9911796707
TMI Blog1992 (3) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... mber 18, 1991, both of the Deputy Director (Stock Exchange), Ministry of Finance (Department of Economic Affairs), Government of India, the fourth respondent in both the writ petitions. By the said impugned orders, the respective applications of the respective petitioners/appellants, under section 3 of the Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as "the Act"), for recognition of the Stock Exchange at Coimbatore, to be promoted by the respective appellants, were rejected. The abovesaid application by the Tex Association was made on July 3, 1991, and the other corresponding application by the Cotton Association was dated April 23, 1991. Even before W. P. No. 11575 of 1991 was dismissed, the abovesaid Department of the Central Government granted recognition to such a stock exchange at Coimbatore pursuant to the application for recognition made by the Coimbatore Stock Exchange Ltd. (hereinafter referred to as " the Coimbatore Ltd."), with effect from September 18, 1991, by issuing Notification in S. O. 606(E), (See [1992] 73 Comp Cas (St.) 61) on the said date. The said Coimbatore Ltd. is the eighth respondent in W. P. No. 16027 of 1991 but is not a party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hould have taken up all the applications before it together and on a comparative analysis of the merits and demerits of each of the said appellants, in the light of section 4 and other relevant provisions of the abovesaid Act, should have come to a conclusion in recognising one or other of the stock exchange of the applicants and that while doing so, the respondent-Government erred in accepting the application of one of the applicants, viz., Coimbatore Limited. Learned counsel also, in this connection, relied on Madhubhai Amathalal Gandhi v. Union of India [1960] 30 Comp Cas 667 ; AIR 1961 SC 21. Learned counsel reiterates that Bakthavatsalam J. has erred in stating that the abovesaid enactment does not say that all the applicants under the abovesaid section 3 have to be brought together and recognition has to be given only after considering all the applicants together and that this court cannot sit in appeal over the decision taken by the Central Government after considering the different applications individually. In this connection, there is a necessity to say a few more facts. The said Coimbatore Limited filed its abovesaid application on July 3, 1991. The said Coimbatore Limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e business of a stock exchange earlier and hence, this abovesaid application should not have been entertained. In this connection, he drew our attention to the definition of the term "stock exchange" under section 2(j) of the said Act. Lastly, learned counsel submits that in exercising the abovesaid statutory function under section 4 of the abovesaid Act in granting the recognition, the Government should show "fairness in action". But, according to him, the Government has not shown such fairness in action in the present case in passing the impugned order and notification. In this connection, he relied on Management of M. S. Nally Bharat Engineering Co. Ltd, v. State of Bihar [1990] 2 SCC 48 and K. J. John Assistant Public Prosecutor Grade I, Palai v. State of Kerala, AIR 1990 SC 1902. On the other hand, Mr. Habibullah Basha, learned senior counsel for Coimbatore Limited and also Mr. Iliyas Ali, learned counsel for the Government authorities, submit that there is no necessity to make a comparative study of the different applications under section 3 of the Act and that it is enough if those applications are considered individually, as it has been done in the present case. Admittedl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 14601 of 1991, have to be dismissed since the grievance therein only relates to this aspect. Mr. Habibullah Basha further contends that the abovesaid third submission of learned counsel for the writ petitioners is totally misconceived. It is not necessary that for making the application under section 3, the stock exchange must be actually doing stock exchange business at the time of the application. According to the definition of the term "stock exchange" under section 2(j), it means only any body constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities. Thus, if it is so constituted for the said purpose, it comes under the said definition. So, the application by the Coimbatore Limited is in order. According to learned counsel, in fact, the writ petitioners also are not a stock exchange who carried on stock exchange business earlier to their applications. Their members were only "stock brokers" which term is different from a stock exchange. Regarding the last submission of Mr. Thiyagarajan, Mr. Habibullah Basha submits that the Government was absolutely showing fairness in action and the contention of learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tock Exchange Limited as a guarantee company." It is also to be noted that the president of the Indian Chamber is also the president of Coimbatore Limited and that in the said application it has also been stated that the Indian Chamber has agreed to provide Coimbatore Limited sufficient space for the trading hall and office for carrying on the stock exchange business. In the light of these facts and certain other facts referred to in paragraphs 9 to 13 of the counter-affidavit of Coimbatore Limited in W. P. No. 14600 of 1991, it can safely be concluded that Coimbatore Limited was only promoted, in effect by Indian