Trilochana K. Doshi Vs The Stock Exchange of India and another

@JUDGMENTTAG-ORDER

S. Radhakrishnan, J.@mdashHeard all the learned Counsel at length.

2. In the above, a preliminary objection has been raised by respondent No. 2, contending that a writ under Article 226 of the Constitution of India would not lie against respondent No. 1, viz. Stock Exchange, Mumbai.

3. The respondent No. 1 Stock Exchange, Mumbai is a recognised stock exchange under the provisions of Securities Contracts (Regulation) Act, 1956. The said exchange is governed by its own rules, bye-laws and regulations. u/s 3 read with with section 19 of the aforesaid Act, the said exchange is recognised by the Central Government. Section 5 empowers the Central Government to withdraw the recognition, thereby to shut down the exchange. The exchange has to file periodical returns and annual report with the Central Government and the Securities of Exchange Board of India. As per the provisions of the above Act, the Rules and Bye-laws have to be approved by Securities and Exchange Board of India, hereinafter referred to as S.E.B.I. and also by the Central Government, which can also direct carrying out of amendments. S.E.B.I. can nominate upto three members on the Governing Board of the Exchange. u/s 11 of the said Act, the Central Government can supercede the Governing Board of the Exchange and u/s 12, it can suspend all the business of the Exchange. u/s 22 of the said Act, an Appeal lies to the Central Government, against refusal to list securities of public companies. S.E.B.I. is fully empowered to conduct enquiries into the affairs of the Exchange, Governing Board and its members.

4. u/s 11 of the Securities and Exchange Board of India Act, 1992, S.E.B.I. can regulate the business and the functions of the Exchange, its Governing Board and the members of the Exchange. Under sections 16, 17 and 18 of the S.E.B.I. Act, Central Government has total control over S.E.B.I. Even the appointment of the Exchange''s Executive Director has to be approved by S.E.B.I.

5. Shri Ramabhadran, the learned Counsel for the respondent No. 2, has relied on the following judgments, to contend that no writ under Article 226 of the Constitution of India can be issued against the Stock Exchange, Mumbai. The first judgment was Chander Mohan Khanna Vs. The National Council of Educational Research and Training and other[OVERRULED], . The Supreme Court has held that National Council of Educational Research and Training would not come within the meaning of "State" as per Article 12 of the Constitution of India. The second judgment relied upon was Satish Nayak Vs. Cochin Stock Exchange Ltd., Ernakulam and Others, , wherein Kerala High Court has come to the conclusion that the Cochin Stock Exchange was not an authority amenable to writ jurisdiction under Article 226 of the Constitution of India. Over and above, the subject matter involved was contractual in nature, hence extraordinary jurisdiction under Article 226 was not exercised. The third judgment relied upon was R. Jagadeesh Kumar Vs. P. Srinivasan and others, , wherein the Karnataka High Court was of the view that a writ in the nature of Mandamus to the Stock Exchange would not lie in respect of an action to expel a member from the said Exchange. The fourth judgment pointed out by the learned Counsel was Rakesh Gupta and others Vs. Hyderabad Stock Exchange Ltd. and others, , wherein Andhra Pradesh High Court was of the view that the Stock Exchange was amenable to the writ jurisdiction under Article 226 of the Constitution of India. The learned Counsel relied on the fifth judgment namely Tekraj Vasandi alias K.L. Basandhi Vs. Union of India (UOI) and Others, , wherein it was held that the Institute of Constitutional and Parliamentary (Studies, registered under the Societies Registration Act, 1860, to be not a "State", as per Article 12 of the Constitution of India.

6. Whereas, the learned Counsel for the petitioner and respondent No. 1, have strongly contended that the Stock Exchange, Mumbai, was amenable to writ jurisdiction under Article 226 of the Constitution of India, in view of the various facts and circumstances as set out in paragraphs 3 and 4 hereinabove. Over and above, they have also relied on the following judgments in support of the contention that the Stock Exchange was amenable to writ jurisdiction under Article 226 of the Constitution of India.

