TMI Blog1979 (2) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... him a defaulter. In our view, the directions dated June 28, 1969, as well as the two resolutions passed by the respondent on July 2, and July 3, 1969, were proper and justified and the appellants' case on merits was rightly rejected by the High Court. - 2458 OF 1969 - - - Dated:- 23-2-1979 - R.S. SARKARIA, V.D. TULZAPURKAR AND A.P. SEN, JJ. Desh Bandhu Gupta for the Appellant. F.S. Nariman, Bishamber Lal, Manoj Swarup, Miss Lalitha Kohli and Miss Manish Gupta , for the Respondent. JUDGMENT Tulzapurkar, J. This appeal by certificate is directed against the judgment and order dated October 14, 1969, of the Delhi High Court dismissing the appellants' Civil Writ Petition No. 520 of 1969 whereby the appellants sought to quash certain directions issued on June 28, 1969, and two resolutions passed on July 2 and 3, 1969, by the Delhi Stock Exchange, which adversely affected them. The Delhi Stock Exchange Association Ltd., New Delhi (the respondent herein), is a company incorporated under the Indian Companies Act, 1913. It has received recognition from the Central Govt. under section 4 of the Securities Contracts (Regulation) Act (XLII of 1956) for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same date the board of directors of the respondent reiterated that its action in fixing the interim clearing rates in the concerned securities and demanding interim margins was in order and that the adjustment of outstanding business claimed by appellant No. 2 was utterly wrong and as such appellant No. 2 was called upon to comply with its notice by submitting an amended list in accordance with the directions together with the differences, if any, immediately. By a telegram dated June 30, 1969, which was confirmed by a letter of even date the appellant No. 2 was again called upon to submit his list along with the amount of differences, if any, by July 1, 1969, failing which he was informed that necessary action would be taken against him. As the appellant No. 2 stuck to his stand, the respondent by its letter dated July 1, 1969, once again stressed that the action of the board in calling for the list and margin money was in order and in accordance with the rules, bye- laws, regulations, practices, usages and previous resolutions of the board and gave further opportunity to him to comply with the directions by July 2, 1969, up to 11-00 a.m. failing which further action was threaten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... July 3, 1969, whereby he was called upon to deposit Rs. 20,000 as additional security were contrary to law and unjust and, therefore, the said action as well as the resolutions were liable to be quashed. The appellant No. 2 further contended that by passing the two resolutions, particularly the first one dated July 2, 1969, in contravention or breach of statutory bye-laws and regulations his fundamental right to carry on business under article 19(1)( f ) of the Constitution had been infringed and, therefore, issuance of appropriate writ quashing the directions issued on June 28, 1969, and the two resolutions dated July 2 and 3, 1969, was sought. By its reply filed on July 15, 1969, the respondent raised a preliminary objection to the maintainability of the petition. It was contended that the relationship between appellant No. 2 and the respondent was contractual resulting from the memorandum and articles of association and the rules, bye-laws and regulations made under the powers given by the articles of association, and since the grievance made in the writ petition related to contractual rights and obligations between the parties and no question of enforcement of any statutory r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their forward outstanding transactions, which amounted to "carry over" of those transactions, was illegal; in other words the proviso did not permit the closing out or liquidation of the existing outstanding transactions by way of "carry over". On the other hand, counsel for the respondent contended that notwithstanding the ban imposed, which prohibited all future forward trading in shares, the existing forward transactions that remained outstanding on that date were permitted to be closed or liquidated in the normal manner under its rules, bye-laws and regulations and, therefore, the directions issued by the respondent on June 28, 1969, were in accordance with the notification. It was pointed out that at the close of June 27, 1969, the appellant No. 2 had certain outstanding contracts in cleared securities for the then current clearing of July 8, 1969, which had to be completed and performed for the said clearing in the manner laid down in Regln. 8 and bye-law 52( e ) which meant that he could either make cross contracts to close his outstanding purchases or sales for that clearing or to make carry over contracts so as to close the contracts of the current clearing and to make co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pose." Counsel for the appellants did not dispute that the proviso in the aforesaid notification dealt with the topic of closing out or liquidating all existing forward contracts entered into up to the date of the notification and which remained to be performed or outstanding as on that date but contended that it did not permit closing or liquidating all such outstanding transactions in the normal manner under the rules, bye-laws, or regulations of the respondent, but such outstanding transactions were declared to be "subject to the rules, bye-laws and regulations of the recognised stock- exchange that come into force when further new dealings are prohibited in any securities on the cleared securities list and subject also to such terms and conditions, if any, as the Central Govt. may from time to time impose". In other words, according to counsel, the words "but such contracts" occurring in the last part of the notification referred to the outstanding contracts that remained to be performed at the close of June 27, 1969, and it is this last portion of the notification which indicated the manner in which such outstanding transactions were required to be closed or liquidated. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms and conditions as the Central Government may from time to time impose". In our view the expression "such contracts" occurring in the last part of the notification was not referable to the existing outstanding contracts nor to "a contract" that could be entered into for closing or liquidating the existing outstanding contracts. In other words, the third part of the notification on which reliance has been placed by the counsel for the appellants, in our view, has nothing to do with the existing outstanding contracts, the closing or liquidating of which was independently provided for by the proviso. It will thus appear clear that on a proper construction of the notification in question the proviso clearly permitted the closing or liquidating of the existing outstanding transactions in the normal manner by entering into a forward contract (which would include a "carry over") in accordance with the rules, bye-laws and regulations of the respondent. There was no warrant for the stand taken by the appellant No. 2 that all outstanding transactions had to be or could be adjusted on the basis of "previous official closing". On the construction of the proviso counsel for the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the respondent, and secondly, no specific period was mentioned in the notification for liquidation of the outstanding business but the members operating on a recognised stock exchange were expected to clear the outstandings in a smooth and orderly manner within a reasonable period and, in fact, the Govt. desired the respondent to forward to it a statement at each settlement indicating the reduction in outstanding business effected from time to time. The exposition in these two documents, therefore, conforms to our interpretation of the proviso. It may be stated that it was not disputed before us that these two documents which came into existence almost simultaneously with the issuance of the notification could be looked at for finding out the true intention of the Govt. in issuing the notification in question, particularly in regard to the manner in which outstanding transactions were to be closed or liquidated. The principle of contemporanea expositio (interpreting a statute or any other document by reference to the exposition it has received from contemporary authority) can be invoked though the same will not always be decisive of the question of construction. ( Maxwell, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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