The Exchange had the power to hold the inquiry under Rule 9(f) of the Rules of the Stock Exchange, which was not ultra vires, and the plaintiff had not established a cause of action against the Exchange.

QAMAR HASAN, J. : -

This appeal by the first defendant i.e., The Hyderabad Stock Exchange Ltd., is directed against the judgment and decree dated 20th Ardibihist 1358F., of Sialat Ali Khan J. in O. S. No 43 of 1356F. perpetually restraining the appellant from holding an enquiry into the complaint made by the respondents 2 and 3.

2. Shorn of all verbiage, the material facts for the disposal of this appeal lie in a short compass and may be briefly stated. The plaintiffs 2 and 3 Rangnath Rathi and D. L. Agarwal are partners of plaintiff No. 1, a firm carrying on business in shares and stocks of various limited companies under the name and style of Messrs. Rangnath Rathi and Co. The firm or more properly its partners are also members of the Hyderabad Stock Exchange Ltd., which is a company registered under the Hyderabad Companies Act (IV of 1320 F.). In this latter capacity they carry on business in stocks and shares of the approved companies according to the rules regulating such business

3. The Hyderabad Stock Exchange, hereinafter to be referred to as the Exchange, received a complaint dated 7th July 1947 from the defendants 2 and 3 N- S. Sardeshmukh and Chunial D. Agarwal charging the plaintiff with serious misconduct. A verbatim quotation of the complaint read as follows.

"It is no secret now that Mr. Ranganath Rathi partner of Messrs. Ranganath Rathi and : Co., members of the Hyderabad Exchange Ltd., had taken duplicate shares from the Mahboob Shahi Mills Ltd., on the plea that the transfer receipts in respect of the original shares were lost some time in November 1945.

It is very strange that Mr. Ranganath Rathi should mortgage both these very original and duplicate shares with two different bankers. The matter subsequently came to the notice of the Company some time in April and August 1946. The listed Bank and the listed Company also doing banking business with whom the said original and duplicate shares were mortgaged must have informed about such fraudulent action on the part of Mr. R. Rathi to the Exchange who should have taken up the matter long before, as such offences are likely to bring the constituents into trouble any moment, and, therefore, should not be allowed to pass off lightly

As such action on the part of M/s. Rathi and Co., apart from the forgery involved, is likely to belittle the prestige of an important Semi-Government Institution like this Exchange in the eyes of the public, it is proper that a confidential and independent inquiry should be conducted forthwith. Further on the findings of this inquiry, suitable action should be taken against the member concerned.

Trusting that an inquest (inquiry) will immediately be held so that the confidence of the public in this financial institution and the Brokers and the listed companies comprising it, is kept intact.

It is needless to add that proof of what is said above will come to light when the inquiry is undertaken.

SD/- Sirdeshmukh N. S.".

Enclosing a copy of the above complaint, the Exchange by its letter No. 1158 dated 21st July 1947 called upon the plaintiffs to submit what they had to say in the matter. The Exchange in continuation of the above letter addressed another letter to the plaintiffs on 17th August 1947 expressing regret at not having received a reply. As in their opinion there was a prima facie case, the complaint, they said, would be inquired into by the Board of Directors. The plaintiffs were therefore requested to be present at the Boards meeting to be held on Saturday the 23rd August 1947 at 10 a.m. sharp at the Stock Exchange premises.

The plaintiffs were to be ready with their explanation, if any, and all papers and evidence in support thereof, and also to show cause why action should not be taken against them under R. 9(2) of the Rules of the Stock Exchange. They were warned that in case they do not attend or give a satisfactory explanation, the matter would be decided ex parte.

4. On the date fixed for hearing, Rangnath Rathi addresse