C.P. RADHAKRISHNAN Vs. COCHIN STOCK EXCHANGE LTD.

JUDGEMENT

(1.) THESE appeals by the various defendants in O.S. No. 175 of 1993 on the file of the Subordinate Judge's Court of Ernakulam, challenge the order of injunction granted by the trial court restraining defendants Nos. 1 to 5 from starting, functioning or organising dealings or from functioning in securities in any manner from building Nos. 36/1602 to 36/1605 in Elamkulam Village, Kanayannur Taluk, Ernakulam District, till the disposal of the suit.

(2.) THE suit, O.S. No. 175 of 1993 is filed by the Cochin Stock Exchange Ltd., a company incorporated under the Indian Companies Act and recognised as a stock exchange within the meaning of the Securities Contracts (Regulation) Act, 1956, for a declaration that the defendants are not authorised to carry on or establish or organise or assist in organising dealings in securities in any manner within the Ernakulam District and for a decree of permanent injunction restraining the defendants from establishing or carrying on or permitting dealings in stocks, shares and securities from building Nos. 36/1602 to 36/1605 of the Corporation of Cochin situate within Ernakulam District. According to the plaintiff, the plaintiff -company was established in the year 1976 with the main object of functioning as a stock exchange. The Government of India had granted recognition to the exchange and the said recognition is being renewed from time to time and at present the recognition is valid till May 9, 1994. The trading activities of the plaintiff are regulated by the memorandum and articles of association of the plaintiff -company, the provisions of the Securities Contracts (Regulation) Act, 1956, and the bye -laws of the Cochin Stock Exchange. It is the further case of the plaintiff that Sections 13 and 19 of the Act, have been brought into force in the Ernakulam District through a Gazette notification dated May 10, 1979. The said notification has been marked as exhibit A -4. It is the case of the plaintiff that in the light of this position no one other than the plaintiff is authorised to permit or organise dealings in securities in the Ernakulam District. Defendants Nos. 2 to 5 who are also members of the Cochin Stock Exchange Ltd. along with others had established another public limited company, M/s, Mayura Securities Ltd., impleaded as defendant No. 1 in the suit with a view to give membership to a large number of persons to function as stock brokers and permitting dealings in securities in their business premises. It is also averred that the first defendant -company is maintaining a trading floor in ifs place of business. According to the plaintiff, the activities carried on by the first defendant -company are illegal and are against Sections 13 and 19 of the Securities Contracts (Regulation) Act, 1956. According to the plaintiff, the various advertisements issued by the first defendant -company clearly make out that it proposes to function as a parallel stock exchange which is prohibited by law in view of the existence of the plaintiff -company as a recognised stock exchange and that, therefore, the first defendant -company is liable to be prevented from functioning as a parallel stock exchange or from establishing or carrying on or permitting dealings in stocks, shares and securities in their premises situate in Ernakulam District. In effect the plaintiffs claimed relief on the footing that the plaintiff as a recognised stock exchange is alone entitled to carry on business in securities or permit others to carry on business in securities or shares in its premises and is entitled to prevent any other rival from carrying on the said activities in Ernakulam District, Along with the suit the plaintiff also filed LA. No. 1357 of 1993 for an interim injunction restraining the defendants from carrying on their activities pending the suit.

(3.) THE application for injunction was resisted by the defendants contending that the suit as framed is not maintainable, that the plaint does not disclose a cause of action, that the plaintiff has no monopoly in carrying on trading in securities, that the plaintiff is only a rival establishment and cannot prevent another from carrying on or permitting trading in securities, that there was no violation of any of the provisions of the Securities Contracts (Regulation) Act, 1956, that the first defendant was only doing 'spot delivery contract' business which is not hit by anything contained in the Securities Contracts (Regulation) Act, that the plaintiff has no prima facie case, that the defendants have invested substantial amounts in acquiring the premises in Ernakulam and have made all arrangements for the carrying on of their business, that the balance of convenience was not in favour of the grant of injunction claimed by the plaintiff and that the application for injunction is liable to be dismissed.