OM PRAKASH POPLAI AND RAJESH KUMAR MAHESHWARI KAMLESH KUMAR JAIN Vs. DELHI STOCK EXCHANGE ASSOCIATION LTDUNION OF INDIA

JUDGEMENT

(1.) The Delhi Stock Exchange Association Ltd. came to be incorporated under the Companies Act, 1913 on June 25, 1947. The Securities Contracts (Regulation) Act, 1956 was brought into force with effect from February 20, 1957, with a view to preventing undesirable transactions in securities by regulating the business of dealing therein. Certain other incidental provisions prescribing prohibitions etc. were also made therein. Section 4 provided for the necessity to secure recognition for transacting business in securities. In pursuance thereof, the Delhi Stock Exchange secured recognition from the Central Government. With the passage of time the volume of work increased and the total number of members who could transact business in securities in the Delhi Stock Exchange being limited certain difficulties were experienced in the matter of servicing the investors. On the one hand there was the problem of servicing the investors; with the number of members being small there was also considerable difficulty experienced on account of the paucity of accommodation. Correspondence ensued between the Delhi Stock Exchange and the Central Government in this connection to find the ways and means to improve the working of the Delhi Stock Exchange with a view Om Prakash Poplai vs Delhi Stock Exchange Assn. Ltd on 14 January, 1994 to providing improved services to the investors. Ultimately on February 5, 1987, the Government of India while replying to the letter of the Delhi Stock Exchange dated January 15, 1987, conveyed its approval to the proposal for increasing membership subject to certain conditions as under:

(2.) Civil Appeal No. 4711 of 1990 arises out of an order of the Division Bench of the Delhi High Court which rejected the Writ Petition No. 1357 of 1990 filed by Om Prakash Poplai on May 7, 1990. By that writ petition the petitioner had questioned his non-selection by the Expert Committee. The High Court noticed that the communication informing the petitioner of his non-selection (but it appears that he was placed on the waiting-list) was conveyed to him in July 1988 whereas he had preferred the writ petition on April 30, 1990. The High Court also did not find any merit in the writ petition and dismissed the same in limine. Thereupon, the petitioner approached this Court by special leave. His contention before the High Court and before us was that he was a double-graduate, B.A., LL.B., with a postgraduate qualification, L.L.M. in Commercial Laws from Utkal University. He had worked as a Member of the Punjab Stock Exchange, Lahore, from 1944 to 1947 before his migration to Delhi where he worked as a Member of the Delhi Stock Exchange from 1951 to 1965. Thereafter he practiced Law in the High Court of Delhi and courts subordinate thereto between 1965 and 1976. He was also enrolled as an Advocate-on-Record in the Supreme Court of India. While he was practicing he was also teaching in the Faculty of Law of the Delhi University between 1971 and 1976. In 1976 he gave up practice and joined the Delhi University as a full-time lecturer in Law. On June 4, 1987, he applied for membership of the Delhi Stock Exchange at the age of 60 years. But the Expert Committee did not select him. It may here be mentioned that the Expert Om Prakash Poplai vs Delhi Stock Exchange Assn. Ltd on 14 January, 1994 Committee constituted nine members but according to the petitioner/appellant he was interviewed on January 16, 1988, by (i) Mr Prem Chand Jain, (ii) Mr Paul Joseph, (iii) Mr R.N. Bansal and (iv) Mr R.K. Pandey. Mr Prem Chand Jain was the President of the Expert Committee, Mr Pandey was the Executive Director of Delhi Stock Exchange whereas the other two members were the nominees of the Central Government on the Board of Directors of the Delhi Stock Exchange. The case put up by the petitioner/appellant in the High Court was that he had answered all the questions correctly and has denied the averment that he was not able to answer questions put to ascertain his knowledge in current laws affecting capital issues, norms for debentures, protection of shareholders, guidelines for bonus issues, etc. etc., which knowledge was essential for the effective functioning of the Stock Exchange and control of capital issues. A bald contention was raised in the petition that he was put only one question, namely, "What are specified shares" to which he had given an appropriate and correct answer but no other question had been put to him as alleged in the counter filed on behalf of the Delhi Stock Exchange. His grievance that Chartered Accountants were favoured because Mr R.N. Bansal had tried to favour members of his fraternity was countered by pointing out that the Chartered Accountants had special knowledge and were abreast with financial matters and mechanics of public issue of shares and were, therefore, able to perform better at the interview. Merely because the petitioner/appellant had worked in the Stock Exchange in the past did not entitle him to priority. He was out of touch with the Stock Exchange since 1965-66 and, therefore, he was not abreast with the current developments in the field of finance and capital issues. It is, further, pointed out that the percentage of marks reserved for the interview was only 20 and, therefore, it is not right to contend that the decision of the Expert Committee was vitiated as being arbitrary and against the principles relevant to Article 14 of the Constitution. Reference was made to the case of one Smt Nirmala Kumari Jain who was selected as the member of the Stock Exchange. It was contended that this selection was in total violation of norms, standard of selection and betrayed nepotism and favouritism. The position, insofar as she is concerned, was clarified by her in paragraph 13 of her counter-affidavit by pointing out that her husband late Gian Chand Jain was admitted to the membership of the Stock Exchange on April 24, 1990, as intimated by the telegram of April 30, 1990 and a share certificate Was Issued in the joint names of her husband and herself dated April 24, 1990. She being the joint shareholder along with her husband was entitled to be registered as a shareholder by virtue of Instruction No. 3 on the application form and was accordingly registered as a shareholder on May 10, 1990 on the death of her husband. She, therefore, contended that the allegations made, insofar as her husband as a member is concerned, appear to be misplaced and the result of a lack of information. The petition was dismissed by the High Court and hence the present appeal.

(3.) One Kamlesh Kumar Jain has preferred a Writ Petition No. 878 of 1989 under Article 32 of the Constitution claiming to be a double graduate, B.Com., L.L.B. and a postgraduate M.Com. with 8 years' experience in Delhi Stock Exchange. He contends that the Expert Committee had wrongly rejected his application for being admitted to the membership of the Stock Exchange and has also prayed that the total membership should be increased to 500 and a fresh advertisement inviting applications from members of the public should be issued thereafter. The learned counsel appearing for the respective parties were heard at length. We find from the judgment of the Delhi High Court in Rajesh Kumar Maheshwari V/s. Union of India, 1992 AIR(Del) 68 that the Division Bench rejected the contention on the ground that the approval granted by the Central Government by the letter of February 5, 1987, was violative of Article 14 of the Constitution and those seeking membership through public issue of shares constitute a class by themselves only and distinct from the class comprising those seeking membership through dilution of shareholding of existing members. Therefore, the condition in regard to higher deposit from those belonging to the first category as compared to those belonging to the second category cannot be said to be unconstitutional. This is how the High Court answers the contention in paragraph 29 of its judgment: