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TMI Blog1996 (5) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... lasses of members, the qualifications for membership and the exclusion, suspension, expulsion and readmission of members therefrom or thereinto. The Exchange in its extraordinary general body meeting, on 24-8-1992, however, introduced an amendment to its articles of association and increased the maximum number of members from 200 to 300. In another general body meeting dated 8-10-1992, it has fixed entrance fee at Rs. 7,51,000 for new members or as may be decided by the general body. On 1-12-1992 it sent proposal of approval of the Screening Committee constituted by it to SEBI and also a proposal for a written test for approval. SEBI in its turn on 18-2-1993 approved the amendment, authorised it to charge admission fee of Rs. 6 lakhs for new members and directed it to follow the guidelines of the Government of India and SEBI and the provisions of the Securities Contracts (Regulation) Act and the rules framed thereunder. However, on a fresh representation by the Exchange on 4-3-1993 SEBI agreed to its proposal on 23-3-1993 for the admission fee for the new members of Rs. 7,51,000. Further correspondence finally resulted in a letter from SEBI, dated 17-6-1993, approving the procedure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esulted in a total manipulation of the selection of the members in the sense that those who fully qualified and fulfilled all the criteria and performed better than many who failed to qualify in the written test, have been denied the membership whereas persons who failed to qualify in the written test have been admitted as members by the Exchange. Petitioners have alleged that those who have wielded power in the Exchange had filled it with their relatives and nominees as candidates for membership and when they found that such persons were likely to be eliminated on account of their failing to qualify in the written test, they managed to introduce the so-called moderation for benefiting them. The Exchange, however, has maintained that there has been good reasons for moderation and the same is a recognised mode of evaluating merit and to make up or compensate for any disadvantage suffered by the examinees in securing the marks on account of unreasonable and stiff question paper set by the examiner or for having included a question or questions outside the syllabus in any question paper or for such other valid reasons considered good by the concerned University or the academic body. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness of dealing therein and by providing for certain other matters connected therewith. A 'stock exchange' is defined under section 2( j ) of the said Act to mean - 'any body of individuals, whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling or dealing in securities'. 'Contract' has been defined under the said Act to mean 'a contract for or relating to the purchase or sale of securities'. 'Securities' under section 2( h ) included shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate. Any Stock Exchange, section 3 of the Act says, which is desirous of being recognised for the purposes of this Act may make an application in the prescribed manner to the Central Government and every application shall contain such particulars as may be prescribed, and shall be accompanied by a copy of the bye-laws of the stock exchange for the regulation and control of contracts and also a copy of the rules relating in general to the constitution of the stock exchange and in particular to the governing body of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers and their audit by char-tered accountants whenever such audit is required by the Central Government." 6. The Act also contains the definition of 'Rules' under section 2( g ) to mean 'with reference to the rules relating in general to the constitution and management of a stock exchange, to include in the case of a stock exchange which is an incorporated association, its memorandum and articles of association'. Section 8 of the Act provides as follows : " Power of Central Government to direct Rules to be made or to make rules. (1) Where, after consultation with the governing bodies of stock exchanges generally or with the governing body of any stock exchange in particular, the Central Government is of opinion that it is necessary or expedient so to do, it may, by order in writing together with a statement of the reasons therefor, direct recognised stock exchanges generally or any recognised stock exchange in particular, as the case may be, to make any rules or to amend any rules already made in respect of all or any of the matters specified in sub-section (2) of section 3 within a period of two months from the date of the order. (2) If any recognised stock exchange fails ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Act 15 of 1992 has envisaged the Exchange Board as a body to protect the interests of investors in securities and to promote the development of, and to regulate the securities market by such measure as it thinks fit. This Act has made provisions for registration of stock-brokers, sub-brokers, share transfer agents, etc., and it is conceded, the Exchange is one such person registered with SEBI for it is involved in the business of contract for or relating to the purchase or sale of securities. 