal justice to convict  him  of  the  offence
keeping such strong doubt undispelled. Even so, it is  for  the  accused  to
dispel any doubt in that regard.

22. The burden of proof  cast  on  the  accused  under  Section  35  can  be
discharged through  different  modes.  One  is  that  he  can  rely  on  the
materials available in the prosecution evidence. Next  is,  in  addition  to
that, he can  elicit  answers  from  prosecution  witnesses  through  cross-
examination to dispel any such doubt. He  may  also  adduce  other  evidence
when he is called  upon  to  enter  on  his  defence.  In  other  words,  if
circumstances appearing in  the  prosecution  case  or  in  the  prosecution
evidence are such as to give reasonable assurance  to  the  court  that  the
appellant could not have had the knowledge or the  required  intention,  the
burden cast on him under Section 35 of the Act would stand  discharged  even
if he has not adduced any other evidence of his own when he is  called  upon
to enter on his defence.”(Emphasis added)


14.         In the light of the above principles, what is to be examined  in
the  present  case  is  whether  the  accused-appellant  has  been  able  to
discharge the burden of proof cast upon him under Section  35  of  the  NDPS
Act. The appellant has raised doubts about the prosecution  case  mainly  on
two aspects viz.; (i)  evidence  of   sole  witness  Ram  Singh-ASI  is  not
trustworthy and (ii) non-examination of Chander Singh-SI  who  prepared  the
rukka.
15.         To assail the prosecution case, it was contended that Ram Singh-
PW1’s testimony cannot be relied upon as PW-1 has stated  that  he  remained
busy in the investigation in the present case for    7-8 hours  but
the fact that Ram Singh has been associated in the investigation of  another
FIR No.235 dated 17.09.1990 relating to  Police  Station  Sadar  Dabwali  at
5.30 a.m.  in  which  one  Bhoop  Singh  was  arrested  while  carrying  one
kilogram  and  hundred  grams  opium,  which  according  to  the  appellant,
renders the presence of Ram Singh-ASI in the instant case  highly  doubtful.
The learned Sessions Judge accepted the above submission  of  the  appellant
to hold that evidence of Ram  Singh-ASI  does  not  inspire  confidence.  As
observed by the High Court,  the  learned  Sessions  Judge  overlooked  that
there is no evidence as to the distance between the places  of  recovery  in
both the cases.  As observed by the High Court, it has come on  record  that
in both the FIRs the place of occurrence has been stated as   “in  the  area
of Village Kingre, at a distance of 18 K.M. towards  the  East,  Deh.No.33”.
It appears from the above entry in the FIR, that  the  place  of  occurrence
was the same for both the FIRs recorded on that night.   The  case  relating
to Bhoop Singh in FIR  No.235  resulted  in  acquittal.   Referring  to  the
acquittal of Bhoop Singh, High Court observed that the  same  would  warrant
an inference that what is incorporated in FIR No.234 is incorrect  and  that
defence has not been able to make any dent in the testimony  of  Ram  Singh-
ASI to discard his evidence as untrustworthy.   We find no reason to take  a
different view.
16.         Contention at the hands of the learned Senior  Counsel  for  the
appellant is that non-examination of Chander  Singh-SI  who  prepared  rukka
and who investigated the case raises serious doubts  about  the  prosecution
case. Material on record would show that Chander Singh-SI  who  investigated
the  case  was  not  examined  by  the  prosecution  in  spite  of   several
opportunities.  No doubt, it is always desirable  that  prosecution  has  to
examine the investigating officer/police officer  who  prepared  the  rukka.
Mere non-examination of investigating officer does not in every  case  cause
prejudice to the accused or  affects  the  credibility  of  the  prosecution
case.  Whether or not any prejudice has been caused  to  the  accused  is  a
question of fact to be determined in each case.  Since Ram Singh-PW-1 was  a
part of the police party and PW-1 has signed in  all  recovery  memos,  non-
examination of Chander Singh-SI could not have caused any prejudice  to  the
accused in this case nor does it affect the credibility of  the  prosecution
version.
17.         In his statement under Section 313 Cr.P.C.,  no  plea  has  been
taken that the appellant was not in conscious possession of the  contraband.
The appellant has only pleaded that he being falsely implicated and  that  a
false case has been foisted against  him  in  the  police  station.  In  his
statement under Section 313 Cr.P.C., the appellant had not  stated  anything
as to why would the police foist the false case against the  appellant.   It
is to be noted that huge quantity of poppy  straw  was  recovered  from  the
possession of the  appellant.   Admittedly,  the  police  officials  had  no
previous enmity with the  appellant.  It  is  not  possible  to  accept  the
contention of the appellant that he is being falsely  implicated  as  it  is
highly improbable that such a huge quantity has been arranged by the  police
officials in order to falsely implicate the appellant.
18.         In his  statement  under  Section  313  Cr.P.C.,  the  appellant
denied the allegations against him and  stated  that  he  has  been  falsely
implicated and to  substantiate  his  defence,  the  appellant  adduced  two
documents Exs.D1 and D2.  Ex.D1 is a certified copy of the FIR No.235  dated
17.09.1990 under Sections 17 and  18  of  the  NDPS  Act  relating  to  case
against Bhoop Singh and Ex.D2 is a copy of the judgment acquitting the  said
Bhoop Singh.  Of course,  case  against  Bhoop  Singh  originated  from  FIR
No.235 dated 17.09.1990 registered at  5.30  a.m.  ended  in  acquittal  but
acquittal of Bhoop Singh in the said case  does not render  the  prosecution
case against the appellant-Baldev Singh doubtful.
19.         From the evidence led by the prosecution,  it  has  been  proved
beyond reasonable doubt that the accused being the  driver  of  the  tractor
was in conscious possession of the thirty three bags of poppy  husk  in  the
trolley attached to the tractor. Upon appreciation of evidence,  High  Court
rightly reversed the acquittal and convicted the appellant under Section  15
of the NDPS Act. The occurrence was in the year 1990 and the  appellant  has
suffered a protracted proceeding of about twenty five years.  In  the  facts
and circumstances of the case, the sentence of imprisonment imposed  on  the
appellant is reduced from twelve years to ten years.
20.         The conviction of the appellant under Section  15  of  the  NDPS
Act is confirmed and the sentence of imprisonment imposed on  the  appellant
is reduced to ten years and the appeal is partly allowed.  The appellant  is
on bail and his bail bonds  are  cancelled.  The  appellant  be  taken  into
custody forthwith to serve the remaining part of the sentence.

