1995 (11) TMI 315 - HC - Companies Law

Issues:
1. Rejection of petitioner's application for recognition under the Securities Contract (Regulations) Act, 1956.
2. Delegation of powers to SEBI by the Central Government.
3. Legality and validity of the impugned order.
4. Feasibility of establishing a Stock Exchange at Trivandrum.
5. Need for a recognized Stock Exchange at Trivandrum.
6. Challenge to the decision on the petitioner's application.
7. Direction to SEBI for reconsideration of the application.

Analysis:

1. The petitioner's application for recognition under the Securities Contract (Regulations) Act, 1956 was rejected by the Joint Secretary to the Government of India. The subsequent developments highlighted the delegation of powers to SEBI by the Central Government, indicating that SEBI would now consider applications for recognition of Stock Exchanges. The court refrained from delving into the legality and validity of the impugned order, directing SEBI to reconsider all pending applications for recognition.

2. The court emphasized that SEBI should independently consider the petitioner's application and those of the interveners, ensuring a fair and unbiased evaluation. It was noted that SEBI would exercise powers concurrently delegated to it under the Act, and all references related to recognition of Stock Exchanges would be forwarded to SEBI for consideration.

3. The court dismissed the argument that a decision on the feasibility of establishing a Stock Exchange at Trivandrum had not been taken by the Government. It highlighted that the impugned decision encompassed both the establishment of a Stock Exchange and the rejection of the recognition application. The court directed SEBI to evaluate the applications based on objective criteria and merits, emphasizing the importance of investor protection.

4. The court acknowledged the inflow of funds from NRIs and local savings in Trivandrum, indicating the potential benefits of establishing a Stock Exchange in the region. It stressed the need for a broad-based membership and efficient management to serve investors effectively. The court emphasized that SEBI should vet the Articles of Association, Bye-laws, and Regulations of the proposed Stock Exchange to ensure investor protection.

5. The court noted the arguments regarding the necessity of setting up Stock Exchanges in all capital cities and the submissions made by the petitioner and other relevant parties regarding the need for a recognized Stock Exchange in Trivandrum. It highlighted that the decision to reject the recognition application was made after careful consideration of the material facts presented.

6. The court clarified that the decision to reject the recognition application was based on the feasibility and necessity of establishing a new recognized Stock Exchange in Trivandrum. It was emphasized that this decision had not been challenged by any party before the court, including the respondents. The court's direction for SEBI to reconsider the applications was made with the consensus of all parties involved.

7. The court concluded by disposing of the writ petition and instructing the petitioners and interveners to present their cases before SEBI for reconsideration. SEBI was tasked with making a decision on the grant of recognition promptly and in accordance with the court's observations and directions.

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