SC : Claim of 'BSE', being secured creditor of defaulting member, had priority over income-tax dues

September 25, 2014[2014] 49 taxmann.com 501 (SC)

CL : By virtue of lien on securities under rule 43 of Stock Exchange Rules, Stock Exchange, being a secured creditor would have priority over

Government dues and, therefore, if a member of a Stock Exchange was declared a defaulter, Income-tax Department would not have priority over all debts owed by defaulter member

• A membership card is only a personal permission from Stock Exchange to exercise rights and privilages that may be given subject to Rules, Bye-Laws and Regulations of Exchange. The moment a member is declared a defaulter, his right of nomination shall cease and vest in Exchange because even personal privilege given is at that point taken away from defaulting member. Therefore no accrued right to property was ever vested in defaulting member

■■■

[2014] 49 taxmann.com 501 (SC)

SUPREME COURT OF INDIA

Stock Exchange, Bombay

v.

V.S. Kandalgaonkar

R.M. Lodha, CJI.
Kurian Joseph AND R.F. Nariman, JJ.

Civil Appeal No. 4354 of 2003

SEPTEMBER  25, 2014