KRISHNARAJ GOSWAMI Vs. RESERVE BANK OF INDIA

JUDGEMENT

(1.) ON 22nd December, 2006, the Reserve Bank of India issued the following circular. <FRM>JUDGEMENT_442_TLMHH0_2007Html1.htm</FRM>

(2.) THE petitioner, an Advocate, has challenged the legality of the above circular in the present writ petition and has prayed that the said circular be quashed.

(3.) IT is contended on behalf of the petitioner that the said circular is unconstitutional, without jurisdiction and is ultra vires the provisions of Foreign Exchange Management Act, 1999 (hereinafter referred to as "the Act") and Rules framed thereunder, as no power is vested under Section 10 (4) and 11 (1) of the Act which empowers and authorises the Reserve Bank of India to issue such circulars. On the basis of the averments made in the petition, the petitioner has also raised an issue that the Stock Exchange is not an infrastructure company but is a regulatory body and it cannot be allowed to function for profit. The impact of the impugned circular is putting restrictions on the trade activities of the general corporate sector which does not fall within the ambit and scope of the Reserve Bank of India. The government of India took a policy decision and vide circular dated 22nd december, 2006, issued by Securities and Exchange Board of India, it has been decided to permit foreign investment subject to the restrictions and classifications made in that Circular. The circular reads as under:-