8. The Central Government has made rules in exercise of the powers conferred by section 30 of the Act which included qualifications for membership of a recognised stock exchange. Rule 8 thereof reads as follows: "8. Qualifications for membership of a recognised stock exchange : The 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 21 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n securi-ties, considered by the governing body to be otherwise qualified for membership. (3) No person who is a member at the time of application for recognition or subsequently admitted as a member shall continue as such if ( a )he ceases to be a citizen of India: Provided that nothing herein shall affect those who are not citizens of India but who were members at the time of such application or were admitted subsequently under the provisions of clause ( b ) of sub-rule (1) of this rule, subject to their complying with all other requirements of this rule; ( b )he is adjudged bankrupt or a receiving order in bankruptcy is made against him or he is proved to be insolvent; ( c )he is convicted of an offence involving fraud or dishonesty; ( d )and ( e ) ****** ( f )he engages either as principal or employee in any business other than that of securities except as a broker or agent not involving any personal financial liability, provided that ( i )the governing body may, for reasons to be recorded in writing, permit a member to engage himself as principal or employee in any such business, if the member in question ceases to carry on business on the stock exchange eit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Act, 1956 (1 of 1956); ( g )the subsidiaries of any of the Corporations or companies specified in ( a ) to ( f ) and any subsidiary of the State Bank of India or any nationalised bank set up for providing merchant banking services, buying and selling securities and other similar activities. (4A) A company as defined in the Companies Act, 1956 (1 of 1956), shall also be eligible to be elected as a member of a Stock Exchange if ( i )such company is formed in compliance with the provisions of section 12 of the said Act; ( ii )such company undertakes to comply with such financial require-ments and norms as may be specified by the Securities and Ex-change Board of India for the registration of such company under sub-section (1) of section 12 of the Securities and Exchange Board of India Act, 1992 (15 of 1992); ( iii ). . . . Omitted ( iv )the directors of the company are not disqualified for being members of a stock exchange under clause (1) except sub-clause ( b ) and sub-clause ( f ) thereof or clause (3) [except sub-clause ( a ) and sub-clause ( f ) thereof] and the Director of the company had not held the offices of the Director in any company which had been a mem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use and minor children shall also be considered. Selection Criteria : Apart from the above criteria, a written test and interview will be conducted for selection. 10. To make, it seems, the above rational and with a view to have a reasonable basis for eliminating such applicants who appear to possess the minimum educational qualifications, experience or to fulfil other condi-tions, a formula of fixing marks at a uniform level for each criterion except for interview for which 20 marks were reserved, SEBI and the Exchange allotted ten as the minimum to qualify for the interview and the selection including for the written test. Although there is some argument before us that a person possessing the minimum of the wealth making him or her fit to be admitted as a member of the Exchange can be found to be more suitable for the purpose of the business of the Exchange than one who is very rich but not possessed of the requisite calibre, we do not propose to detain ourselves to deal with this and other similar arguments before us except observing that what is contemplated for the purposes of scrutiny and which in some respects appear to go beyond the rules of eligibility or ineligibili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the Court in any dealings between the Exchange and SEBI. It is, therefore, a case, in our opinion, in which the only matter that this Court should attend to should be relating to the eligibility of the applicants under the notices issued by the Exchange inviting applications and whether in scrutinising the applications or eliminating applicants the Exchange has committed any illegality or violated any of the rights of the applicants. 12. The learned counsel for the Exchange, however, has urged rather forcefully that the Exchange being a body incorporated under the Companies Act, 1956, and so being not 'a state' under article 12 of the Constitution of India, is not amenable to the writ jurisdiction of this Court. The appellant and the writ petitioners who have sought interfer- ence of the Court in the selection of the members by the respondent -Exchange, have raised a private dispute of a sort. The Exchange is neither a statutory body nor an instrumentality or agent of a State, nor has any public duty to perform in admitting members to itself. 13. Part-III of the Constitution of India contains article 12 which defines 'the State' to include the Government and the Parli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factor to consider whether the administration is in the hands of a Board of Directors appointed by Government, though this consideration also may not be determinative, because even where the Directors are appointed by Government, they may be completely free from governmental control in the discharge of their functions. What then are the tests to determine whether a Corporation established by statute or incorporated under law is an instrumentality or agency of Government? It is not possible to formulate an all-inclusive or exhaustive test which would adequately answer this question. There is no cut and dried formula which would provide the correct division of Corporations into those which are instrumentalities or agencies of Government and those which are not." (p. 1639) The Supreme Court in this judgment has proceeded to consider various factors such as whether the operation of the Corporation is an important public function, and concluded : "19. It will thus be seen that there are several factors which may have to be considered in determining whether a Corporation is an agency or instrumentality of Government. We have referred to some of these factors and they may be summarise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would, in the exercise of its power or discretion, be subject to the same constitutional or public law limitations as the Government. The rule inhibiting arbitrary action by the Government must apply equally where such Corporation is dealing with the public, whether by way of given jobs or entering into contracts or otherwise and it cannot act arbitrarily and enter into relationship with any person it likes at its sweet will, but its action must be in conformity with some principle which meets the test of reason and relevance. 