2008 (2) TMI 629 - HC - Companies Law

Summary

Issues:
1. Whether a writ of mandamus can be issued to direct an inquiry into price manipulation/inside trading.
2. Whether SEBI is obligated to investigate complaints of price manipulation.
3. Whether the court can entertain public interest litigations (PILs) regarding stock market matters.

Analysis:
Issue 1: The petitioner sought a writ of mandamus to direct an inquiry into price manipulation/inside trading of a company's scrip. The petitioner, a small investor, alleged losses due to fluctuating share prices and complained to SEBI. However, the court cited a previous judgment stating that individual shareholders cannot compel SEBI to investigate stock market fluctuations based on personal losses. The court dismissed the petition, ruling it as not maintainable.

Issue 2: The court emphasized SEBI's role as a specialized body for regulating the stock market. It noted that SEBI is responsible for determining when and where investigations are necessary. The court highlighted that fluctuations in stock prices can be influenced by various factors, and individual shareholders cannot dictate SEBI's investigative actions based on personal financial outcomes. The court dismissed the petition, stating that it cannot direct SEBI to conduct investigations into stock market activities based on individual complaints.

Issue 3: The court addressed the nature of public interest litigations (PILs) related to stock market matters. It stated that PILs concerning stock market fluctuations, such as allegations of price manipulation, cannot be entertained by the court. The court highlighted that the petitioner's complaint was akin to a PIL and ruled that such matters fall outside the court's jurisdiction for entertaining petitions. Consequently, the court dismissed the petition, deeming it not maintainable based on the principles governing PILs.