1994 (10) TMI 210 - HC - Companies Law

Summary

Issues:
Challenge to the legality of regulation 10 of the Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992 under articles 14, 19(1)(g), and 265 of the Constitution.

Detailed Analysis:
The petitioners, a society of members of the Bombay Stock Exchange and some individual members, filed a petition under article 226 of the Constitution challenging the legality of regulation 10 of the Securities and Exchange Board of India (Stock Brokers and Sub-brokers) Regulations, 1992, along with Schedule III, as being illegal, unconstitutional, void, and ultra vires articles 14, 19(1)(g), and 265 of the Constitution. They sought a declaration to this effect and consequential reliefs.

Upon hearing the initial arguments, the judges suggested the appointment of a Committee of Experts to examine the issue further due to its controversy and potential impact on stock-brokers and the economy. The counsel representing both parties readily agreed to this suggestion after consulting their clients. The Committee, comprising individuals such as a former Judge of the Court, a Senior Advocate, and representatives of the petitioners and SEBI, was constituted with specific terms of reference.

The Committee was tasked with examining whether the registration fees imposed by SEBI on stock brokers should be linked to turnover, charged at a flat rate, or by any other method. It was also directed to consider the total impact of the fees, the frequency of payment (one-time or annual), the quantum of fees, and any other relevant factors. The Committee was required to submit its report by the end of February 1995 and share copies with all concerned parties.

The fees and expenses of the Committee were to be shared equally by the members of the BSE Brokers' Forum and SEBI, with the Bombay Stock Exchange offering necessary facilities. The petition was scheduled for a hearing before the designated Bench along with other related writ petitions in the following weeks.

This judgment reflects a proactive approach by the Court to address a complex issue by appointing a specialized Committee to provide expert recommendations, ensuring a thorough examination of the matter before reaching a final decision.