7. Firstly they had relied upon the Supreme Court judgment in Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust and Others Vs. V.R. Rudani and Others, , wherein the Supreme Court has categorically held that a writ under Article 226 of the Constitution need not be confined only to statutory authorities and instrumentalities of State, but the same can be issued against any other person or body performing public duty. Second judgment relied upon was from this Court, in Mrs. Sejal Rikeen Dalal and others Vs. The Stock Exchange, Bombay and another, , by Mrs. Justice Sujata Manohar, J., as she then was.

8. In Mrs. Sejal Rikeen Dalal and others Vs. The Stock Exchange, Bombay and another, , this Court was dealing with the issue whether a writ would He against Stock Exchange, Bombay in the sense whether it is amenable to the writ jurisdiction under Article 226 of the Constitution of India. This Court in the said judgment has referred to some of the recent judgments, rules, bye-laws and regulations of the Bombay Stock Exchange which are statutory bye-laws approved by the Government of India in the Securities Contracts (Regulation) Act, 1956. The Rule 4 of the said Rules lays down the main object of the Stock Exchange as under :---

"....."To support and protect in the public interest the character and status of brokers and dealers and to further the interests both of brokers and dealers and of the public interested in securities; to assist, regulate and control in the public interest dealings in securities, to ensure fair dealing, to maintain high standards of commercial honour and integrity, to promote and inculcate honourable practices and just and equitable principles of trade and business, to discourage and to suppress malpractices, to settle disputes and to decide all questions of usage, custom or courtesy in the conduct of trade and business."

9. After dealing with the various aspects with regard to the Stock Exchange, Bombay this Court by the aforesaid judgment came to the conclusion that the Stock Exchange, Bombay is amenable to writ jurisdiction under Article 226 of the Constitution of India in the following words :---

"..... The 1st respondent is, therefore, a statutory body and the Central Government is vested with supervisory powers under the said Act over the functioning of the 1st respondent. The Stock Exchange is, inter alia, established to assist, regulate and control dealings in securities and then sure fail dealings. These are objects of public interest. Therefore, looking to the wide interpretation given to Article 226 of the Constitution, the 1st respondent can be considered, for the purpose of this petition, as amenable to the jurisdiction of the High Court under Article 226 of the Constitution."

10. The learned Counsel for the petitioner has also relied on the well known case of the Apex Court in Rajasthan State Electricity Board, Jaipur Vs. Mohan Lal and Others, . The aforesaid judgment had interpreted Article 12 of the Constitution of India especially the words "other authorities" to include various statutory authorities which may not form part of "State".

11. The learned Counsel for the petitioner has also relied on another judgment of the Apex Court in Ajay Hasia and Others Vs. Khalid Mujib Sehravardi and Others, . Here also the Supreme Court while dealing with the word "authorities" under Article 12 of the Constitution of India gave a wide interpretation to include various statutory corporations within its ambit.

12. The learned Counsel appearing for respondent No. 1 has also strongly contended that in view of the various facets of respondent No. 1 as set out hereinabove, the respondent No. 1 would be amenable to writ jurisdiction under Article 226 of the Constitution of India. The learned Counsel for the respondent No. 1 has also relied on the judgment of the Supreme Court in U.P. State Co-op. Land Devpt. Bank Ltd. v. Chandra Bhan Dubey, . In this case the Supreme Court came to the conclusion that a writ would lie against the aforesaid U.P. State Co-operative Land Development Bank Ltd.

13. In this context it would be relevant to note the judgment of the Supreme Court in Dwarka Nath Vs. Income Tax Officer, Special Circle D-ward, Kanpur and Another, . In this judgment the Supreme Court was interpreting the scope of Article 226 of the Constitution of India and has held as under :---

"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 authority against whom it can be exercised can issue writs in the nature of prerogative writ as understood in England; but the scope of those writs also is widened by the use of expression "nature", for the said expression does not equate the writs that can be issued in India with those in England, but only draws as analogy from them. That apart, High Courts can also issue directions, orders or writs other than the prerogative writs. It enables the High Courts to mould the reliefs to meet the peculiar and complicated requirements of this country. Any attempt to equate the scope of the power of the High Court under Article 226 of the Constitution with that of the English Courts to issue prerogative writs is to introduce the unnecessary procedural restrictions grown over the years in a comparatively small country like England with a unitary form of Government into a vast country like India functioning under a federal structure. Such a construction defeats the purpose of the article itself."

