1979 Supreme(SC) 163

SUPREME COURT OF INDIA
R.S. SARKARIA, V.D. TULZAPURKAR AND A.P. SEN, JJ.
Desh Bandhu Gupta and Co. and others, Appellants
Versus
Delhi Stock Exchange Association Ltd., Respondent.
Civil Appeal No. 2458 of 1969, D/- 23-2-1979.
Advocates appeared
Mr. Desh Bandhu Gupta-Appellant No. 2 for self and on behalf of Appellants, 1050 Nos. 1 and 2, Mr. F. S. Nariman, Sr. Advocate (M/s Bishamber Lal, Manoj Swarup, Miss Lalita Kohli and Miss Manish Gupat Advocates with him), for Respondents.

Headnote:

Securities Contracts (Regulation) Act, 1956 – Sections 16, 4 – Indian Companies Act, 1913 – Quashment of Direction – Appeal by certificate is directed against the judgment and order of the Delhi High Court dismissing the appellants Civil Writ Petition whereby the appellants sought to quash certain directions issued and two resolutions passed by the Delhi Stock Exchange, which adversely affected them. – Delhi Stock Exchange Association Ltd., New Delhi (the Respondent herein) is a company incorporated under the Indian Companies Act, 1913. – 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. – One Desh Bandhu Gupta (Appellant No. 2) carried on business as a share-broker in the firm name and style of Desh Bandhu Gupta & Co. (Appellant No. 1) and as such was a member of the Respondent. – By a notification No. S. O. 2561, 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 country by declaring that "no person, in the territory to which the said Act extends, shall, save with the permission of the Central Government, enter into any contract for the sale or purchase of securities other than such spot delivery contract or contract 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 a recognised Stock Exchange", but as regards the forward contracts which remained outstanding as on that date it was directed under the proviso that these could be closed or liquidated in the normal manner. – Held, It may be stated that it was not disputed before us that these two documents which came into existence almost simultaneously with the issuance of the notification could be looked at for finding out the true intention of the Government in issuing the notification in question, particularly in regard to the manner in which outstanding transactions were to be closed or liquidated. – The principle of contemporanea expositio (interpreting a statute or any other document by reference to the exposition it has received from contemporary authority) can be invoked though the same will not always be decisive of the question of construction. – In Crawford on Statutory Construction (1940 Edn.) in para 219 (at pp. 393-395) it has been stated that administrative construction (i.e.contemporaneous construction placed by administrative or executive officers charged with executing a statue) generally should be clearly wrong before it is overturned; such a construction commonly referred to as practical construction although not controlling, is nevertheless entitled to considerable weight it is highly persuasive – Even without the aid of these two documents which contain a contemporaneous exposition of the Governments intention, court have come to the conclusion that on plain construction of the notification the proviso permitted the closing out or liquidation of all outstanding transactions by entering into a forward contract in accordance with the rules, bye-laws and regulations of the respondent. – It will be clear that the directions issued by the respondent to all its members including appellant No. 2 on June 28, 1969 in regard to their outstanding transactions as at the close of June 27, 1969 were proper and legal and the appellants stand was clearly erroneous. – It cannot be disputed that ample opportunity was given to appellant No. 2 to comply with the directions but the appellant persisted in his erroneious contention and failed to comply with those directions with the result that the respondent had no alternative but to declare him a defaulter. – Directions as well as the two resolutions passed by the respondent were proper and justified and the appellants case on merits was rightly rejected by the High Court. – This conclusion of ours, as stated at the commencement of the judgement, renders unnecessary the determination of the preliminary objections. – Appeal Dismissed