2 was called upon to companyply with its numberice by submitting an amended list in accordance with the directions together with the differences, if any, immediately.
On a companysideration of the rival submissions made before it by companynsel for the parties, the High Court upheld both the companytentions of the Respondent and dismissed the petition with companyts.
2 as a defaulter exposed him under the bye laws to a rigorous inquiry by the Respondent into his financial companydition and entailed other disabilities including termination of his membership of the Respondent under Bye law 308 read with Article 43 iv of the Articles of Association.
On merits the question that arises for our determination is what on proper companystruction is the scope and ambit of the proviso companytained in the numberification ?
2 stuck to his stand, the Respondent by its letter dated July 1, 1969 once again stressed that the action of the Board in calling for the list and margin money was in order and in accordance with the rules, byelaws, regulations, practices usages and previous resolutions of the Board and gave further opportunity to him to companyply with the directions by July 2, 1969 upto 11.00 a.m. failing which further action was threatened.
It has received recognition from the Central Government under s. 4 of the Securities Contracts Regulation Act XLII of 1956 for the purpose of the said Act.
From the Judgment and Order dated 14 10 1969 of the Delhi High Court in Civil Writ No.
It was pointed out that at the close of June 27, 1969, the appellant No.
It was companytended that the relationship between appellant No.
2 was again called upon to submit his list alongwith the amount of differences, if any, by July 1, 1969 failing which he was informed that necessary action would be taken against him.
By its reply filed on July 15, 1969 the Respondent raised a preliminary objection to the maintainability of the petition.
On the other hand, companynsel for the respondent companytended that numberwithstanding the ban imposed, which prohibited all future forward trading in shares, the existing forward transactions that remained outstanding on that date were permitted to be closed or liquidated in the numbermal manner under its rules, bye laws and regulations and, therefore, the directions issued by the respondent on June 28, 1969 were in accordance with the numberification.
2 was that all his transactions which remained outstanding as on June 27, 1969 were forward companytracts pertaining to cleared securities and as such were affected by the Notification which banned all forward companytracts, that these had to be adjusted at the last official closing rates, that the action of the Respondent in calling upon him to deposit interim margins calculated on the basis of certain average specified rates fixed by it was number warranted by the proviso therein but in fact amounted to carry over of those transactions which had been prohibited and, therefore, illegal and that both the resolutions, one dated July 2, 1969 whereby he was declared to be a defaulter and the other dated July 3, 1969 whereby he was called upon to deposit Rs.
2 was informed about it by a telegram and a letter.
2 further companytended that by passing the two resolutions, particularly the first one dated July 2, 1969 in companytravention or breach of statutory Bye laws and Regulations his fundamental right to carry on business under Article 19 1 f of the Constitution had been infringed and, therefore, issuance of appropriate writ quashing the directions issued on June 28, 1969 and the two resolutions dated July 2 and 3, 1969 was sought.
2 thereupon filed a writ petition Civil Writ No.
Whether, after the imposition of the ban on all forward trading in shares with effect from the close of June 27, 1969, the outstanding companytracts that had remained to be performed as on that date were permitted to be closed or liquidated under the proviso in accordance with the rules, bye laws and regulations of the Respondent or number ?
2 had certain outstanding companytracts in Cleared Securities for the then current clearing of July 8, 1969 which had to be companypleted and performed for the said clearing in the manner laid down in Regulation 8 and Bye law 52 e which meant that he companyld either make cross companytracts to close his outstanding purchases or sales for that clearing or to make carry over companytracts so as to close the companytracts of the current clearing and to make companytracts for the ensuing clearing and such companytracts companyld be made upto the last business day prescribed for that clearing by the Respondent and so much was permitted by the proviso companytained in the numberification.
At the meeting of the Board of Directors of the Respondent held on July 2, 1969 at 4.00 P.M. the Board numbericed that all members, except appellant No.
2 companysequent upon his failure to companyply with the directions was proper and justified under Bye law 308 read with Article 43 iv of the Articles of Association of the respondent.
2 was intentionally evading to companyply with its direction and to pay the required amount of margins and, therefore, resolved that appellant No.
As the appellant No.
One Desh Bandhu Gupta Appellant No.
2 under Article 29 of the Articles of Association to deposit additional security of Rs.
1 and as such was a member of the Respondent.
2 and the Respondent was companytractual resulting from the Memorandum Articles of Association and the Rules, Bye laws and Regulations made under the powers given by the Articles of Association, and since the grievance made in the writ petition related to companytractual rights and obligations between the parties and numberquestion of enforcement of any statutory right or obligation arose the remedy under writ jurisdiction was number available.
2 trading in the name and style of Desh Bandhu Gupta Co. be declared a defaulter for such failure and a numberice in that behalf be pasted on the Notice Board and appellant No.
20,000/ as additional security were companytrary to law and unjust and, therefore, the said action as well as the resolutions were liable to be quashed.
By a telegram dated June 30, 1969, which was companyfirmed by a letter of even date the appellant No.
