S.E.B.I.versusALLIANCE FINSTOCK LTD. & ORS. ETC. ETC.

                   [2015] 10 S.C.R. 145


                          S.E.B.I.                            A
                             v.
     ALLIANCE FINSTOCK LTD. & ORS. ETC. ETC.
              (Civil Appeal No. 4493 of 2006)
                                                              B
                  NOVEMBER 03, 2015
   [VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ.]
  .  Securities & Exchange Board of India (Stock Brokers
and Sub-Brokers) Regulations, 1992 - Schepu·le Ill            c
Paragraph 4 - Stock brokers convert their individual!
partnership membership into a corporate entity prior to April
01, 1997 - Entitlement to fee continuity benefit- Held: Stock
brokers entitled to the benefits <?f the continuity in terms of
paragraph 4 of Schedule Ill of the Regulations - SEB/ en-ed D
in denying the stock brokers the benefit of fee continuity.

     Dismissing the appeals, the Court

     HELD: 1.1 Para 4 of Schedule Ill to the Securities &
Exchange Board of India (Stock Brokers and Sub-               E
Brokers) Regulations, 1992 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            F
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 member has already paid the fees. In respect
of a legislation of fiscal character such as the instant      G
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. 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   H
                           145
146         SUPREME COURT REPORTS                [2015] 1OS.C.R.


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
B 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
C 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 Ill to the Regulations.
0
  [Para 18] [160-D-H; 161-A-C]

            1.2 The legislative intention is to put an embargo
      on collection in f_uture, in case the converted corporate
      entity is found entitled to the benefits of fee continuity.
 E    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 Ill to the Regulations. In any cas-e the
 F    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 instant case the
      provisions do not create any obligation or liability. They
G     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 the test
      of fairness is applied, no exception can be taken to
      extention of the benefit of fee exemption as provided by
 H    the relevant provision in the Regulations. Since the
         S.E.B.I. v. ALLIANCE FINSTOCK LTD.             147


policy behind grant of benefits is to encourage A
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. [Para 19, 20] [161-D-H; 132-A]
                                                         B
     K Narayanan v. State of Kamataka 1993 (2) Suppl.
     SCR 105: 1994 Supp. (1) sec 44; Mohd. Rashid
     Ahmad v. State ofU.P. 1979 (2) SCR 826: (1979)
     1 SCC 596; Mahadeo/a/ Kanodia v. The
     Administrator General of West Bengal (1960) 3       c
     SCR 578: AIR 1960 SC 936; K.S. Paripooman v.
     State of Kera/a & Ors. 1994 (3) Suppl. SCR 405:
     (1994) 5 SCC 593; C. Gupta v. Glaxo- Smithkline
     Pharmaceuticals Ltd. 2007 (7) SCR 800: (2007)
     7 SCC 171; National Council For Teacher             D
     Education v. Shri Shyam Shiksha Prashikshan
     Sansthan 2011 (2) SCR 291: (2011) 3 SCC 238;
     Mathuram Agrawal v. State of Madhya Pradesh
     1999 (4) Suppl. scR 195: (1999) 8 sec 667;
     Somaiya Organics (India) Ltd. v. State of U.P. 2001 E
     (3) SCR 33: (2001) 5 SCC 519; K.P. Varghese v.
     Income Tax OfficerEmakulam 1982 (1) SCR 629:
     (1981) 4 SCC 173; Commissioner of Sales Tax,
     UP. v. Indra Industries (2000) 9 SCC 66; CIT v.
                                                         F
     Vatika Township (P) Ltd., (2015) 1 SCC 1 -
     referred to.

                    Case Law Reference
1993 (2) Suppl. SCR 105         referred to. Para 7     G
1979 (2) SCR 826                referred to. Para 7
(19_60) 3 SCR 578               referred to. Para 7
1994 (3) Suppl. SCR 405         referred to. Para 8
                                                        H
148         SUPR~MECOURTREPORTS                  [2015] 10S.C.R.


A     2007 (7) SCR 800                    referred to. Para 8
      2011 (2) SCR 291                    referred to. Para 9
      1999 (4) Suppl. SCR 195             referred to. Para 11
      2001 {3) SCR 33                     referred to. Para ~1 .
 B
      1982 (1) SCR 629                    referred to. Para 14
      (2000) g sec 66                     referred to. Para 14
      (2015) 1 sec 1                      referred to. Para 15
 c         CIVIL APPELLATE JURISDICTION: Civil Appeal No.
      4493 of2006

         From the Judgment and Order dated 09.05.2006 of the
    Securities Appellate Tribunal in Appeal No. 120 of 2003 and
  D Appeal Nos. 123, 125, 149, 170, 171, 172, 173, 174, 175,
    176, 177, 178, 179, 180.~81, 182, 183, 184, 185, 186, 190,
    191, 193, 196, 197,200,204,206,207,208,210,218,224,
    226,227,229,230,231,233,237,240,244,248,251,252,
    253,254,255,258,263,264,286,291,292,293,301,311,
. E 312, 324, 330, 331, 332, 333, 336 and 344 of2004

                                 WITT-I
      C. A. No. 4743 of 2006
 F        Chander Uday Singh, Dhawal Mehrotra, Saumya
      Mehrotra, Rishi Gautam, Bhargava V. Desai for the Appellant.

