A.P. SHAH, J.:---Rule is issued and is made returnable forthwith.

2. This writ petition under Article 226 of the Constitution has been filed for the issue of writ of certiorari to quash and set aside the order dated 12-3-2001 and the circular of even date issued by the Securities and Exchange Board of India (S.E.B.I.) in exercise of powers under section 11 read with section 11-B of the Securities and Exchange Board of India Act, 1992, hereinafter referred to as the said Act. The petitioners are also seeking to quash orders dated 30-3-2001 and 13-4-2001 passed by the S.E.B.I. confirming the order dated 12-3-2001.

3. The 1st petitioner is a broker at the Bombay Stock Exchange and he was President of the Stock Exchange during the relevant period. The petitioner Nos. 2 to 5 are private limited companies engaged in broking, investments, banking etc. The respondent No. 1 S.E.B.I. is constituted under section 3 of the said Act. The respondent No. 2 is the Bombay Stock Exchange which is recognized under the said Act and is a leading Stock Exchange in the country. The respondent No. 2 is regulated by the S.E.B.I. under the Securities Contracts (Regulations) Act, 1956 and the said Act.

4. A few months ago on 28-2-2001, the Finance Minister introduced what was widely seen as "an investor friendly budget". The general expectation was that the stock markets in the country would be buoyed by such a budget. In fact between 28-2-2001 and 1-3-2001 itself, as a reaction to the budget, the sensex rose by 201 points. However, on the next day i.e. 2-3-2001 there was a sudden and unexpected fall in the stock market and the sensex dropped by a total of 176 points. In the wake of the drastic and totally unexpected fall in the market and apprehending possible attempts to manipulate the securities market, investigations were undertaken by the S.E.B.I. Some news papers carried articles alleging that the 1st petitioner who was the President of Stock Exchange had illegally obtained some price/market sensitive information obtained from an officer of the surveillance department in the presence of certain other brokers. During the investigation the transcripts of telephonic conversion revealed that the 1st petitioner had obtained information in respect of certain specific scripts and brokers on 2-3-2001 from Shri Arun Dhanawade, a Junior Officer of the Surveillance Department of the Bombay Stock Exchange. The 1st petitioner resigned from the post of President on 7-3-2001.

5. On 12-3-2001 the Chairman of the S.E.B.I. in exercise of powers under section 11 read with section 11-B of the said Act passed the impugned order which reads as follows :

"SECURITIES AND EXCHANGE BOARD OF INDIA"

ORDER UNDER SECTIONS 11 11-B OF THE S.E.B.I. ACT."

"There have been allegations that a broker office bearer of the Bombay Stock Exchange obtained information from the surveillance department of the exchange on March 2, 2001 the day on which the sensex fell by 175 points. It has been verified as to whether Mr. Anand Rathi (Ex. President of the B.S.E.) had obtained information in respect to certain specific scrips and brokers on March 2, 2001 from Mr. Arun Dhanwade an official of the Surveillance Department of the Bombay Stock Exchange.

In this connection it may be mentioned that S.E.B.I. had issued circular No. IEM/LKS/MI/2990/95 on August 8, 1995 regarding setting up of Surveillance Department. It was stated in the said circular that it is the responsibility of the stock exchanges to monitor brokers positions, margins etc. Therefore it was directed by S.E.B.I. that each stock exchange shall have a separate surveillance department. This department would report solely to the Executive Director. In this regard in the subsequent circular dated December 6, 1995 it was stated that Executive Director would be directly responsible for the proper and independent functioning of the surveillance department in the stock exchange. It was also advised in the circular dated May 25, 2000 tha