                                                        .………..…..…………………..J.
                                                                    (JAGDISH
SINGH KHEHAR)

                                                       ....………..……………………..J.
                                                  (R. BANUMATHI)
New Delhi;
November  4, 2015

‘levy’ and ‘collection’ are not synonyms and generally they occur at different stages. In the present case the legislative intention is to put an embargo on collection in future, in case the converted corporate entity is found entitled to the benefits of fee continuity. Such embargo is clearly to operate prospectively even if there existed some kind of liability in the past on account of fees leviable prior to insertion of paragraph 4 of Schedule III to the Regulations. In any case the rationale in not permitting retrospective operation of laws is only to ensure that subjects are not adversely affected by creation of legal liabilities and obligations for a period already bygone. In the present case the provisions do not create any obligation or liability. They only confer benefits by way of fee continuity on account of fees already paid by the earlier entity before its conversion into a new corporate entity. Even if we were to apply the test of fairness, no exception can be taken to extention of the benefit of fee exemption as provided by the relevant provision in the Regulations. Since the policy behind grant of benefits is to encourage corporatization of individual or partnership members of a stock exchange, the action of extending such benefits without any curb on the basis of date of conversions cannot be held as unfair. As noted earlier the SEBI itself extended the benefit to those converting not only from 21.1.1998 but from 1.4.1997. There is nothing in paragraph 4 or in the explanation to support the stand of the SEBI that the benefits must be confined to conversions taking place after a particular date when no such date finds place in the Regulations. As a result, appeals preferred by SEBI are dismissed and the judgments and orders under appeal passed by SAT are upheld. In the facts of the case the parties shall bear their own costs

                                                                  REPORTABLE


                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL NO.4493 OF 2006



S.E.B.I.                                                …..Appellants


                                      Versus


Alliance Finstock Ltd. & Ors. Etc.     Etc.             …..Respondents


                                   W I T H

                            C.A.No. 4743 of 2006



                               J U D G M E N T



SHIVA KIRTI SINGH, J.


Both the appeals have been preferred under Section 15Z of the  Securities  &
Exchange Board of India Act, 1992 (for brevity ‘the  SEBI  Act’)  against  a
common judgment and order dated  09th  May  2006  rendered  by  the  learned
Securities Appellate Tribunal (for brevity ‘the SAT’) in  Appeal  No.123  of
2004 and other analogous appeals filed by  the  stock  brokers  (respondents
herein) to challenge the action of the Securities & Exchange Board of  India
(for short, ‘the SEBI’) denying them the benefit of fee continuity in  terms
of paragraph 4 of Schedule III to the Securities & Exchange Board  of  India
(Stock Brokers and Sub-Brokers) Regulations, 1992 [hereinafter  called  ‘the
Regulations’].
The SAT formulated the issue falling for determination  in  the  form  of  a
question   –   “whether   stock   brokers   who   have    converted    their
individual/partnership membership into a corporate  entity  prior  to  April
01, 1997 are entitled to the fee continuity benefit in terms of paragraph  4
of Schedule III ….”.  Since the SAT answered the question in favour  of  the
stock brokers (the respondents herein), SEBI is in appeal.
The basic facts are common in all the  matters  inasmuch  as  the  concerned
broker was previously member  of  the  Bombay  Stock  Exchange  (for  short,
‘BSE’) in his individual capacity or as a partnership  firm.   He  opted  to
form a corporate entity under the  provisions  of  the  Companies  Act  1956
prior to April 01, 1997 and carried on the brokers’ business under the  name
and style of new  corporate  entity  by  getting  its  membership  converted
through approval of BSE leading to registration by the SEBI as  a  corporate
entity.  Undoubtedly, no stock broker or sub-broker can buy,  sell  or  deal
in securities unless it is  granted  Certificate  of  Registration  by  SEBI
under the Regulations and for that, ordinarily the stock broker is  required
to pay the requisite fees in the manner provided  in  the  Regulations.   In
particular, Regulation 10 provides that every  applicant  eligible  for  the
grant of a certificate shall  pay  such  fees  and  in  such  manner  as  is
specified in Schedule III to the Regulations.
Although the controversy relates to paragraph 4 of Schedule III, some  other
paragraphs are also relevant and hence these  along  with  paragraph  4  are
extracted hereinbelow :
“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 :

where the annual turnover does  not  exceed  rupees  one  crore  during  any
financial year, a sum of rupees five thousand for each financial year;

where the annual turnover of  the  stock-broker  exceeds  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;

…… …… ……

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  date  of  grant  of  initial  registration  to  keep   his
registration in force.