         Shyam Divan, Sr. Adv., Bharat Merchant, Jatin Zaveri,
   Neel Kamal Mishra, Abhinav Malhotra, Manoj K. Mishra, Mohd.
 G lrshad Hanif, P. N. Puri, RashmikumarManilalVithlani, Chinmoy
   Khaladkar, Vimal Chandra S. Dave, Prateesh Kapur, Ranjit
   B. Raut, Bina Gupta, K. J. John & Co., Legal Options, Lalitha
   Kohli (for Manoj Swarup & Co.), Vikas Mehta, A. K. Sinha,
   Rauf Rahim for the Respondents.
 H
           S.E.8.1. v. ALLIANCE FINSTOCK LTD.                       149


      The Judgment of the Court was delivered by                    A

      SHIVA KIRTI SINGH, J. 1. 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 091h May 2006             s
rendered Qy 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 C
of fee continuity in terms of paragraph 4 of Schedule Ill to the
Securities & Exchange Board of India (Stock Brokers and Sub-
B roke rs) Regulations, 1992 [hereinafter called 'the
Regulations'].
                                                                  D
      2. 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 HI .... ". E
Since the SAT answered the question in favour of the stock
brokers (the respondents herein), SEBI is in appeal.

      3. The basic facts are common in all the matters inasmuch
as the concerned broker was previously member of the                F
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               G
membership converted through approval of SSE 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        H
150         SUPREME COURT REPORTS                     [2015) 1O S.C.R.


A     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 Ill to the
      Regulations.
B
            4. Although the controversy relates to par~graph 4 of
            Schedule Ill, some other paragraphs are also relevant
            and hence these along with paragraph 4 are extracted
            herein below :
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           (2) where the annual turnover does not exceed rupees
            one crore during any financial year, a sum of rupees five
            thousand for each financial year;
           (3) 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;
           (bb)
F
            (4) after the expiry offive 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.
            2. Fees referred to in clauses (a) and (b) of paragraph 1
            above shall be paid -
H           18. in respect of the financial year 1992-93 within one
            month of the commencement of these regulations;
      S.E.B.I. v. ALLIANCE FINSTOCK LTD.                    151
              [SHIVA KIRTI SINGH, J.]

19. in respect of the financial year beginning on the 1s1 A
day of /,pril, 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 w.ith reference to the
                                                            8
annual turnover relating to the preceding financial year.
3.
4. Where· a corporate entity has been formed by
converting the individual or partnership membership card C
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 0
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.                                                  E
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 F
for which erstwhile entity has paid the fee as per the
regulations.
4A.

5. If a stock broker fails to remit fees in accordance with G
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,     H
152        SUPREME COURT REPORTS                  [2015] 10 S.C.R.


A          may take as deemed fit against the stock broker under
           the Act, or the Regulations.
           Provided further ................. .


B          Manner of Fees to be paid.
           The fees specified above shall be paid on or before the
           1•1 day of October each year payable by draft in favour of
           ''The Securities and Exchange Board of India" at
c          Bombay, or at the respective regional office".

        5. Case of the SEBI is that since Para 4 of Schedule Ill
  was introduced by an amending notification dated 21.1.98
  which states in Para 2 that the amendment will be effective
D 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 ln
  respect of fees payable for the year 1.4.97 onwards. On such
  premise it has been forcefully contended on behalf of the
E appellants thatthe 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.

 F        6. The submission of Mr. C.l:I. 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
G                  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,
H
                   there can be no interference.
             S.E.8.1. v. ALLIANCE FINSTOCK LTD.                     153
                     [SHIVAKIRTI SINGH, J.]

       (5)      Materials like press statement or letter cannot A
                act as estoppel against the statutory provisions
                such as the Regulations.
      7. In support of the first and second submission it has
been pointed out that Section 30 of the SEBI Act vests the          8
Board with the power to ma.ke 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       c
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 SCR578 =AIR 1960 SC 936. In K.                D
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              E
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    F
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               G
Mahadeolal.

      8. Reliance was also placed upon a Constitution Bench
judgment in the case of K.S. Paripoornan v. State of Kera la
& Ors., (1994) 5 SCC 593. There the issue related to
retrospectivity but in an entirely different context of whether     H
154       SUPREME COURT REPORTS                 [2015] 10 S.C.R.