Chamber, and that the abovesaid "in principle approval" given by the Government would enure to Coimbatore Limited. After going through the relevant communications, we also observe that the word "promoted" would only have the normal literal meaning and not as contended for by Mr. Thiyagarajan. In the circumstances, we do not think that there is any merit in the second submission of Mr. Thiyagarajan. We also find that in W. P. Nos. 14600 and 14601 of 1991, there is no plea even that since the abovesaid comparative consideration of all the applications together was not don ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... change, by name, (1) Native Share and Stock Brokers' Association, and (2) Indian Stock Exchange Limited. The former was recognised under the erstwhile Bombay Securities Contract Control Act, 1925, but the latter was not so recognised under the abovesaid 1925 Act. Then, after the abovesaid Act (of 1956) was introduced, both the abovesaid stock exchanges at Bombay, applied for recognition under section 3 thereof and the Government no doubt, considering the relevant merits of the two, recognised the former under the name of "Stock Exchange, Bombay" subject to the conditions, which included that the members of the abovesaid Indian Stock Exchange Limited would be entitled to apply for membership of the abovesaid "Stock Exchange, Bombay", provided they were active members of the said Indian Stock Exchange Limited, etc. Then, the Central Government issued a subsequent notification under section 13 of the Act, with the result that thereafter every contract in shares between the members of any unrecognised stock exchanges in Bombay would be illegal. The said notification and the earlier notification were challenged by a member of the Indian Stock Exchange Limited on the ground that they off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in Shanmugham v. Arumugham [1960] I MLJ 66, which dealt with applications under section 5. of the Madras Cinemas (Regulation) Act (IX of 1955) for the grant of a no objection certificate to locate a touring cinema. There also, this court has held that there is nothing in the said Regulation, Act or in the Rules thereunder which casts a duty on the Collector or the Board of Revenue to make a comparative estimate of the qualifications of the different applicants or to make a selection among several applicants. Several difficulties in invoking the principle of selection in respect of the above-referred to applications were also pointed out in the said decision. No doubt, Rajamannar C. J., who delivered the said Bench judgment, also pointed out that the scheme and procedure laid down in the abovesaid Regulation Act did not correspond to the scheme and procedure found in the Motor Vehicles Act and the Rules framed thereunder, in respect of applications under section 57(2) of the then existing Motor Vehicles Act for stage carriage permits. In relation to the said applications under section 57(2), in view of the several specific features of the Motor Vehicles Act, the learned judge no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s bad under the said Companies Act. According to learned counsel, the abovesaid defect goes to the root of the jurisdiction to grant the said recognition and the failure to consider the same is an error apparent on the face of the record. Learned counsel also cited decisions in support of his contention that the review applications are maintainable on the facts of the present case. On the other hand, learned counsel for the Coimbatore Stock Exchange Limited submits as follows: The above argument that the registration of the Coimbatore Stock Exchange Limited under the Companies Act itself was bad, was not made at all while the writ petitions were argued, nor was the said plea raised in any of the supporting affidavits of the respective writ petitions. Hence, there is no error apparent which could be corrected in these review petitions. No doubt, the subscribers to the abovesaid memorandum of association have become automatically members of the Coimbatore Stock Exchange Limited, which has since been recognised. But, such automatic admission to the membership of the said recognised Stock Exchange does not make the said recognition bad, even assuming there was any disqualification as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rules relating to admission of members of a stock exchange seeking recognition shall, inter alia, provide that : (1)No person shall be eligible to be elected as a member if (a)he is less than twenty-one years of age ; (b)he is not a citizen of India ; provided that the governing body may in suitable cases relax this condition with the prior approval of the Central Government ; (c)he has been adjudged bankrupt or a receiving order in bankruptcy has been made against him or he has been proved to be insolvent even though he has obtained his final discharge ; (d)he has compounded with his creditors unless he has paid sixteen annas in the rupee ; (e)he has been convicted of an offence involving fraud or dishonesty ; (f)he is engaged as principal or employee in any business other than that of securities except as a broker or agent not involving any personal financial liability unless he undertakes on admission to sever his connection with such business : Provided that the Central Government may, for reasons sufficient in the opinion of the said Government, permit a recognised stock exchange to suspend the enforcement of this clause for a specified period on condition that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