2.    Fees referred to in clauses (a) and (b) of paragraph 1 above shall  be
paid -

in  respect  of  the  financial  year  1992-93  within  one  month  of   the
commencement of these regulations;

in respect of the financial year beginning on the 1st  day  of  April,  1993
and the following financial years, on or before the first day of October  of
the financial year to which such payment relates,

and such fees shall be  computed  with  reference  to  the  annual  turnover
relating to the preceding financial year.

…… …… ……

Where a corporate entity has been formed by  converting  the  individual  or
partnership membership card of the exchange, such corporate entity shall  be
exempted 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 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.

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 erstwhile entity has paid the fee as per the regulations.

4A.   …… …… ……
If a stock broker fails to remit fees in accordance with  Paragraphs  1  and
2, he shall be liable to pay interest at 15% per annum  for  each  month  of
delay or part thereof.

Provided that the liability to pay interest as aforesaid may be in  addition
to any other action which the Board, may take  as  deemed  fit  against  the
stock broker under the Act, or the Regulations.

Provided further …… …… ……

…… …… ……

Manner of Fees to be paid.

The fees specified above shall be paid on or before the 1st day  of  October
each year payable by draft in favour of “The Securities and  Exchange  Board
of India” at Bombay, or at the respective regional office”.

Case of the SEBI is that since Para 4 of Schedule III was introduced  by  an
amending notification  dated  21.1.98  which  states  in  Para  2  that  the
amendment will be effective from the date of notification i.e, 21.1.98,  the
annual fee payable by registered brokers would  remain  unaffected  for  the
earlier year ending 31.3.97 and it can at best be effected only  in  respect
of fees payable for the year 1.4.97 onwards. On such  premise  it  has  been
forcefully contended on behalf of the appellants that the SAT has  erred  in
granting retrospectivity to  the  provisions  of  para  4  by  granting  the
benefit  of  fee  continuity  even  to  entities  which  acquired  corporate
membership on conversion even prior to 1.4.97.
The submission of Mr. C.U. Singh, learned Senior Counsel for the  SEBI,  are
to the following effect:-
      (1)   SEBI cannot make retrospective Regulations.
       (2)    Rules  and  regulations  are  generally   prospective   unless
      explicitly made retrospective.

       (3)    While  bestowing  a  new  benefit,  the  concerned   statutory
authority can always choose a cut off date.

       (4)    Unless  the  cut  off   date   suffers   from   arbitrariness,
there can be no interference.

       (5)    Materials  like  press  statement  or  letter  cannot  act  as
        estoppel   against   the   statutory   provisions   such   as    the
Regulations.