15. Dealing with a case of an Engineering College under the management of a society registered under the Jammu and Kashmir Registration of Societies Act, 1898 and the Memorandum thereof and referring parti-cularly to one of the clauses of the memorandum of association which provided for making rules for the conduct of the affairs of the society and to add, to amend, vary or rescind them from time to time with the approval of the Government of Jammu and Kashmir State and the Central Government and such other provisions which appear to subject the Society to the directions and control of the State Government and the Central Government, the Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it does not extend to the other provisions of the Constitution and hence a juristic entity which may be 'State' for the purpose of Parts-III and IV would not be so for the purpose of Part-XIV or any other provision of the Constitution. ..." (p. 497) 16. We do not propose to add to the above several other judgments of the Supreme Court on the subject, but before we refer to a very important aspect of the law with reference to the power of this Court under article 226 and some leading judgments of the Courts, including the Supreme Court, we may point out that 'State' as defined under article 12 alone is not covered by the expansive jurisdiction of the Court under article 226. Article 226 reads : ". . . every High Court shall have power, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs,..." 17. The use of the expression 'any person or authority' and including in the expression 'authority' in appropriate cases 'any Government' indicates the expansion of the power of the Court and that the expression 'all local or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osure compensation was ultra vires of the powers of the syndicate. 19. The High Court rejected the above submissions and accepted the writ petitions. The trustees moved the Supreme Court. The Supreme Court has in the said judgment considered the question of maintainability of the writ petition under article 226 in these words : "11. The essence of the attack on the maintainability of the writ petition under article 226 may now be examined. It is argued that the management of the college being a trust registered under the Public Trusts Act is not amenable to the writ jurisdiction of the High Court. The contention in other words is that the trust is a private institution against which no writ of mandamus can be issued. In support of the contention, the counsel relied upon two decisions of this Court: ( a ) Executive Committee of Vaish Degree College, v. Lakshmi Narain AIR 1976 SC 888 and ( b ) Deepak Kumar Biswas v. Director of Public Instruction [1987] 2 SCC 252. In the first of the two cases, the respondent institution was a Degree College managed by a registered cooperative society. A suit was filed against the college by the dismissed principal for reinstatement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of imparting education to students. They are subject to the rules and regulations of the affiliating University. Their activities are closely supervised by the University authorities. Employment in such institutions, therefore, is not devoid of any public character ( See The Evolving Indian Administrative Law by M.P. Jain [1983] p. 266). So are the service conditions of the academic staff. When the University takes a decision regarding their pay scales, it will be binding on the management. The service conditions of the academic staff are, therefore, not purely of a private character. It has super-added protection by University decisions creating a legal right-duty relationship between the staff and the management. When there is existence of this relationship, mandamus cannot be refused to the aggrieved party. 15. The law relating to mandamus has made the most spectacular advance. It may be recalled that the remedy by prerogative writs in England started with very limited scope and suffered from many procedural disadvantages. To overcome the difficulties, Lord Gardiner (the Lord Chancellor) in pursuance of section 3(1)( e ) of the Law Commission Act, 1965, requested the Law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fundamental rights and for any other purpose'. 17. Article 226 reads: '226. Power of High Courts to issue certain writs (1) Notwithstanding anything in article 32, every High Court shall have power throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority including in appropriate cases, any Government, within those territories directions, orders or writs, including (writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari ) or any of them for the enforcement of any of the rights conferred by Part III and for any other purpose.' ****** 18. The scope of this article has been explained by Subba Rao, J., in Dwarkanath v. Income-tax Officer AIR 1966 SC 81 at pp. 84-85): "This article is couched in comprehensive phraseology and it ex facie confers a wide power on the High Courts to reach injustice wherever it is found. The Constitution designedly used a wide language in describing the nature of the power, the purpose for which and the person or authority against whom it can be exercised. It can issue writs in the nature of prerogative writs as understood in England; but the use of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies or corporations to carry out duties placed on them by the statutes authorising their undertaking. A mandamus would also lie against a company constituted by statute for the purpose of fulfilling public responsibilities. [ See - Halsbury's Laws of England (3rd Edn. Vol. II p. 52 and onwards]. Here again we may point out that mandamus