14. In another well known case the Apex Court in The Praga Tools Corporation Vs. Shri C.A. Imanual and Others, has held as under :---

"It is, however, not necessary that the person or the authority on whom the statutory duty is imposed need be a public official or an official body. A mandamus can issue, for instance, to an official of a society to compel him to carry out the terms of the statutes under or by which the society is constituted or governed and also to companies or corporations to carry out duties placed on them by the statutes authorising their undertakings. A mandamus would also lie against a company constituted by a statute for the purpose of fulfilling public responsibilities."

15. As noted hereinabove in the aforesaid well known case of Andi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust and Others Vs. V.R. Rudani and Others, the Supreme Court has held as under :---

"20......The term "authority" used in Article 226, in the context, must receive a liberal meaning unlike the term in Article 12. Article 12 is relevant only for the purpose of enforcement of fundamental rights under Article 32. Article 226 confers power on the High Courts to issue writs for enforcement of the fundamental rights as well as non-fundamental rights. The words "any person or authority" used in Article 226 are, therefore, not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. The form of the body concerned is not very much relevant. What is relevant is the nature of the duty imposed on the body. The duty must be judged in the light of positive obligation owed by the person or authority to the affected party. No matter by what means the duty is imposed. If a positive obligation exists mandamus cannot be denied."

16. In the above judgment in para 22, the Supreme Court has observed as under :---

"22. 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 Action 4th Ed. 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 Article 226. We, therefore, reject the contention urged for the appellant on the maintainability of the writ petition."

17. In another recent judgment the Apex Court in Air India Statutory Corporation, etc. Vs. United Labour Union and others [overruled], has held as under :---

"The public law remedy given by Article 226 of the Constitution is to issue not only the prerogative writs provided therein but also any order or direction to enforce any of the fundamental rights and "for any other purpose". The distinction between public law and private remedy by judicial adjudication gradually marginalised and became obliterated. In Life Insurance Corporation of India Vs. Escorts Ltd. and Others, , this Court in paragraph 102 had pointed out that the difficulty will lie in demarcating the frontier between the public law domain and the private law field. The question must be decided in each case with reference to the particular action, the activity in which the State or the instrumentality of the State is engaged when performing the action, the public law or private law character of the question and the host of the relevant circumstances. Therein, the question was whether the management of LIC should record reasons for accepting the purchase of the shares ? It was in that fact situation that this Court held that there was no need to state reasons when the management of the shareholders by resolution reached the decision. This Court equally pointed out in other cases that when the State''s power as economic power and economic entrepreneur and allocator of economic benefits is subject to the limitations of fundamental rights, a private Corporation under the functional control of the State engaged in an activity hazardous to the health and safety of the community, is imbued with public interest which the State ultimately proposes to regulate exclusively on its industrial policy. It would also be subject to the same limitations as held in M.C. Mehta and another Vs. Union of India and others, ."

18. The aforesaid the Supreme Court had considered a Full Bench judgment of the Andhra Pradesh High Court in Sri Konaseema Co-operative Central Bank Ltd. v. N. Seetharama Raju, 1990 B.J. 6S7; : AIR 1990 A.P. 171 and has observed as under :---

"The Full Bench of the Andhra Pradesh High Court was considering the question whether writ petition lay against a co-operative society and if it does, in what circumstances. After examining various decisions and treatises on the subject it was stated that even if a society could not be characterised as a State within the meaning of Article 12 even so as a writ would lie against it to enforce a statutory public duty which an employee is entitled to enforce against the society. In such a case it is unnecessary to go into the question whether the society is being treated as a person, or an ''authority'', within the meaning of Article 226 of the Constitution. What is material is the nature of the statutory duty placed upon it, and the Court is to enforce such statutory public duty."

19. In another case of the Supreme Court in The Engineering Mazdoor Sabha Representing Workmen Employed Under the Hind Cycles Ltd. and Another Vs. The Hind Cycles Ltd., Bombay, it has observed as under :---

"Article 226 under which a writ of certiorari can be used in an appropriate case, is in a sense, wider than Article 136, because the power conferred on the High Courts to issue certain writs is not conditioned or limited by the requirement that the said writs can be issued only against the orders of Courts or Tribunals. Under Article 226(1), an appropriate writ can be issued to any person or authority, including in appropriate cases any Government, within the territories prescribed. Therefore, even if the arbitrator appointed u/s 10(A) is not a Tribunal under Article 136 in a proper case, a writ may lie against his award under Article 226."

