1996 Supreme(AP) 399

Andhra Pradesh High Court
Judges : M.H.S.ANSARI, P.S.MISHRA
Rakesh Gupta - Appellant
Versus
Hyderabad Stock Exchange Ltd - Respondent
Decided On : 05-09-96

The Court held that the Exchange was amenable to the writ jurisdiction of the High Court under Article 226 of the Constitution of India. The Court also held that the Exchange had failed to perform its public duty in the sense that it had gone beyond the mandates of the rules and the bye-laws, or in performance of the same had violated any of the fundamental rights of the petitioners. The Court further held that the moderation of marks was not permissible and that all the respondents who had been wrongly selected and taken as members at the cost of others, who, but for the bonus marks, would have been selected if not found unsuitable in the viva voce, were to be removed from membership.

Headnote:

The Court held that the Exchange was amenable to the writ jurisdiction of the High Court under Article 226 of the Constitution of India. The Court also held that the Exchange had failed to perform its public duty in the sense that it had gone beyond the mandates of the rules and the bye-laws, or in performance of the same had violated any of the fundamental rights of the petitioners. The Court further held that the moderation of marks was not permissible and that all the respondents who had been wrongly selected and taken as members at the cost of others, who, but for the bonus marks, would have been selected if not found unsuitable in the viva voce, were to be removed from membership.

Fact of the Case:

The petitioners, who were unsuccessful candidates in an examination conducted by the Hyderabad Stock Exchange Limited (the Exchange) for selection of members, challenged the selection process on the ground that the Exchange had moderated the marks allotted in the written test, thereby giving undue advantage to certain candidates. The petitioners also contended that the Exchange was not amenable to the writ jurisdiction of the High Court under Article 226 of the Constitution of India.

Finding of the Court:

The Court held that the Exchange was amenable to the writ jurisdiction of the High Court under Article 226 of the Constitution of India. The Court also held that the Exchange had failed to perform its public duty in the sense that it had gone beyond the mandates of the rules and the bye-laws, or in performance of the same had violated any of the fundamental rights of the petitioners. The Court further held that the moderation of marks was not permissible and that all the respondents who had been wrongly selected and taken as members at the cost of others, who, but for the bonus marks, would have been selected if not found unsuitable in the viva voce, were to be removed from membership.

Issues: 1. Whether the Exchange was amenable to the writ jurisdiction of the High Court under Article 226 of the Constitution of India? 2. Whether the Exchange had failed to perform its public duty in the sense that it had gone beyond the mandates of the rules and the bye-laws, or in performance of the same had violated any of the fundamental rights of the petitioners? 3. Whether the moderation of marks was permissible?

Ratio Decidendi: 1. The Court held that the Exchange was amenable to the writ jurisdiction of the High Court under Article 226 of the Constitution of India. The Court relied on the fact that the Exchange was incorporated under the Companies Act, 1956 and was recognised by the Securities and Exchange Board of India (SEBI) as a Stock Exchange. The Court also noted that the Exchange was subject to the control and regulations of SEBI and that its rules and bye-laws were required to be approved by SEBI. 2. The Court held that the Exchange had failed to perform its public duty in the sense that it had gone beyond the mandates of the rules and the bye-laws, or in performance of the same had violated any of the fundamental rights of the petitioners. The Court relied on the fact that the Exchange had moderated the marks allotted in the written test, thereby giving undue advantage to certain candidates. The Court also noted that the Exchange had not followed the procedure prescribed for inviting applications and selecting candidates. 3. The Court held that the moderation of marks was not permissible. The Court relied on the fact that the moderation of marks was not provided for in the rules and bye-laws of the Exchange. The Court also noted that the moderation of marks had resulted in giving undue advantage to certain candidates.

Final Decision: The Court allowed the writ appeal and the writ petitions to the extent indicated above. The respondent-Exchange, SEBI and the Central Government were directed to forthwith remove respondents 4 to 34 (in W. P. No. 12250 of 199-5) from the membership of the respondent-Exchange and proceed to invite fresh applications in the light of the observations made in the judgment above. It was, however, made clear that; respondents 4 to 34 shall be deemed to be members for completion of the transactions already undertaken by them, but shall not be allowed to take up any fresh transactions.