The central legal point established in the judgment is the court's affirmation of the legality and validity of the administrative circular, emphasizing the need to prevent speculation based on manipulation and to protect small investors.

JUDGMENT - P.C.:—The petitioner claims to be a director of M/s. Pacific Corporate Services Ltd. and claims to be an investor in the capital market holding approximately 45 lakhs shares of respondent No. 4. He is aggrieved by the impugned circular issued by respondent No. 2 bearing No. NSE/CMO/0055/2003 dated September 23, 2003 issued as a part of surveillance review pursuant to its meeting with the respondent Nos. 1 to 3 with a view to take preventive surveillance measure to ensure market safety and to safeguard interest of investors whereby, it has moved eight securities to trade for trade segment. The members were requested to note that these securities shall not be available in rolling segment. The respondent No. 4 is one of the securities moved to trade for trade segment. According to the petitioner he being the shareholder of the respondent No. 4 holding 45 lakhs shares has been seriously prejudiced by the aforesaid decision of the respondent No. 2.

2. The learned Senior Counsel Mr. Janak Dwarkadas has made a number of submissions very emphatically assailing the circular of the respondent No. 2, inter alia, on the ground that the petitioner was not heard in the matter and even the companies, stock of which were moved to trade for trade segment, were not heard and, therefore, there was serious infraction of principles of natural justice. He has further submitted that the respondent No. 4 in the list of trade to trade segment ought to have been heard in the matter, as this decision has caused a serious prejudice to them also. He further submitted that such decisions are usually taken when there is sudden increase in the volume of turnover of the stocks in the market. The learned Counsel submits that in the scrip of the respondent No. 4, there was no such sudden increase in the volume of turnover and, therefore, it was not at all necessary to take such a decision, causing serious financial injury to the shareholders of the respondent No. 4 like the petitioner. According to Mr. Dwarkadas such an abrupt decision is arbitrary and unreasonable and is hit by Article 14 of the Constitution of India being discriminatory as the scrips of other companies, the turn over of which was much larger were not put to trade to trade segment. Picking up of the respondent No. 4, submits the learned Counsel, has in fact stigmatised the respondent No. 4. Mr. Dwarkadas has tried to elaborate from material containing statistics that there has been a serious discriminatory treatment meted out to the respondent No. 4 in particular and the stocks of the companies under the said circular. Mr. Dwarkadas has further submitted that the decision of the respondent No. 2 is illegal, biased, unilateral and in contravention of the Rules and By-laws and Regulations and the Act under which the respondent Nos. 1 to 3 are governed.

3. On the other hand Mr. Rafique Dada the learned Senior Counsel appearing for respondent No. 2 has stoutly defended its decision challenged in the present petition. He submitted that the circular is not the final decision as it would be reviewed from time to time and there was nothing permanent or static about the said circular. The learned Sr. Counsel submitted that the decision was taken by the Committee for surveillance in order to prevent speculation based on manipulation and to tune up the transactions on the basis of actual delivery of the scrips to protect small investors. He further submitted that the said decision was perfectly within the four corners of the law and based on material considered by the Committee, which is keeping surveillance on the market in the interest of small investors. It is a bona fide and lawful preventive step to protect the small shareholders. He further submitted that the petitioner holding 45 lakhs shares is not prevented from selling any number of shares with him and no harm or prejudice is caused to him. By the said circular the attempt is to stabilise the market in the interest of small investor wh

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