20. In an earlier judgment of our High Court in Corporation of the City of Nagpur Vs. The Nagpur Electric Light and Power Company Ltd., , it is held as under :---

"47. As pointed out in 73 Corpus Juris Secundum 998:--

"As a general rule, a public utility has the duty to give the public reasonable and adequate service at reasonable rates and without delay. A public utility has the duty to supply a commodity or to furnish service to the public. This duty exists independently of statutes regulating the manner in which it shall do business or of contracts with municipalities or individuals, and is imposed because the utility is organised to do business affected a public interest and holds itself out to the public as being willing to serve all members thereof. Broadly speaking, the primary duty of a public utility is to give reasonable and adequate service at reasonable rates and without delay."

Such being the position, a writ can issue at the instance of any consumer to a public utility concerned for its failure to perform its duty under the Electricity Act or under its licence. Similarly, a writ can issue to it restraining it from abusing its powers under any of the provisions of the Act or under its licence."

21. From all the aforesaid judgments, it is clear that the jurisdiction under Article 226 of the Constitution of India can be exercised against any person or authority rendering a public utility service. Over and above, the very objective of a writ of Mandamus is that it must be easily available "to reach injustice wherever it is found".

22. Under the aforesaid facts and circumstances, and in view of the aforesaid judgments, we have no hesitation to hold that a writ of mandamus under Article 226 of the Constitution of India would lie against Mumbai Stock Exchange.

23. Now let us consider the merits of the case. In an Arbitration proceedings before the Arbitration Committee, of Mumbai Stock Exchange, an Award came to be passed in favour of respondent No. 2 and the petitioner was directed to pay a sum of Rs. 1,14,38,467.75 ps. to respondent No. 2 by the Award dated 26-6-1999.

24. Against the aforesaid Award, the petitioner filed an Appeal. Bye-law 291-A of Mumbai Stock Exchange contemplates that whenever anyone appeals to the Full Bench of the Arbitration Committee, full amount must be deposited unless exempted in whole or in part by the Governing Body or the President. The petitioner by her letter dated 12th July, 1999, sought full exemption from deposit on the ground that she had closed down her business since June 1996 and that her stock-exchange membership card would fetch Rs. 1.50 crores in auction.

25. The Mumbai Stock Exchange informed the petitioner by its letter dated 2-8-1999, that the Governing Board at its meeting held on 29-7-1999 had decided that the Full Bench of the Arbitration Committee would consider petitioner''s Appeal, provided she deposited a sum of Rs. 50 lakhs.

26. The petitioner by her letter dated 4th August, 1999, again made a fervent plea for total exemption, in view of her precarious financial condition. The Board at its meeting held on 12th August, 1999, agreed to a condition that the petitioner should deposit securities worth Rs. 50 lakhs instead of a cash deposit. The Board had also agreed to take into account her deposits lying with the Stock Exchange.

27. At the hearing learned Counsel for the Stock Exchange pointed out that in all cases full amount of deposit is being taken, and in petitioner''s case more than 50% concession has been already given. Over and above, the facility of deposit of securities is also given. He also pointed out that the Membership Cards cannot be sold by a member.

28. The learned Counsel for respondent No. 2 has also pointed out that his client has been waiting for the last over 6 years for the aforesaid amount and as per the provision of Arbitration and Conciliation Act, 1996, the above Award automatically becomes a decree, unless set-aside, therefore the present award must be treated as money decree and full amount must be directed to be deposited to secure the interests of his client.

29. From the above, it is clear that the petitioner has already been given an exemption of more than 50% and that too by deposit of securities. Therefore, we do not find anything unreasonable, illegal or arbitrary on the part of the Governing Board in their decisions dated 29th July, 1999 and 12th August, 1999.

30. The petition is devoid of merits, hence we dismiss the same.

31. Personal Assistant to issue an ordinary copy of the order to the parties.

32. Issuance of certified copy is expedited.

33. Petition dismissed.