1995 (2) TMI 297 - HC - Companies Law

Summary

Issues Involved:
1. Legality of the guidelines issued by the Central Government on 9-11-1989.
2. Authority of the Screening Committee to modify the guidelines.
3. Compliance with the modified norms by the Screening Committee.
4. Validity of the selection process and adherence to prescribed norms.
5. Jurisdiction of the High Court under Article 226 to adjudicate disputed facts.

Issue-Wise Detailed Analysis:

1. Legality of the guidelines issued by the Central Government on 9-11-1989:

The petitioners contended that the guidelines issued by the Central Government on 9-11-1989 were statutory and binding on the Stock Exchange. They argued that these guidelines were conditions prescribed under Section 4 of the Securities Contracts (Regulations) Act, 1956, which mandated compliance. However, the court disagreed, stating that the guidelines did not form part of the order of recognition and were not imposed following the procedure laid down in Section 4(1)(b). Therefore, the guidelines were not statutory conditions but administrative instructions.

2. Authority of the Screening Committee to modify the guidelines:

The Screening Committee, constituted by the Central Government, had the authority to decide its own selection criteria while considering the general guidelines issued. The Committee made modifications to the guidelines to suit local conditions, which were communicated to the Central Government. The Central Government, upon receiving the report from the Screening Committee, advised them to proceed with the selection process, thereby implying approval of the modified criteria.

3. Compliance with the modified norms by the Screening Committee:

The Screening Committee adhered to the four criteria laid down by the Central Government (education, experience, financial solvency, and interview) but adjusted the points allocation to suit local conditions. The Central Government, being fully aware of these modifications, did not object and instead directed the Committee to complete the selection process. This implied ratification of the modified norms by the Central Government.

4. Validity of the selection process and adherence to prescribed norms:

The court found that the selection process adhered to the modified norms approved by the Central Government. The Screening Committee's decision to vary the points while retaining the four criteria was within its authority and was subsequently ratified by the Central Government. Therefore, the selection process was valid, and there was no violation of the guidelines.

5. Jurisdiction of the High Court under Article 226 to adjudicate disputed facts:

The court held that it would not investigate disputed questions of fact under its jurisdiction in Article 226. Specific grievances, such as those raised by individual petitioners regarding their qualifications and marks, were deemed more appropriate for proceedings under Section 111 of the Companies Act or civil suits, not writ petitions.

Conclusion:

The writ petitions were dismissed as the court found no merit in the arguments presented by the petitioners. The interim orders were vacated, and there was no order as to costs. The court upheld the validity of the selection process and the authority of the Screening Committee to modify the guidelines, which were subsequently ratified by the Central Government.