In support of the first and second submission it has been pointed  out  that
Section 30 of  the  SEBI  Act  vests  the  Board  with  the  power  to  make
regulations consistent with the Act and the rules made thereunder so  as  to
carry out the purposes of the Act and there  is  nothing  specific  in  this
Section granting power to frame regulations with  retrospective  effect.  To
further support this proposition, reliance has been  placed  upon  judgments
in the case of  (1) K Narayanan  v. State of Karnataka, 1994 Supp.  (1)  SCC
44, (2) Mohd. Rashid Ahmad v. State of  U.P.,  (1979)  1  SCC  596  and  (3)
Mahadeolal Kanodia v. The Administrator General of  West  Bengal,  (1960)  3
SCR 578 = AIR 1960 SC 936.  In K. Narayanan a retrospective rule was  struck
down on ground of unjust and unfair effect upon a section of  officials  and
therefore held discriminatory and violative of Articles 14 and 16. In  Mohd.
Rashid Ahmed the Court was dealing with service matter and was  called  upon
to decide whether a particular rule could  be  given  retrospective  effect.
Since the statute vested the State Government  with  power  to  frame  rules
even with retrospective effect,  the  relevant  provision  was  held  to  be
retrospective after reiterating an established rule  of  construction  “that
retrospective operation is not to be given to a statute so as to  impair  an
existing right or obligation other than as regards the matter of  procedure,
unless that effect cannot be avoided without doing violence to the  language
of enactment.” Similar view was expressed in the case of Mahadeolal.
Reliance was also placed upon a Constitution Bench judgment in the  case  of
K.S. Paripoornan v. State of Kerala & Ors., (1994)  5  SCC  593.  There  the
issue related to retrospectivity but in an  entirely  different  context  of
whether there must be clear intendment in the law if  an  amendment  dealing
with substantive rights is to apply to pending legal proceedings,  initiated
prior to the commencement of the amending Act. The majority  held  that  the
intendment in such a situation must be in clear terms. In  the  case  of  C.
Gupta v. Glaxo- Smithkline  Pharmaceuticals  Ltd.,  (2007)  7  SCC  171  the
Court, in the context of benefits  under  the  Workmen’s  Compensation  Act,
reiterated the well established law that an enactment in order  to  be  read
as retrospective, must have an express provision  to  that  effect  or  same
effect must flow by necessary implication or intendment.
The aforementioned case laws have been  noticed  out  of  deference  to  the
submissions but in fact they do not  serve  much  purpose  because  the  law
governing the field is otherwise also quite settled.  Although the  amending
notification  introducing  para  4  of  Schedule  III  is   effective   from
21.1.1998, on the plea of convenience and logic  the  appellant  has  itself
clarified that the provisions of para 4 will be effective  from  an  earlier
date, viz., 1.4.1997.  By relying upon some case laws such as  in  the  case
of National Council For Teacher Education v. Shri Shyam Shiksha  Prashikshan
Sansthan (2011) 3 SCC 238 it has been contended that appellant  is  entitled
to fix a cut-off date such as 1.4.1997.  It has been highlighted  that  fees
are to be computed and paid for every financial year hence  introduction  of
the concession under paragraph 4 w.e.f. beginning of a financial year  1997-
1998 is reasonable and serves a purpose.  Appellant emphasized  the  reasons
for introducing incentive for corporatisation of individual  or  partnership
entities for carrying out business of brokerage in shares etc. by  referring
to a speech of the then Finance Minister as well as a Memorandum  explaining
the provisions in the Finance Bill,  1997.   It  was  argued  on  behalf  of
appellant that capital gains exemptions were granted as a one  time  measure
during the concerned financial year to encourage  corporatisation  of  stock
brokers’ cards and hence the action of SEBI in introducing  paragraph  4  of
Schedule III in the Regulations needs to be construed only as a  prospective
measure and not as one conferring  benefit to even  such  entities  who  had
acquired corporate entity prior to 1.4.1997.
In reply Mr. Shyam Divan, learned senior advocate appearing for some of  the
respondents used the same background facts  to  contend  that  in  principle
SEBI accepted the proposition that if the same entity had  paid  fees  as  a
stock broker and it continues to do the same business by converting  into  a
corporate entity then fees paid for the earlier  years  needed  recognition.
On this principle the effect of paragraph 4 to Schedule III was to place  an
embargo on the powers of SEBI on and after the amendment  introduced  w.e.f.
21.1.1998 to collect any fees from the  new  entity  by  ignoring  the  fees
earlier paid by the previous avatar of the new  entity.   According  to  Mr.
Divan a fee is a  fiscal  levy  and,  therefore,  principles  applicable  to
interpretation of legal provisions governing a fiscal levy are attracted  in
the present case and not the rules of interpretation governing  other  laws.
According to him the plain language of paragraph 4 is decisive and that  led
to the decision under appeal against SEBI.  According to him  even  if  some
amount  of  ambiguity  is  found  in  the  relevant   provision   then   the
interpretation which is favourable to the brokers needs to be  adopted.   He
further made a distinction between power to a  levy  duty  or  fee  and  the
power of collection.  According to him a competent authority, in  this  case
SEBI, can decide for itself whether  to  proceed  with  collection  or  not.
Embargo on collection, according to  him,  is  clearly  prospective  in  the
present facts.
On behalf of respondents reliance was placed upon judgment in  the  case  of
Mathuram Agrawal v. State of Madhya Pradesh (1999) 8  SCC  667  wherein,  in
the context of municipal taxes, this Court held that the  intention  of  the
Legislature in a taxing statute is to be gathered from the express  language
particularly where it is plain and unambiguous.  It is  not  permissible  to
add or substitute words for giving  a  meaning  to  such  statutes  for  the
purpose of serving the perceived spirit or  intention  of  the  Legislature.
Reliance was also placed upon Somaiya Organics  (India)  Ltd.  v.  State  of
U.P. (2001) 5 SCC 519 for supporting the submission that in law there  is  a
clear distinction between levy and collection of  taxes.   In  the  case  of
Somaiya Organics the Constitution  Bench  noted  that  Article  265  of  the
Constitution uses the words ‘levy’ and ‘collect’.   The  Court  went  on  to
hold that these words  are  not  synonymous  terms.   This  distinction  was
required to be made  in  that  case  because  certain  provisions  had  been
declared illegal only prospectively.  In  that  context  it  was  held  that
while “levying” would mean the assessment or charging or  imposing  of  tax,
“collection” would  mean  the  fiscal  realization  of  the  tax  levied  or
imposed.  It was also pointed out that ordinarily collection  of  tax  is  a
stage subsequent to the levy of the same.  It is not necessary  to  multiply
case laws cited on these points.
Respondents referred to a Press Release  dated  28.12.2001  publicising  the
decisions that were taken in the meeting of the SEBI  Board  on  that  date.
In sub-para (e) of para 2 it is disclosed that  the  SEBI  Board  considered
the representations made by the brokers in the light of  relevant  materials
and decided the following :

“2.  Broker  Fees  –  Amendment  to  SEBI  (Stock  Broker  and  Sub  Broker)
Regulations

a.    ….. ….. …..
b.    ….. ….. …..
c.    ….. ….. …..
d.    ….. ….. …..

e.    the fee-continuity benefit which was given to  all  brokers,  who  had
corporatised after January 21, 1998 (the  date  on  which  the  SEBI  (Stock
Broker and Sub Broker) Regulations were  amended)  and  also  to  those  who
corporatised between April 1, 1997 and January 21, 1998  would  be  extended
to all brokers who had corporatised prior to April 1,  1997,  provided  that
SEBI has not collected fees from any such broking entity already.
f.    …. …. ….”

It was also pointed out that Explanation of paragraph 4 to Schedule  III  of
the Regulations was inserted through an amendment regulation of 2002  w.e.f.
20.2.2002 and submitted that the entire provision in the Explanation was  to
give  statutory  base  to  the  decision  contained  in  the  Press  Release
highlighted above.  The Explanation reads thus :

“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 the erstwhile entity has paid the fee as per the regulations.”