A  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.
B 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
C necessary implication or intendment.

         9. 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
D otherwise also quite settled. Although the amending notification
  introducing para 4 of Schedule Ill 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
E such as in the case of National Council For Teacher
  Education v. Shri Shyam Shiksha Prashikshan Sansthan
  (2011) 3 sec 238 it has been contended that appellant is
  entitled to fix a cut-off date such as 1.4.1997. It has been
F 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
G 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
H one time measure during the concerned financial year to
          S.E.B.I. v. ALLIANCE FINSTOCK LTD.                      155
                  [SHIVAKIRTI SINGH, J.)

encourage corporatisation of stock brokers' cards and hence A
the action of SEBI in int~oducing paragraph 4 of Schedule Ill 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.
                                                                    B
       10. In reply Mr. Shyam Divan, learned senior advocate
appearing for some of the respondents used the same
background facts fo 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 C
into a corporate entity then fees paid for the earlier years
needed recognition. On this principle the effect of paragraph
4 to Schedule Ill 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 D
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 E
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 F
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. E;mbargo on
collection, according to him, is clearly prospective in the G
present facts.

     11. 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            H
156         SUPREME COURT REPORTS                [2015] 10S.C.R.


A 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
B 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
C 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
0
  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
E the same. It is not necessary to multiply case laws cited on
  these points.

      12. Respondents referred to a Press Release dated
      28.12.2001 publicising the decisions that were taken in the
 F    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
G          and Sub Broker) Regulations
           a.
           b.
           c.
H
            S.E.B.I. v. ALLIANCE FINSTOCK LTD.                       157
                    [SHIVAKIRTI SINGH,J.]

      d.                                                             A
      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
                                                                     8
      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.                                                       c
      f. ............ "
       13. It was also pointed out that Explanation of paragraph
4 to Schedule Ill of the Regulations was inserted through an
amendment regulation of 2002 w.e.f. 20.2.2002 and submitted          o
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 clarifiec:t that the conversion of E
      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 F
      regulations."                        ·

      14. Reliance was placed upon judgments in the case of
K.P. Varghese v. Income Tax Officer Ernakulam (1981) 4
sec   173 and also in the case of Commissioner of Sales G
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 H
158        SUPREME COURT REPORTS                  [2015) 10 S.C.R.


A 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 CQl.!rts
  or on the assessee.
B
         15. 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
C 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:-
D
        "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
E       persons but without iRflicting 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,
F       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
G       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
H
        as a whole, even in the absence of a provision the statute
          S.E.B.I. v. ALLIANCE FINSTOCK LTD.                       159
                  [SHIVAKIRTI SINGH, J.]

     may be held to be retrospective in nature. However, we A
     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 B
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 C
earlier law, it is generally intended to have retrospective
operation.

       16. Learned counsel appearing on behalf of several other
respondents have supported the contentions advanced by Mr. o
Divan that on plain construction of the concerned Regulation
i.e, para 4 of Schedule Ill, 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 E
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 F
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 G
case.

      7. 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 H
160          SUPREME COURT REPORTS                  [2015] 10 S.C.R.


A 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. PartA, inter alia, contains a clarification in respect of
  applicability of the notification on exemption from fees on
B 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 stockpartnership membership into corporate on or
  after 1.4.1997. Accordingly such stock brokers shall be given
C the benefit of continuity subject to the satisfaction of conditions
  mentioned in the notification."

             18. On a careful consideration of rival submissions and
      l<eeping in view the relevant case laws relied upon by the parties
D     we have examined analytically and carefully paragraph 4 as
      well as the explanations thereto in Schedule Ill 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
E     although possessi~g 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
F     of a legislation offiscal 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
G     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
H     a corporate entity, the corporate entity shall be deemed to be
          S.E.B.I. v. ALLIANCE FINSTOCK LTD.                     161
                  [SHIVAKIRTI SINGH, J.]

a continuation of the entity in respect of collection of fees from A
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 or:i or after any particular date. The B
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 Ill to the Regulations.                                   C

       19. 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 D
.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 ifthere existed some
 kind of liability in the past on account of fees leviable prior to
 insertion of paragraph 4 of Schedule Ill to the Regulations. In E
 any case the rati.onale 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 F
 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.

     20. Even if we were to apply the test of fairness, no
exception can be taken to extention of the benefit of fee G
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 H
162           SUPREME COURT REPORTS              [2015] 10 S.C.R.


A     benefits without any curb on the basis of date of conversions
      cannot be held as unfair.

        21. As noted earlier the SEBI itself extended the benefit
  to those converting not only from 21.1.1998 but from 1.4.1997.
B 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
C orders under appeal passed by SAT are upheld. In the facts of
  the case the parties shall bear their own costs.

      Nidhi Jain                                   Appeals dislT!issed.