DEEPAK DEWAN Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner challenges the guidelines dated 9.4.1990 (Annexure A) issued by the Central Government read with the Press Release dated 12.11.1990 (Annexure B) issued by the 3rd respondent (SEBI), as well as the Press Note dated 11.3.1991 (Annexure C) issued by the Union of India, which purport to regulate the business of Merchant Banking.

(2.) Petitioner is an Advocate and adm ittedly "engaged primarily in advisory and con - sultancy work in areas relating to issue of capital by Public and Private Companies". The nature of the advisory work is explained in para 4 of the writ petitioner, which indicates that the said work is mostly the work performed by any Advocate. Though the petitioner asserts that his activities are commonly and popularly known as "Merchant Banking" activities, it seems to me, that these activities do not exhaust the activities of "Merchant Banking", because the activities of the petitioner do not cover any kind of "Underwriting" or "Portfolio management". His activities, are the activities of a "legal advisor'.

(3.) Annexure 'A' (Press Release dated 9.4.1990 issued by Government of India) bears the hearing "Banking Guidelines for Merchant Bankers". Para I states that any person to engage in the business of merchant banking would need authorisation by the SEBI. This requirement has to be meteven by the 'managers', 'consultants' or 'advisors' to issues. Authorised Activities are enunciated in para 2. Para 3 requires all merchant bankers to perform with high standards of integrity and fairness. A code of conduct for merchant bankers will be prescribed by SEBI and within this context SEBI's authorisation criteria would take into account mainly - (a) Professional competence; (b) Personnel, their adequacy and quality, and other infrastructure) Capital adequacy; (d) Past track record. experience, general reputation and fairness in all their transactions. Para 4(a) requires all merchant bankers to obtain authorisation from SEBI within three months from the issue of these guidelines. Petitioner is very much aggrieved by para 4(b), (d) and (h) which read thus:-