R.Bhaskaran v. The National Stock Exchange of India Ltd

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 22-11-2007CORAMTHE HON'BLE MR.JUSTICE M.JAICHANDREN Writ Petition No.4050 of 2007R.Bhaskaran.. Petitioner. VersusThe National Stock Exchange of India Ltd.,7th Floor, Arihant NITCO Park,90, Dr.Radhakrishnan Road,Chennai-600 004... Respondent. Prayer: Petition filed under Article 226 of the Constitution ofIndia praying for the issuance of a Writ of Mandamus and for thereliefs as stated therein. For petitioner : Mr.R.Bhaskaran (Party-in Person) For respondent : Mr.S.ThiruvenkatasamyO R D E RHeard Mr.R.Bhaskaran (Party-in Person), the petitioner inthe above writ petition and Mr.S.Thiruvenkatasamy, the learnedcounsel appearing on behalf of the respondent. 2. The writ petition has been filed, praying for a writ ofmandamus to direct the National Stock Exchange of India Limited,Chennai, to comply with the directions of the Securities andExchange Board of India, issued in their letter, dated24.2.2004, and to take appropriate penal action against theconcerned stock brokers, namely, M/s.Paterson and Co., Chennai.3. It is submitted by the petitioner that he had purchased200 shares of M/s.Saw Pipes Limited (later changed as M/s.TheJindal Pipes Ltd.) and the shares had been sent to the saidcompany to transfer the same in accordance with the establishedprocedure, by following the necessary formalities. However, thecompany had intimated the petitioner, after a very long delay,that the broker, who had sold the shares to the petitioner hadobtained a stay order from the Court on the ground that the https://hcservices.ecourts.gov.in/hcservices/ person who had sold the shares was not legally entitled to sellthem. The petitioner has further stated that though thepetitioner ought to have delivered the bad shares to the broker,namely, M/s.Patterson and Co., Chennai within one year from thedate of its return from the Company, expressing its inability totransfer the shares, he had not done so due to unavoidablereasons. Therefore, the petitioner had approached the NationalStock Exchange of India Limited, Chennai, to take necessaryaction against the share broker for his fraudulent act and toinvoke the penal provisions for imposing appropriate penalty onhim. However, the National Stock Exchange of India had failed todo so. Thereafter, the petitioner had appealed to the Securitiesand Exchange Board of India, which had directed the NationalStock Exchange of India to initiate action against the concernedstock broker. The National Stock Exchange of India, Limited hasnot complied with the directions issued by the Securities andExchange Board of India in their letter, dated 24.12.2004, tilldate. Hence, the petitioner has filed the present writ petition.4. In the counter affidavit filed on behalf of therespondent, it has been submitted that the writ petition isliable to be dismissed inlimine for non-joinder of necessaryparties and for latches, as the writ petition has been filedwith an inordinate delay of nearly three years. The petitionerhad not impleaded the trading member, namely, M/s.PatcoInvestments and Consultancy Services (P) Ltd. and the regulatingauthority, namely, the Securities and Exchange Board of India,as parties to the writ petition. It has been further stated thatthe respondent vide its letter, dated 30.3.2004, had placed thefacts of the case before the Securities and Exchange Board ofIndia and had been further corresponding with it with regard tothe grievance of the petitioner. Further, the petitioner had notapproached this Court with clean hands, as he has suppressed thematerial facts relating to the matter. It has also been statedthat Section 23(L) of the Securities Contracts (Regulation) Act,1956, provides for an appeal against the order or decision ofthe recognised Stock Exchange or the adjudicating Officer beforethe Securities Appellate Tribunal. Without prejudice to thepreliminary objections raised, it has also been submitted thatthe respondent is a stock exchange duly recognized by theCentral Government under Section 4 of the Securities Contracts(Regulation) Act, 1956. The respondent is a company dulyincorporated under the Companies Act, 1956 with the object ofsupporting, developing and promoting a healthy securities marketin the best interest of the investor and the general public andthe economy of the country.5. With regard to the dealing in securities, certainschemes have been specified by the Securities and Exchange Boardof India, including the good/bad delivery norms. The respondenthad received a circular from the Secondary Market Department of https://hcservices.ecourts.gov.in/hcservices/ Securities and Exchange Board of India, bearingNo.SMD/POLICY/CIR/7-97, dated 16th April 1997. As per EntryNo.97 of the Circular issued with regard to good/bad deliverynorms, the validity period of a company objection by the lastbuying broker is to be notified to the respondent/introducingbroker within 12 months from the date of the objection memo. Inview of the said prescription, upon the expiry of the validityperiod of the company objection, the company objection cannot belodged by the Receiving Member against the Introducing Member.Thus, the remedy available with the Receiving Member becomestime barred. However, the respondent had taken up the cause ofthe petitioner and had been communicating with the Securitiesand Exchange Board of India to redress the grievance of thepetitioner to the extent possible. Several communications havebeen exchanged between the respondent and Securities andExchange Board of India, with regard to the grievance of thepetitioner, as enclosed in the typed set of papers filed onbehalf of the respondent. Since the petitioner had approachedthe Securities and Exchange Board of India, directly, theSecurities Exchange Board of India has written a letter, dated15.04.2004, in reference No.SRO/SMD/SMDD/EIF/1998/6/2293,directing the respondent to look into the issue of delivery ofshares in detail for an effective redressal of the petitioner'scomplaint. Thereafter, since the petitioner had come before thisCourt by way of a writ petition, the matter had not been pursuedfurther by the respondent. 6. The learned counsel appearing for the respondent hadfurther submitted that the respondent, if so directed by thisCourt, would look into the matter further and send acommunication to The Securities and Exchange Board of India,with the necessary details in pursuance of The Securities andExchange Board of India's letter, dated 15.04.2004. 7. On such submission being made, this Court is of theconsidered view that it would suffice if the respondent isdirected to send an appropriate reply to the Securities andExchange Board of India, in reply to its letter, dated15.04.2004, within a stipulated period. 8. Accordingly, the respondent is directed to send anappropriate reply to the Securities and Exchange Board of India,with the necessary details as required by the Securities andExchange Board of India, vide its letter, dated 15.04.2004,within a period of four weeks from the date of receipt of a copyof this order. https://hcservices.ecourts.gov.in/hcservices/ With the above directions, the writ petition is disposedof. No costs.CshSd/Asst.Registrar/true copy/Sub Asst.RegistrarToThe National Stock Exchange of India Ltd.,7th Floor, Arihant NITCO Park,90, Dr.Radhakrishnan Road,Chennai-600 004.+ 1 cc to Mr. S. Thiruvenkatasamy, Advocate, SR No.69327+ 1 cc to Mr. Baskaran Party in Person, Advocate, SR No.69423RA(CO)SR/3.12.2007Writ Petition No.4050 of 2007