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2007(8) Supreme 121
Supreme Court of india
(From Bombay High Court)
Ashok Bhan & V.S. Sirpurkar, JJ.
Veneet Agrawal — Petitioner
versus
Union of India & Others — Respondents
Appeal (civil) 2565 of 2005
Civil Appeal No(S). 7574 of 2005
Decided on : 31-10-2007
1966 (1) SCR 505; (1979)2 SCC 196; (1972) 2 SCC 601; (2003) 2 SCC 721; (2003) 12 SCC 738 – Relied upon.
(b)SEBI Act, 1992 – Section 31 – The provision requiring laying of Rules and Regulations before Parliament was directory and not mandatory – Therefore non-compliance with the laying of the rule before the Parliament is not a sufficient ground to declare the rules/ regulations framed under the statute as to be ultra vires.(Paras 14 to 16)
(2000) 8 SCC 655; (2001) 6 SCC 307 – Relied upon.
(c)Judicial Review – Validity of Statute – Even though Regulation 10 of the SEBI Regulations, 1992 had been held valid, repeated attempts were being made to get it declared ultra vires – Once the regulations are declared to have been validly made then it is not open to argue that the same was not examined from a particular angle and the court should re-examine it again – It is especially so, when the counsel appearing before the Supreme Court had appeared in the earlier cases as well – Appeal dismissed with cost.(Paras 18 and 19)
2001 (3) SCC 482 – Referred.
Facts of the case:
1.Principal challenge to the Rules & Regulations of 1992 is based on the contention that the Rules & Regulations were not laid before each Houses of the Parliament as mandated by Section 31 of the Securities and Exchange Board of India Act, 1992.
Findings of the Court:
The SEBI Regulations are intra vires.
Result : Appeal dismissed with cost.
judgment
BHAN, J. —
1. This judgment shall dispose off Civil Appeal No. 2565 of 2005 directed against the judgment of the High Court of Bombay in Writ Petition No. 1414 of 2004 dated 29.06.2006 and Civil Appeal No. 7574 of 2005 directed against the judgment of the High Court of Uttaranchal at Nainital in Civil Misc. Writ Petition No. 606(M/B) of 2002 dated 17.10.2003. The point involved being the same, the appeals are disposed off by a common order.
2. By the impugned judgments, the High Court of Bombay and Uttaranchal have upheld the vires and constitutionality of SEBI (Stock Brokers and Sub Brokers) Rules and Regulations, 1992 (for short “the Rules & Regulations of 1992). The facts are taken from Civil Appeal No. 2565 of 2005. Although in the writ petition several other points were also taken but at the time of argument before the High Court, the learned counsel appearing for the writ petitioners confined his submissions to the question of vires of the rules and regulations only.
3. Principal challenge to the Rules & Regulations of 1992 is based on the contention that the Rules & Regulations were not laid before each Houses of the Parliament as mandated by Section 31 of the Securities and Exchange Board of India Act, 1992 (for short “the Securities and Exchange Act). It will therefore be essential to reproduce Section 31 of the said Act as the entire argument is placed on the requirement of the said Section. Section 31 reads as under:
“Rules and regulations to be laid before Parliament.—Every rule and every regulation made under this Act shall be laid, as soon as may be after it is made, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule of regulation or both Houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation.”
4. SEBI is a regulatory body which has been established under the SEBI Act with the objective of protecting the interest of investors in the securities and of promoting the development of and to regulate, the securities market and for matters connected therewith or incidental thereto. Under Section 29 of the SEBI Act, the Central Government is empowered to frame rules for carrying out the purposes of the Act. Under Section 30 of the SEBI Act, the SEBI is empowered to frame regulations consistent with the SEBI Act and the rules made thereunder to carry out the purposes of the Act. Section 31 of the SEBI Act, however, provides that every rule and regulation made under the Act would be required to be laid before each House of the Parliament, while it is in session, for a total period of 30 days which may comprise in one session or two or more successive sessions. It is further provided therein that if after such laying, both the houses agree that the rules/regulations should not be made then the same would be of no effect. In case, if both the Houses agree in making any modification in the said rules or regulations, then the rules or regulations shall have effect only in such modified form. However, any such modification or annulment shall be without prejudice to the validity of any act previously done under that rule or regulation.
5. Before proceeding further, it may be mentioned that under Regulation 10 of the SEBI Act, 1992, the Registration fee is levied on the annual turnover of the stock brokers and sub brokers. Levy of turnover fee as well as the vires of Regulation 10 was challenged in different high courts by filing writ petitions soon after the said regul
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