DR. D.Y.CHANDRACHUD, J.

1. Rule, by consent returnable forthwith. With the consent of Counsel and at their request the Petition is taken up for hearing and final disposal.

2. The Whole Time Member of the Securities and Exchange Board of India has rejected an application filed by the Petitioner for permission to undertake business as a Stock Exchange, other than for the Currency Derivatives Segment. The order is under Section 4 of the Securities Contracts (Regulation) Act, 1956 (SCRA) and Sections 11(1) and 19 of the Securities and Exchange Board of India Act, 1992. The Petition challenges the legality of the order.

3. For convenience of exposition, this judgment is divided into Parts, which are as follows:

? I - Facts (Paragraphs 4-27).

? II - Show Cause Notice by SEBI and the Impugned order. (Paragraphs 28-30)

? III – Submissions (Paragraphs 31-36).

? IV – The SCRA and MIMPs Regulations (Paragraphs 37-46).

? V - Role of Stock Exchanges (Paragraphs 47-53).

? VI – Regulation 4 and Regulation 8 (Paragraphs 54-55).

? VII – The process of dilution (Paragraphs 56-57).

? VIII – Share warrants (Paragraphs 58-62).

? IX – Buy back arrangements (Paragraphs 63-66).

? X – Dut