cannot be denied on the ground that the duty to be enforced is not imposed by the statute. Commenting on the development of this law, professor De Smith states: 'To be enforceable by mandamus a public duty does not necessarily have to be one imposed by statute. It may be sufficient for the duty to have been imposed by charter, common law, custom or even contract.' (Judicial Review of Administrative Act, 4th Edn. p. 540). We share this view. The judicial control over the fast expanding maze of bodies affecting the rights of the people should not be put into water-tight compartment. It should remain flexible to meet the requirements of variable circumstances. Mandamus is a very wide remedy which must be easily available to reach injustice wherever it is found'. Technicalities should not come in the way of granting that relief under Artic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable for any other purpose even one for which another remedy may exist. The amendment to article 226 in 1963 inserting article 226(1A) reiterates the targets of the writ power as inclusive of any person by the expressive reference to the residence of such person. But it is one thing to affirm the jurisdiction, another to authorise its free exercise like a bull in a China shop. This Court has spelt out wise and clear restraints on the use of this extraordinary remedy and High Courts will not go beyond those wholesome inhibitions except where the monstrosity of the situation or other exceptional circumstances cry for timely judicial interdict or mandate. The mentor of law is justice and a potent drug should be judiciously administered. Speaking in critical retrospect and portentous prospect, the writ power has, by and large, been the people's sentinel on the qui vive and to cut back on or liquidate that power may cast a period to human rights. We hold that the award here is not beyond the legal reach of article 226, although this power must be kept in severely judicious leash." (p. 429) 21. The Supreme Court has made these observations in a case in which the award of an arb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tution of India. The Court has observed : "Before considering the question whether a writ of mandamus as prayed for by the petitioners can be issued against the second respondent, Commissioner of Labour, it is necessary to consider the scope and nature of a writ of mandamus. A writ of mandamus is a command issued by a court to a person holding a public office or against a Corporation or inferior court for the enforcement of duties which under the law for the time being in force are clearly incumbent upon such person or court in his or its public character or Corporation in its corporate character." 24. The Court in this judgment has quoted from Halsbury's Laws of England, Third Edition, Vol. 2, at page 84, which is as follows : "The order of mandamus is an order of a most extensive remedial nature, and is, in for a command issuing from the High Court of Justice, directed to any person, corporation or inferior Tribunal, requiring him or them to do some particular thing therein specified which appertains to his or their office and is in the nature of a public duty. Its purpose is to apply defects of justice; and accordingly it will issue, to the end that justice may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 530) 29. In Praga Tools Corpn. v. C.V. Immaneul [1969] II LLJ 749 it is observed: "Article 226 provides that every High Court shall have power to issue to any person or authority orders and writ, including writs in the nature of habeas corpus, mandamus, etc., or any of them for the enforcement of any of the rights conferred by Part-III of the Constitution and for any other purpose. But, it is well understood that a mandamus lies to secure the performance of a public or statutory duty in the performance of which the one who applies for it has a sufficient legal interest. Therefore, the condition precedent for the issue of mandamus is that there is one claiming it a legal right to the performance of a legal duty by one against whom it is sought. An order of mandamus, is, in form, a command directed to a person, corporation or inferior Tribunal requiring him or them to do a particular thing therein specified which appertains to his or their office and is in the nature of a public duty. It is, however, not necessary that the person on the authority on whom the statutory duty is imposed need be a public official or an official body. It is, therefore, clear that a w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticle 14." The Full Bench has also spoken on the features of mandamus and certiorari in these words : "The basic feature of mandamus and certiorari is that they are public law remedies and are not available to enforce private law rights. Though the strict technical rules governing these writs in English law are not applicable in India, yet the broad principles underlying the said writs have to be kept in mind by this Court while exercising the powers under Art. 226. Not keeping the said distinction in mind would obliterate the distinction between a writ petition and a suit; there will be choas. As pointed out by a Constitution Bench of the Supreme Court in T.C. Basappa v. T. Nagappa AIR 1954 SC 440 though the power of the High Court under Art. 226 need not be constricted by the technical rules applicable to these prerogative writs in English law, it is yet necessary to "keep to the broad and fundamental principles that regulate the exercise of jurisdiction in the matter of granting such writs in English law." Similarly, it was pointed out in Dwaraka v. ITO AIR 1966 SC 81 that "Article 226 is couched in comprehensive phraseology and it ex facie confers a wide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he field of private law are not subject to judicial review. Dealing with the said contentions, the Court observed : "While we do find considerable force in the contention of the learned Attorney-General it may not be necessary for us to enter into any lengthy discussion of