DELHI STOCK EXCHANGE ASSOCIATION LTD. Vs. CUSTODIAN

JUDGEMENT

(1.) This application has been taken out by the Delhi and Mumbai Stock Exchanges for clarification of Order dated 19th Oct., 1993. By that Order, this Court established a process of certification. Under that Order, the Stock Exchanges could certify whether a person is or is not a bona fide purchaser for value. This provided the concerned shares had been acquired from or through a member for the Stock Exchanges or a sub-broker. It appears that in many cases there are more than one sub-brokers. The Stock Exchanges therefore seek permission to certify even though there are more than one sub-brokers.

(2.) Mr. Tulzapurkar submitted that the whole purposes of the Order was to see that shares in possession of a bona fide purchaser for value without notice are not affected by attachment of this Court. He submitted that the purpose is that small shares purchasers are not forced to come to Court. He submitted that it made no difference whether there was one sub-broker or more than one sub-brokers. He submitted that the Court should permit the petitioners and other Stock Exchanges to undertake the process of certification even though more than one sub-broker was involved.

(3.) Undoubtedly, the purpose of the Order was to safeguard bona fide purchasers for value. However, the Stock Exchanges were authorised to certify in cases where the purchase was through a member or sub-broker attached to that member. Whilst it is clear that there could be more than one sub-brokers, it necessarily follows that all the sub-brokers involved must be sub-brokers of some members of the Stock Exchanges. If the sub-broker is not a sub-broker of a member but for example, is a sub-broker of a sub-broker, then the Stock Exchanges cannot undertake certification.