TULSI D.BHAYANA Vs. BHUBANESWAR STOCK EXCHANGE

JUDGEMENT

(1.) BY this petition under Article 226 of the Constitution of India, the petitioner has prayed for quashing the notice dated 16.1.2003 under Annexure -12 issued by opposite party No.3 being the Administrator of Bhubaneswar Stock Exchange, Bhubaneswar expelling the petitioner form membership of the said Exchange.

(2.) THE case, in brief, is that the petitioner is a Chartered Accountant. He is one of the promoter members of Bhubaneswar Stock Exchange, a corporate body incorporated under the Indian Companies Act, 1956. Bhubaneswar Stock Exchange was given recognition by the Stock Exchange Division, Ministry of Finance, Government of India in the year 1989 under the provisions of Securities Contracts (Regulation) Act, 1956. Petitioner is also a registered stock broker with the Securities and Exchange Board of India (hereinafter referred to as "SEBI"). As a member of Bhubaneswar Stock Exchange petitioner has a right to carry on business of stock broking at Bhubaneswar Stock Exchange. It is the further case of petitioner that he is also a Director of the Indian Finance Guaranty Ltd. (hereinafter referred to as "IFGL"). Said IFGL is a corporate member of the equity market segment of National Stock Exchange (hereinafter referred to as "NSE") since 1996. Said IFGL as a member of equity market segment is also a registered stock broker with SEBI. Said IFGL is carrying on business on stock broking in its offices at Bhubaneswar, Delhi, Hissar and Meerut. Bhubaneswar Stock Exchange is a Company Limited by Guarantee registered under Section 25 of the Companies Act, 1956, which was incorporated on 17.4.1989 with the Registrar of Companies, Orissa.

(3.) THE Bhubaneswar Stock Exchange by its letter dated 24.9.2001 requested the Chairman of SEBI for an enquiry into the allegations of siphoning of funds of the Trust. In this connection an elaborate report of the members of the Trust form its inception till 22.9.2001 which included, inter alia, the details of various loans sanctioned by the Trust form time to time since its inception, security taken against such loan, the name of the office bearer of the Bhubaneswar Stock Exchange and Members Welfare Trust on the date on which such loans were sanctioned, details of outstanding loans etc. as considered necessary by the Council of management of Bhubaneswar Stock Exchange in its meeting held on 22.9.2001 was forwarded to SEBI along with the aforesaid letter dated 24.9.2001. It is stated that SEBI is the ultimate regulatory body in India constituted under the Securities and Exchange Board of India Act, 1992 for regulating the stock exchanges and stock brokers. In response to the aforesaid request made by the Bhubaneswar Stock Exchange by its letter dated 24.9.2001, Chairman of SEBI in exercise of his power conferred upon him by or under Sub -section (3) of Section 6 of the Securities Contracts (Regulation) Act, 1956 appointed an Enquiry Officer on 28.9.2001 to enquire into the affairs of the said Trust and various allegations made in this regard. Accordingly, the enquiry team visited the Stock Exchange of Bhubaneswar on 1.10.2001 and conducted elaborate investigation into the affairs of the Trust.