the topic, as we shall presently see. We also desire to warn ourselves against readily referring to English cases on questions of Constitutional Law, Administrative Law and Public Law as the law in India in these branches has forged ahead of the laws in England, guided as we are by our Constitution and uninhibited as we are by the technical rules which have hampered the development of the English law. While we do not for a moment doubt that every action of the State or an instrumentality of the State must be informed by reason and that, in appropriate cases actions uninformed by reason may be questioned as arbitrary in proceedings under article 226 or article 32 of the Constitution, we do not construe article 14 as a charter for judicial review of State actions and to call upon the State to account for its actions in its manifold activities by stating reasons for such actions. For example, if the action of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the territory in relation to which it exercises jurisdiction. Obviously, therefore, the decision of the statutory quasi-judicial authorities which can be appropriately described as Tribunal will be subject to judicial review namely a writ of certiorari by the High Court under article 227 of the Constitution. The decision questioned before the High Court was of the Deputy Commissioner and the Commissioner exercising powers under section 3 of the 1969 Act. And these statutory authorities are certainly amenable to the writ jurisdiction of the High Court. 8. The matter can be viewed from a slightly different angle as well. After the decision of the Constitution Bench of this Court in Ajay Hasia v. Khalid Mujib Sehravardi AIR 1981 SC 487 the aided school receiving 95 per cent of expenses by way of grant from the public exchequer and whose employees have received the statutory protection under the 1969 Act, and who is subject to the Regulations made by the Education Department of the Union Territory of Chandigarh as also the appointment of Headmaster to be valid, must be approved by the Director of Public Instruction, would certainly be amenable to the writ jurisdiction of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remedy have been indicated in various pronouncements of the Supreme Court and High Courts, and the High Courts will not go beyond those wholesome inhibitions. However, where the situations warrant or exceptional circumstances cry for timely judicial interdict or man-date, the Court shall have the power to issue any writ, order or direction. In the words of the Supreme Court - "the mentor of law is justice and a potent drug should be judiciously administered. Speaking in critical retrospect and portentous prospect, the writ power has, by and large, been the people's sentinel on the qui vive and to cut back on or liquidate that power may cast a peril to human rights"; ( 4 ) Mandamus, certiorari and prohibition are recognised as public remedies. They are not available to enforce private law rights; ( 5 )The word 'authority' in article 226 of the Constitution of India is not restricted to the same meaning as the words 'other authorities', should receive in the definition of the 'State' in article 12 of the Constitution of India. The former must receive a liberal meaning. The latter is relevant only for the purpose of enforcement of fundamen- tal rights. The High Court's power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Magadh Stock Exchange Association AIR 1992 Pat. 61 has also accepted the Bombay view in these words : "... Undoubtedly respondent No. 1 is a private organisation and it has to be seen whether such an organisation would be amenable to the writ jurisdiction under articles 226 and 227 of the Constitution of India. In this context, Mr. Chatterji drew our attention to the various sections of the Securities Contract Regulation Act, 1956 (hereinafter referred to as the Act) to indicate that under those provisions the Government exercises an all pervading influence in the Constitution as well as the functioning of the Stock Exchange. Mr. Chaterji also places reliance on the case in Mrs. Sejal Rikeen Dalal v. Stock Exchange AIR 1991 Bombay 30, which relates to the Bombay Stock Exchange. In that case their Lordships were of the opinion that the functions of the Stock Exchange were in public interest and for the benefit of the investors. In that context they observed that for safeguarding the public interest, the Court could reasonably exercise its jurisdiction under article 226. We do not propose to go into this technical aspect of the matter any further and for the present we ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lume II at page 947, which reads as follows : " Award of moderation marks: - Moderation marks are awarded to all the candidates, obviously for the reason that the moderation marks are meant to make up or compensate ( a )for any disadvantage suffered by the examinees in securing the marks on account of unreasonably stiff question paper set by any examiner, or ( b )for having included a question or questions outside the syllabus in any question paper, or ( c )for such other valid reasons considered good by the concerned University or academic body." 39. On a similar plea on behalf of the CBSE in Association of Private Schools Affiliated to the CBSE v. State of Tamil Nadu 1992 (2) Law Weekly, 155 one of us (P.S. Mishra, J.) as the Judge of the Madras High Court, speaking for the Court has said : "A Court cannot have any idea of the degree of difficulty existing at the level of average as well as students proficiency or the effect of the handicaps available with the CBSE. Experts alone should be left with the task of judging the difficult factors that influence the overall performance of the students touching the ill-prepared as well as bright students. This would h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... individual varies also in ability and performance over a period of time. The same holds true for a group of individuals. The degree of uncertainty or error for a single measurement