Reliance was placed upon judgments in the case of K.P.  Varghese  v.  Income
Tax Officer Ernakulam (1981) 4 SCC 173 and also in the case of  Commissioner
of Sales Tax, U.P. v. Indra Industries (2000) 9 SCC 66  in  support  of  the
submission that the Press Release may not be having statutory effect but  it
helps in  understanding  the  intention  of  SEBI  Board  which  issued  the
Release.  In other words, the respondents sought to rely upon the  principle
of contemporanea expositio as propounded in the case of K.P.  Varghese.   In
Indra Industries the circulars issued by  the  Income  Tax  Department  were
held to have binding effect upon the taxing authorities though  it  may  not
be binding on the courts or on the assessee.
For highlighting the general  principles  concerning  retrospectivity  of  a
statutory Act, Rule or notification, Mr. Divan relied  upon  a  Constitution
Bench judgment in the case of CIT v. Vatika Township (P) Ltd., (2015) 1  SCC
1. In paragraphs 27, 28  and  29  the  Court  recollected  the  clear  legal
position agreed to by the parties and thereafter some exceptions as to  when
and why the  general  rule  against  retrospectivity  is  inapplicable,  was
pointed out in paragraph 30 which is as follows:-

“30. We would also like to point out, for the  sake  of  completeness,  that
where  a  benefit  is  conferred  by  a  legislation,  the  rule  against  a
retrospective construction is different. If a legislation confers a  benefit
on some persons but without inflicting a  corresponding  detriment  on  some
other person or on the public generally, and where to  confer  such  benefit
appears to have been the legislators’ object, then the presumption would  be
that such a legislation, giving it a purposive construction,  would  warrant
it to be given a retrospective effect. This exactly is the justification  to
treat procedural provisions as retrospective. In Govt. of  India  v.  Indian
Tobacco Assn., (2005) 7 SCC 396 the doctrine of  fairness  was  held  to  be
relevant factor to construe a statute conferring a benefit, in  the  context
of it to be given a retrospective operation. The same doctrine of  fairness,
to hold that a statute was retrospective in nature, was applied in Vijay  v.
State of Maharashtra, (2006) 6 SCC 289. It was held  that  where  a  law  is
enacted for the benefit of community as a whole, even in the  absence  of  a
provision the statute may be held to be retrospective  in  nature.  However,
we are (sic not) confronted with any such situation here.”

The Court then concluded that “In such cases,  retrospectivity  is  attached
to benefit the persons in contradistinction to the provision  imposing  some
burden or liability where the presumption attaches  towards  prospectivity.”
The Court also extracted relevant explanation  in  respect  of  “declaratory
statutes” from the book Principles of Statutory  Interpretation  by  Justice
G.P. Singh to make the legal position clear that if a statute  is  curative,
explanatory or merely  declaratory  of  an  earlier  law,  it  is  generally
intended to have retrospective operation.


Learned counsel appearing  on  behalf  of  several  other  respondents  have
supported the contentions advanced by Mr. Divan that on  plain  construction
of the concerned Regulation i.e, para 4 of Schedule III, it  can  safely  be
held that the provisions  merely  look  at  some  past  happenings  but  the
benefits are to accrue to the eligible entities only  in  future  and  hence
the  provisions  do  not  operate  retrospectively.  Further  stand  of  the
respondents is  that  SEBI  itself  cannot  question  the  validity  of  the
circulars  and  policy  decisions  declared  by  the  SEBI  Board  and  such
circulars and declarations granting benefits even from a retrospective  date
cannot be held bad in law in view of law noticed and  laid  down  in  Vatika
case. The matter could have been different if SEBI had attempted  to  impose
liabilities or create obligations upon stock brokers  from  a  retrospective
date. In case of conferment of benefits,  no  vested  rights  are  adversely
affected  and  in  such  cases  retrospective  operation  is  protected  and
permissible on the principles noticed in Vatika case.
In reply Mr. C.U. Singh referred to policy circular  dated  28.3.2002  which
inter alia states that pursuant to a judgment of this Court  dated  1.2.2001
directing SEBI to amend the Regulations in light of recommendations  of  the
R.S. Bhatt Committee report, SEBI  had  examined  representations  from  the
brokers and issued clarifications contained in part A of the circular.  Part
A, inter alia, contains a clarification in respect of applicability  of  the
notification on exemption from fees on  corporatization.  The  clarification
reads thus “the spirit behind  notification  dated  21.1.1998  was  to  give
benefit of  this  amendment  to  stock  brokers  who  have  converted  their
individual  stock  partnership  membership  into  corporate  on   or   after
1.4.1997. Accordingly such stock brokers  shall  be  given  the  benefit  of
continuity subject to  the  satisfaction  of  conditions  mentioned  in  the
notification.”

On a careful consideration of rival submissions  and  keeping  in  view  the
relevant case laws relied upon by the parties we have examined  analytically
and carefully paragraph 4 as well as the explanations  thereto  in  Schedule
III of the Regulations. We find that para 4 was no  doubt  inserted  through
an amendment with effect from 21.1.1998 but it  does  not  disclose,  either
explicitly or even by necessary implication, that  although  possessing  the
required qualifications, a corporate  entity  formed  earlier  to  21.1.1998
would not be exempted from payment of fee  for  the  period  for  which  the
erstwhile individual or partnership members has already paid  the  fees.  In
respect of a legislation of fiscal character such as the  present  provision
which relates to fees, it will not be proper or permissible to read into  or
delete words which do not exist in the provision. Further even if  there  is
any scope of doubt, the benefit of such doubt will go to the  subject  i.e.,
the stock brokers and not to authority, in this case the  SEBI.  We  further
find that the explanation to para 4 introduced with  effect  from  20.2.2002
takes complete care of any doubt, if at all it could exist, by  providing  a
deeming  fiction  that  in  the  case  of  conversion  of  entities   having
individual or partnership membership  card  into  a  corporate  entity,  the
corporate entity shall be deemed to be  a  continuation  of  the  entity  in
respect  of  collection  of  fees  from  the  converted  corporate   entity.
Further, an embargo has been created against collection of fees  again  from
the converted corporate entity. This explanation is statutory in nature  and
like para 4 it  also  does  not  restrict  the  benefits  of  conversion  to
entities converted on or after any particular  date.  The  explanation  does
not talk of making any refund  nor  does  it  render  the  initial  levy  or
assessment of fee as bad but forbids the collection  of  such  fees  if  the
converted corporate entity is entitled to fee continuation benefit in  terms
of paragraph 4 of Schedule III to the Regulations.