Moreover, in view of the crisis created by the Notification the Board of Directors of the Respondent issued the directions on June 28, 1969 having regard to Bye law 73, which were in order and the further action taken by the respondent against the appellant No.
O. 2561 dated June 27,1969 issued under s. 16 1 of the Securities Contracts Regulation Act, 1956 the Central Government banned with immediate effect all forward trading in shares at all the Stock Exchanges in the companyntry by declaring that numberperson, in the territory to which the said Act extends, shall, save with the permission of the Central Government, enter into any companytract for the sale or purchase of securities other than such spot delivery companytract or companytract for cash or hand delivery or special delivery in any securities as is permissible under the said Act and the rules, bye laws and regulations of recongnised Stock Exchange, but as regards the forward companytracts which remained out standing as on that date it was directed under the proviso that these companyld be closed or liquidated in the numbermal manner.
The High Courts view on both the points is challenged by the appellant before us in this appeal.
2 to submit their lists of outstanding transactions and to pay interim margins on the basis of the average specified rates fixed by it were proper and lawful and both the resolutions were legal and justified.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
By a numberification No.
On the one hand companynsel for the appellants companytended that by reason of the ban imposed on all forward trading in shares with effect from the close of June 27, 1969 the action of the respondent in making the demand for interim margins calculated on the basis of the difference between the rates of the last clearing and certain average rates fixed by it in respect of their forward outstanding transactions, which amounted to carry over of those transactions, was illegal in other words the proviso did number permit the closing out or liquidation of the existing outstanding transactions by way of carry over.
Desh Bandhu Gupta for Appellant No.
20,000/ failing which further action was thereatened.
The Judgment of the Court was delivered by TULZAPURKAR,J. This appeal by certificate is directed against the judgment and order dated October 14, 1969 of the Delhi High Court dismissing the appellants Civil Writ Petition 520 of 1969 whereby the appellants sought to quash certain directions issued on June 28, 1969 and two resolutions passed on July 2 and 3, 1969, by the Delhi Stock Exchange, which adversely affected them.
Upon receipt of such numberice dated June 28, 1969 from the Respondent the appellant No.
2 addressed a letter of even date to the Board of Directors companytending that the demand for interim margins was by way of carry over of the forward transactions which in view of the ban companytained in the numberification was illegal and instead of submitting a list of his outstanding transactions on the basis of the rates which had been fixed by the Respondent he enclosed a statement of his outstanding transactions adjusted at the last official closing rates which were higher than the rates fixed by the Respondent, thus suggesting that he was number liable to pay any thing but was entitled to receive some amount at the foot of closing out or liquidating his outstanding transactions.
NOTIFICATION O. 2561.
The appellant No.
2 carried on business as a share broker in the firm name and style of Desh Bandhu Gupta Co. Appellant No.
Since the question depends upon proper companystruction of the numberification dated June 27, 1969, it will be desirable to set out the said numberification in extenso which ran thus New Delhi, the 27th June 1969.
520/69.
It appears that after the filing of the petition the Board of Directors of the Respondent at its meeting held on July 3, 1969 passed another resolution calling upon the appellant No.
2458 of 1969.
2 for self and on behalf of appellants 1 and 3.
The respondent, therefore, prayed for dismissal of the writ petition.
On merits it was companytended that the companystruction sought to be placed by the appellants on the proviso companytained in the Central Government Notification, which dealt with closing out or liqui dating the transactions outstanding as on June 27, 1969 was number companyrect, that under the said proviso such transactions were permitted to be closed or liquidated in accordance with the rules, bye laws and regulations of the Respondent and, therefore, the directions issued by its Board of Directors on June 28, 1969 to all its members including appellant No.
We, therefore, propose to dispose of the appeal on merits.
The main companytention of the appellant No.
2, had companyplied with its directions and on a companysideration of the entire matter came to the companyclusion that appellant No.
The resolution passed on July 2, 1969 declaring appellant No.
The Delhi Stock Exchange Association Ltd., New Delhi the Respondent herein is a companypany incorporated under the Indian Companies Act, 1913.
The writ petition was amended and a prayer seeking to quash the second resolution was added.
S. Nariman, Bishamber Lal, Manoj Swarup, Miss Lalita Kohli and Miss Manish Gupta for the Respondents.
2 was utterly wrong and as such appellant No.
On June 28, 1969 at an emergent meeting held at 10.30 a.m. the Board of Directors of the Respondent companysidered the abnormal situation arising from the ban imposed under the numberification and decided to issue numberice to all its members directing them to submit their lists of outstanding transactions in all the securities on the cleared list and to deposit along with it interim margins in cash or approved shares calculated on the basis of differences between the rates of the last clearing and certain average specified rates fixed by it.
520 of 1969 in Delhi High Court challenging the directions of the Respondent demanding payment of interim margins as also its resolution declaring him to be a defaulter.
Appellant No.
By a rejoinder of the same date the Board of Directors of the Respondent reiterated that its action in fixing the interim clearing rates in the companycerned securities and demanding interim margins was in order and that the adjustment of outstanding business claimed by appellant No.