or set of measurements needs to be appreciated, and where possible calculated". This article recognises as the first statistical exercise after a test or examination to produce a frequency distribution for the scores of marks obtained by the candidates and adds 'For small entries, such as the classroom test, this often takes the form of a distribution based upon individual marks within an appropriate range of marks'. . . . For a large entry, probably marked on a percentage scale, the marks are usually grouped into appropriate classes with a frequency distribution similar to that shown in Table 1( b ). This might be the kind of distribution for an assistant examiner with one of the examining boards". After the table of frequency distribution of marks, it is stated, "One cannot have a lenient view or severe marker for objective tests, or one who is inclined to bunch marks, because the marking is completely objective. It is quite possible, however, to have this state of affairs with essay-type examination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eciding to award grace marks as a whole to every candidate. Standardization has to be a process to ensure that equals in merit are evaluated equally. If it would benefit a person who performed poorly and merited a lower place in the result it would, on the one hand, deny to a person possessed of real merit his correct position as he would be graded with a person who is lower in merit and give on the other hand, undue advantage to a person who on merit assessment ranked lower but on account of the so-called standardization/moderation marks, was pushed higher. In the case in hand, it is yet another tale created on account of its effect." 41. The view taken by the Madras High Court is not different from the view expressed by the Supreme Court in the case of Umesh Chandra v. Union of India AIR 1985 SC 1351. That was a case in which after the answer books at the written examination were valued, it was decided to add two marks to the marks obtained in each paper by way of moderation to all candidates who had appeared for the examination for selection of officers for being appointed in the Delhi Judicial Service. The Supreme Court in the said judgment has observed as follows : " ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any irregularities in the valuation of the answer books. It may be that some candidates had obtained high marks in some papers and by reason of their not obtaining the required marks in the other paper or 60 per cent and above in the aggregate they may not have become qualified for the viva voce test. In our opinion this alone would not be sufficient to add any marks by way of moderation. It is relevant to note the mandatory character of clause (6) in the Appendix to the Rules which says only such candidates will be called for viva voce who have obtained 50 per cent marks in each written paper and 60 per cent in the aggregate except in the case of candidates belonging to the Scheduled Castes/Tribes in whose case the qualifying marks will be 40 per cent in each written paper and 50 per cent in the aggregate. Addition of any marks by way of moderation to the marks obtained in any written paper or to the aggregate of the marks in order to make a candidate eligible to appear in the viva voce test would indirectly amount to an amendment to clause (6) of the Appendix. Such amendment to the Rules can be made under article 234 only by the Lt. Governor (Administrator) after consult ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrange the names in order of merit and these names shall be sent to the Selection Committee, we are of the view that the High Court has no power to include the names of candidates who had not initially secured the minimum qualifying marks by resorting to the devise of moderation, particularly when there was no complaint either about the question papers or about the mode of valuation. Exercise of such power of moderation is likely to create a feeling of distrust in the process of selection to public appointments which is intended to be fair and impartial. It may also result in the violation of the principle of equality and may lead to arbitrariness. The cases pointed out by the High Court are no doubt hard cases, but hard cases cannot be allowed to make bad law. In the circumstances, we lean in favour of a strict construction of the Rules and hold that the High Court has no such power under the Rules. We are of the opinion that the list prepared by the High Court after adding the moderation marks is liable to be struck down. The first contention urged on behalf of the petitioners, has, therefore, to be upheld. We, however, make it clear that the error committed by the High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of many unscrupulous persons entering as members of the Exchange and indulging in activities to enrich them- selves at the cost of the public at large. If the recent happenings with the key role of stock brokers have not given any lesson, there is a chance of such persons taking over the control of the Exchange who shall have no regard for the norms of the trade. While solvency, as we have observed earlier, is important, it should be examined whether the assets are genuine and truly belong to the applicant who seeks membership and that he has not arranged such assets or obtained by questionable means and methods. It is time, we feel persuaded to observe, for the Stock Exchanges to realise that they are not trading in an individual capacity; they are doing some kind of institutional business for which the institu- tion must enjoy the confidence of the people. The Government of India and SEBI shall do service to the people by seeking a declaration of assets of members of the Stock Exchanges and also information as to the source from which assets have been procured and evolve some method by which profits by the members of the Stock Exchanges and their agents are kept under watch and c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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