Following the judgment in the  case  of  Somaiya  Organics,  we  agree  that
‘levy’ and ‘collection’  are  not  synonyms  and  generally  they  occur  at
different stages. In the present case the legislative intention  is  to  put
an embargo on collection in future, in case the converted  corporate  entity
is found entitled to  the  benefits  of  fee  continuity.  Such  embargo  is
clearly to  operate  prospectively  even  if  there  existed  some  kind  of
liability in the past on account of fees  leviable  prior  to  insertion  of
paragraph 4 of Schedule III to the Regulations. In any  case  the  rationale
in not permitting retrospective operation of laws is  only  to  ensure  that
subjects are not adversely affected by creation  of  legal  liabilities  and
obligations for a period already bygone. In the present case the  provisions
do not create any obligation or liability. They only confer benefits by  way
of fee continuity on account of fees already  paid  by  the  earlier  entity
before its conversion into a new corporate entity.

Even if we were to apply the test of fairness, no exception can be taken  to
extention of the benefit of  fee  exemption  as  provided  by  the  relevant
provision in the Regulations. Since the policy behind grant of  benefits  is
to encourage corporatization of  individual  or  partnership  members  of  a
stock exchange, the action of extending such benefits without  any  curb  on
the basis of date of conversions cannot be held as unfair.

As noted earlier the SEBI itself extended the benefit  to  those  converting
not only from 21.1.1998 but from 1.4.1997. There is nothing in  paragraph  4
or in the explanation to support the stand of the  SEBI  that  the  benefits
must be confined to conversions taking place after a  particular  date  when
no such date finds place in the Regulations. As a result, appeals  preferred
by SEBI are dismissed and the judgments and orders under  appeal  passed  by
SAT are upheld. In the facts of the case the parties shall  bear  their  own
costs.

…………………………….J.
[VIKRAMAJIT SEN]


..……………………………..J.
[SHIVA KIRTI SINGH]
New Delhi.
November 03, 2015.

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” as was available to them before the NSE decided to permit segmental surrender of membership to its members. as per Clause 4 of Schedule III, 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, 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 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 requesting fee continuity on 4.2.2002, a date prior to the 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 pay the fee in accordance with Schedule III, 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 contradistinction of Clause (c). 14 The amounts deposited by the Respondent have been properly calculated. The Respondent is not entitled to any refund therefrom. The Appeal is accordingly allowed. The Interim Order granted by the Court stands recalled.

                                                                  REPORTABLE
                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                        CIVIL APPEAL No. 7607 OF 2005
SECURITIES & EXCHANGE BOARD OF INDIA    .….   APPELLANT
                                   VERSUS
M/s.  PREBON   YAMANE   (I)   LTD.                                       …..
RESPONDENT
                               J U D G M E N T

VIKRAMAJIT SEN, J.

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” 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  amount  of  [pic]4,37,20,256/-
together with     [pic]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 as in  the  Equity
Market/Capital Market (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  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 segregation  of  its
Membership  of  WDM  and  of  the  EM/CM  segments.   By  its  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
memberships simultaneously.  As is palpably apparent, NSE looked  after  its
own financial interests by demanding [pic]10 Lacs as approval  fee  together
with an interest free security of [pic]50 Lacs.   Both  entities  were  also
required to maintain their shareholding pattern  and  comply  with  the  net
worth and all other requirements - Oracle in respect  of  corporate  trading
of the Capital Market  and  the  Respondent  in  respect  of  the  corporate
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 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 privy to these negotiations.
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”.   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  in  the  letter  dated
4.4.1999 are these -

2  d)       It shall pay the amount fees  for  registration  in  the  manner
provided in the Securities and Exchange Board of India  [Stock  Brokers  and
Sub Brokers] Regulations, 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-III  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 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, 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
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 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  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,  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 unpaid dues in the name  of
the Respondent  to  the  tune  of  [pic]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 Respondent, NSE clarified  that  although  segmental  surrender  of  the
trading  membership  was  permissible   since   December,   2002,   it   had
nevertheless to be kept in perspective that when 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”.

5     After receiving the provisional fee liability statement  which  stated
a  fee  liability  of  [pic]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  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 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
protest pending disposal of the appeal, a sum  of  [pic]4,37,20,256  towards
the principal  amount  of  the  Appellant’s  claim  and  a  further  sum  of
[pic]26,96,590 as interest. However,  the  SAT  directed  the  Appellant  to
refund both the amounts to the Respondent.   Hence, the present Appeal.

