LexOM PRAKASH POPLAI, RAJESH KUMAR MAHESHWARI AND ORS. ETC. versus DELHI STOCK EXCHANGE ASSOCIATION LTD. AND ORS./UNION OF INDIA AND ORS. ETC.
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A B OM PRAKASH POPLAI, RAJESH KUMAR MAHESHWARI AND ORS. ETC. v. DELHI STOCK EXCHANGE ASSOCIATION LTD. AND ORS./UNION OF INDIA AND ORS. ETC. JANUARY 14, 1994 [AM. AHMADI AND M.M. PUNCHHI, JJ.] Securities Contracts, (Regulation) Act, 1956: Section 4-Delhi Stock C Exchange-Proposal for increase in membership through public issue of shares and through dilution of shareholdinij-Approval of Central Government-- Demand of deposit~igher amount in case of members through public . issue-Whether arbitrary and discriminatory-Constitution of Expert Commit- tee appointed to Select members-Validity of-Allegation of bias-Whether D proved-Selection made-Whether arbitrary and. discriminatory. Constitution of India, 1950 : Article 14-Delhi Stock Exchange--In- crease in membership through public issue and dilution of share-hold- ing-Higher deposit demanded from one category-Constitution of Expert Committee and selection made by it-Whether arbitrary, discriminatory and E violative of. Administrative Law : Policy matters-Decision taken by Govem- ment--Court always reluctant to inteif ere. In pursuance of Section 4 of the Securities Contracts (Regulation) F Act, 1956 providing for the necessity to secure recognition for trasacting business in securities, the Delhi Stock Exchange secured recognition from the Central Government. With the passage of time the volume of work Sincreased and in view of the limited membership the Delhi Stock Exchange experienced difficulties in the matter of servicing the investors. Hence it G proposed to increase the Membership. Central Government approved the proposal of increasing the membership by 250 members, that is 125 member~ through public issue of shares and 125 members through dilu· tion for shareholding of each member from two shares to one share. All new members were to pay an admission fee of Rs. 1 lakh. The members admitted~through public issue of shares and through dilution of existing H shareholding we~ reqqired to pay an additional non-refundable deposit 120 r POPALl/MAHESHWARI v. DELHISTOCKEXCHANGE/U.0.1. 121 of Rs. 3 lakhs and Rs. 1 lakh, respectively, which amount was to be utilised A x by the Stock Exchange for making provision to improve the services and providing a better infrastructure. The selection of 250 members was to be made on objective criteria taking into consideration the applicants' experience, professional B qualifications and other relevant factors through an Expert Committee. The issue of shares through dilution of existing members was restricted to . ,#· assistants of members of the Delhi Stock Exchange, daughters/sons or direct dependents of the members. By a subsequent letter, the Central ....... ~ Government modified the term regarding deposit money by making it transferable. c Two Writ Petitions came to be filed before the High Court, one challenging the terms of approval granted by the Central Government and the inclusion of Directors/Members of the Delhi Stock Exchange as Mem- hers of the Expert Committee, and the other challenging the non-selection D of the Writ Petitioner. Both the Writ Petitions were dismissed and hence the present appeals. The Writ Petition filed in this Court also challenged the rejection of the Petitioner's application for being admitted· to the membership of the Stock Exchange. Dismissing the matters, this Court E HELD : 1. The High Court rightly rejected the plea of the appellants that the approval granted by the Central Government by letter of 5th February, 1987, was violative of Article 14 of the Constitution as those ~ seeking membership through public issue of shares constitute a class by themselves only and distinct from the class comprising those seeking F membership through dilution of shareholding of existing members. There- fore, the condition in regard to higher deposit from those belonging t.o the first category as compared to those belonging to the second category cannot be said to be unconstitutional. (127-F-GJ Rajesh Kumar Maheshwari v. Union of India & Ors., reported in A.I.R. G 1992 Delhi 68, approved. 2. As per the Memorandum of Articles of Association of the Delhi Stock Exchange the selection of members for the Expert Committee was made by the Board of Directors. The validity of that provision was not put H 122 SUPREME COURT REPORTS (1994] 1 S.C.R. A in question. Therefore, it cannot be said that the constitution of the Expert Committee was arbitrar
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