YOGESH JAIN Vs. UNION OF INDIA (UOI)

JUDGEMENT

(1.) MS . Enakshi Kulkshreshta, the counsel for the applicant requests that she may be allowed to withdraw the application. Request allowed. The application is accordingly dismissed as withdrawn.

(2.) WRIT petitioner is seeking prohibitory order against the respondent prohibiting them to regulate the Securities and Exchange Board of India (Stock broker and sub -broker) Rules, 1992 SEBI Rules, 1992). He also wants Regulations 1992 to be declared illegal, unconstitutional and void ab initio. He has further challenged the validity of order of prohibition for 'Sale and then purchase of shares'. According to the Petitioner by virtue of regulation excessive powers have been delegated to the SEBI. Regulation 1992 is also against the principles of natural justice.

(3.) MAIN thrust of the petitioner's arguments is that the SEBI has framed various rules and regulations which have been framed without following the provisions of the Securities and Exchange Board of India Act, 1992 ('the Act'). This according to him, amounts to excessive delegations of power. Further the rules as framed do not lay down any guidelines with regard to the minimum and maximum powers to be exercised by the SEBI for the purpose of levy of registration fees: secondly the SEBI cannot charge or levy the registration fees from the investors. Some of the brokers are also investors, Therefore, without laying down any guidelines, levy fees on such investors is against the Act and the rules framed therein. Since there is uncontrolled and unbridled power given to the SEBI without laying down minimum and maximum which is vocative of principle of natural justice. To support his contentions he placed reliance on the following decisions of the Supreme Court in the cases namely Devi Das Gopal Krishnan v. : [1967]3SCR557 , Hamdard Dawakhana v. : 1960CriLJ671 , Vasanlal Maganbhai Sanjanwala v. : 1978CriLJ1281 , Satyanaraian Bajoria v. : AIR1994SC1583 , Union of India v. Deoki Nandan Agrawal, AIR. 1992 SC 96 and of course the decision between B.S.E. Brokers Forum Bombay v. SEBI, [2001] 30 SCL 1 (SC) and lastly Transferred Case (Civil) No. 20 of 2000 (With W.P. (C) No. 502 of 2000) dated 1 -2 -2001 by the Apex Court. There cannot be any quarrel with the proposition of law laid down by the Apex Court in the above quoted cases. Admittedly the legislative power in favor of another Agency either in whole or in part is beyond the permissible limits of delegation. However, it is for the Court to strike down without any hesitation any arbitrary power conferred on the Executive by the legislature. At the same time we cannot loose sight of the fact that it is for the Court to hold on a fair, generous and liberal construction of an impugned statute whether the Legislature exceeded such limits. The question of delegated legislation came up for interpretation before Supreme Court in the case of Hamdard Dawakhana(supra) wherein their Lordship held that delegated legislation involves delegation of rule making power which constitutionally may be exercised by the administrative agent. This means the Legislature lays down the broad principles of its policy and the details are to be supplied by the administrative authority. In the words of the Apex Court, "when the delegate is given the power of making rules and regulations in order to fill in the details to carry out and subserve the purpose of the legislation the manner in which the requirements of the statute are to be met and the rights therein to be enjoyed, it is an exercise of delegated legislation. And that is precisely what has happened in this case. Therefore, the decisions relied upon by the petitioner no way advance his case nor help him in any manner. From facts on record it cannot be said that there is unbridled delegations of power in favor of SEBI. In fact observations of the Apex Court negates the arguments of the counsel for the petitioner because by virtue of Section 31 powers have been delegated to the SEBI to frame rules and regulations and at the same time reasonable restrictions have been placed on the SEBI to place such rules and regulations before the Parliament's approval. Section 31 which is reproduced as under clearly indicates that no arbitrary powers vest with the SEBI nor it is a case of excessive delegation of powers.