6     Learned Senior Counsel for the Appellant has relied on  Regulation  10
and Schedule III of the SEBI (Stock Brokers and  Sub  Brokers)  Regulations,
1992, which are reproduced for the facility of reference:
10. (1) Every applicant eligible for grant of a certificate shall  pay  such
fees and in such manner as specified in Schedule III or  Schedule  IIIA,  as
the case may be: Provided that the  Board  may  on  sufficient  cause  being
shown permit the stockbroker to pay such fees at any time before the  expiry
of six months from the date on which such fees become due.
(2) Where a stock-broker fails to pay the fees  as  provided  in  Regulation
10, the Board may suspend the registration certificate, whereupon the stock-
broker shall cease to buy, sell or deal in securities as a stock-broker.





                                SCHEDULE III
                                Regulation 10

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 :
(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 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;
xxx         xxx        xxx

(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  date  of  grant  of  initial  registration  to  keep   his
registration in force.  (currently deleted)
       xxx       xxx        xxx

4. Where a corporate entity has been formed by converting the individual  or
partnership membership card of the exchange, such corporate entity shall  be
exempted 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 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.
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 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 Exchange is an essential  pre-requisite,  for  which
the fee prescribed in Regulation 10 is payable by  every  such  member.  The
amount that is payable as fee is determined  as  per  the  provisions  under
Schedule III. Emphasis has been placed on Clause 4 of Schedule  III  (supra)
as it provides the only exception to the payment  of  fees.    Facially,  it
appears to us, this exception has 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  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
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 SCC 482.

8       Reliance has also been placed on letter  dated  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  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  entrenched  legal  principle  that  estoppel  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  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 DDA?

14. It is trite to state that notings in a departmental  file  do  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-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-making
authority  in  the  department;  gets  his  approval  and  the  final  order
is communicated to the person concerned.

15.  In Bachhittar  Singh v. The  State  of  Punjab AIR  1963  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 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 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 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
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.

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
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) 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 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:
      “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)  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  the  WDM  segment  were  automatically  entitled  to
membership in this segment by paying an additional deposit.
      Oracle applied and was granted membership of the  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 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  Yamane
Group insisted on  being a partner exclusively in the WDM  segment.   Oracle
therefore requested the 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  decided
to operate the WDM segment in the name  of  Prebon  Yamane  (India)  Limited
(PYIndia).   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  subscribed  capital
in the new entity.
      Although Oracle and  PYIndia  were  given  two  separate  registration
numbers for EM and WDM respectively, the NSE did not collect the deposit  of
Rs.15 million which it  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 PYIndia.  PYIndia did not bring in fresh deposits for  the  WDM
membership of NSE.
      Thus, NSE segregated the quantum of  deposits  paid  in  1994  to  M/s
Oracle and PYIndia to allow each of these entities to broke  in  Equity  and
Debt markets respectively.  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 PYIndia.  Thus, in essence,  the  NSE
treated 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 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  in  this
regard, we would request you to give the status of  fee  continuity  to  the
composite membership taken by M/s Oracle and PYIndia.
      In other words, if Oracle has paid turnover fees from  1994,  and  the
broking business has commenced from 1994,  any  fees  be  levied  in  either
Oracle and/or PYIndia for the balance period, as a composite entity.”

10    Learned Senior Counsel for the Respondent has 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% 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 NSE to the Respondent, which had stated that as per the policies of  the
NSE, segmental surrender  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  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 from any stock exchange, he would be required  to  pay  fees  as
per the Regulations for  each  and  every  certificate  that  he  held.  The
Circular further stated that in the event  of  a  broker  holding  only  one
Registration  Certificate  but  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  that  this
provision 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.  Union  of  India,  and  an  Appeal
thereagainst is pending before this Court.   However,  we  find  that  issue
which were in 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  that  the  Respondent  had
applied for fee continuity vide letter dated  4.2.2002  which  had  enclosed
the letter 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  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 the concerned Authority or Department.

12    Counsel for the Appellant has pointed out that the Respondent has  not
paid fee as per Schedule III, Clause 1(c).  The  Respondent  only  paid  the
basic fee indicating that its  turnover  for  the  financial  year  was  not
beyond [pic]1 Crore. However, the fixed basic fee of [pic]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 [pic]5000 only once, for the block  of  5
years.   Furthermore,  to  prove  that   the   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  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 III, 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, 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 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
requesting fee continuity on 4.2.2002, a date prior to the 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 pay the  fee  in  accordance  with  Schedule  III,
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
contradistinction of Clause  (c).
14     The  amounts  deposited  by  the  Respondent   have   been   properly
calculated.  The Respondent is not entitled to any refund  therefrom.    The
Appeal is accordingly allowed.  The  Interim  Order  granted  by  the  Court
stands recalled.
…………………………………J.
[VIKRAMAJIT SEN]

…………………………………J.
[SHIVA KIRTI SINGH]

New Delhi,
November 03, 2015.

the adverse observations against the conduct of the officers and a direction by the High Court to record displeasure in the annual confidential report of the assessing officer and the appellate authority. Going through the materials available on record as produced by both sides, we find that there is no justification for any such direction by the High Court. Apparently, the authorities have only discharged their functions under law. It appears that there has been some procedural irregularity. But that does not mean that there is any malafide or illegal conduct on the part of the officers. It may be noted that even according to the High Court, an inquiry is to be conducted for fastening the liability. If that be so, there is no justification for the remarks against the assessing officer and the appellate authority. It is seen from the records that there is marked difference in the pattern of consumption after the new meter was installed in January, 2010. In such circumstances, it is difficult to digest any allegation of motivated conduct on the part of the two officers.Accordingly, the appeal is allowed with directions as above on reassessment. The adverse remarks on the conduct of the officers are expunged and the directions contained in paragraphs-48, 49 and 51 of the impugned judgment are vacated. The order on costs is also vacated.

                        IN THE SUPREME COURT OF INDIA

                       CIVIL  APPELLATE  JURISDICTION

                       CIVIL APPEAL NO.  9148  OF 2015
                  (Arising from S.L.P. (C) No. 23721/2012)


U. P. Power Corporation Limited
and others                              … Appellant (s)

                                   Versus

Vimla Devi and another                  … Respondent (s)


                               J U D G M E N T

KURIAN, J.:



    Leave granted.


The short dispute in this case pertains to the steps taken by the appellant-
Corporation for levying the energy charges on the first respondent  for  the
period of the alleged meter fault. On the basis of the inspection  conducted
on 25th/28th November,  2009  by  the  Junior  Engineer  of  the  appellant-
Corporation, the first respondent was served with a notice dated  23.03.2010
demanding an amount of Rs.1,97,815/- towards energy  charges  which  escaped
billing. The first respondent filed a writ petition before  the  High  Court
which was disposed of by judgment dated 18.05.2010 permitting  her  to  file
objections and directing the Executive Engineer to consider  the  objections
and  pass  a  speaking  order.  The  Executive  Engineer,  by  order   dated
08.06.2010, passed the revised order limiting  the  demand  to  Rs.50,891/-.
The said order was challenged before the High Court in C.W.P. No.  19347  of
2012 leading to the impugned judgment.

The High Court, having conducted  an  elaborate  inquiry  into  the  matter,
found that there was no justification for the demand. It was held  that  the
proper procedure prescribed under law was not  followed  in  inspection  and
preparation of the  report.  Still  further,  it  was  held  that  even  the
appellate authority did not discharge its functions  as  expected  of  them.
The displeasure on the conduct of the assessing officer  and  the  appellate
authority was directed  to  be  recorded  in  their  annual  character  roll
(annual confidential report) for the relevant period. The writ petition  was
thus allowed with  costs  of  Rs.10,000/-  to  be  paid  by  the  appellant-
Corporation with liberty to recover the same from  the  officials  concerned
after conducting an appropriate inquiry.  There  was  also  a  direction  to
communicate the order to the Chief Secretary for ensuring compliance of  the
directions by the High Court. And thus aggrieved, the  Corporation  and  its
officials have come up in appeal.

Heard learned Counsel appearing for the appellants and the respondents.

Though several contentions are raised by the  Counsel  on  both  sides,  the
dispute  essentially  is  in  a  very  narrow  compass.  According  to   the
appellants, for whatever  reason,  there  was  short  assessment  of  energy
charged at the premises of the first respondent during  the  period  between
05.11.2008, when the old meter was replaced and 31.01.2010.  It  is  not  in
dispute that a new  meter  was  installed  at  the  premises  of  the  first
respondent on 23.01.2010. It is fairly conceded that when the meter  at  the
premises  of  a  consumer  is  reported  to  be   non-functional,   and   if
consequently, there is short assessment for a long period, the bills can  be
revised for that period but limiting to twelve months. What  should  be  the
basis of the assessment, is the simple question.

There is no case for the appellants that the meter installed  on  23.01.2010
had any fault thereafter, in any  case,  for  quite  some  time.  Therefore,
having regard to the entire facts and circumstances of the case, we  are  of
the view that interest of justice will be served if the energy bills of  the
first respondent are revised for a  period  of  twelve  months  ending  with
31.01.2010, taking the average of twelve months from  01.02.2010.  In  other
words, based on the average  consumption  for  a  period  of  twelve  months
beginning from 01.02.2010, the energy bills of the first  respondent  for  a
period of twelve months ending with 31.01.2010 shall  be  revised.  A  fresh
demand on that basis shall be issued to  the  first  respondent  within  two
months from today. After adjusting the amounts already  paid  for  the  said
period, the first respondent shall pay the  balance  amount  within  another
one month  failing  which  it  will  be  open  to  the  appellants  to  take
appropriate coercive action permitted under law. It is made clear that  this
order has thus given a quietus to the entire  dispute  raised  in  the  writ
petition regarding the short assessment.

Having said that we have also  to  address  the  grievances  raised  by  the
appellants with regard to the adverse observations against  the  conduct  of
the officers and a direction by the High Court to record displeasure in  the
annual confidential report  of  the  assessing  officer  and  the  appellate
authority. Going through the materials available on record  as  produced  by
both sides, we find that there is no justification for  any  such  direction
by the High Court. Apparently, the authorities have  only  discharged  their
functions under  law.  It  appears  that  there  has  been  some  procedural
irregularity. But that does not mean that there is any malafide  or  illegal
conduct on the part of the officers. It may be noted that even according  to
the High Court, an inquiry is to be conducted for fastening  the  liability.
If that be so, there  is  no  justification  for  the  remarks  against  the
assessing officer and the appellate authority. It is seen from  the  records
that there is marked difference in the pattern of consumption after the  new
meter  was  installed  in  January,  2010.  In  such  circumstances,  it  is
difficult to digest any allegation of motivated conduct on the part  of  the
two officers.

Accordingly,  the  appeal  is  allowed   with   directions   as   above   on
reassessment. The adverse  remarks  on  the  conduct  of  the  officers  are
expunged and the directions contained in paragraphs-48, 49  and  51  of  the
impugned judgment are vacated. The order on costs is also vacated.

There shall be no order as to costs.

                                                              ..…….…..…………J.
                     (T. S. THAKUR)



                                                                ..……………………J.
                    (KURIAN JOSEPH)
New Delhi;
October 30, 2015.
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NON-REPORTABLE


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