JUDGMENT

(PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA)

1. As the issues raised in both the above captioned petitions are the same, those were heard analogously and are being disposed of by this common judgment and order. However, we have considered the Special Civil Application No.17040 of 2012 filed by the Trading Members and shareholders of the Vadodara Stock Exchange Limited as the lead matter.

2. By this writ application under Article 226 of the Constitution of India, the petitioners herein claiming to be the Trading Members and shareholders of the Vadodara Stock Exchange Limited (for short, 'VSEL') seeks to challenge the legality and validity of the circulars dated 30th May 2012 and 13th December 2012 and the Securities Contracts (Regulation) (Stock Exchange and Clearing Corporations) Regulations, 2012, issued by the Securities Exchange Board of India (for short, 'SEBI') including the notice dated 28th November 2012 issued by the VSEL on the grounds, inter alia, that the impugned circulars, regulations and notice are ultra vires the Constitution of India and are contrary to the provisions of the Securities Contracts (Regulation) Act, 1956 and the Companies Act, 1956.

3. According to the petitioners, they are Trading Members and shareholders of the VSEL and have preferred the petition in their personal capacity as the Trading Members and also as a representative petition on behalf of the other Trading Members of the VSEL.

4. The respondent no.1 is the Union of India. The respondent no.2 is the Securities and Exchange Board of India established under the Securities and Exchange Board of India Act, 1992 (for short, 'SEBI Act') for the purpose of carrying out the functions assigned to it under the Securities Contracts (Regulation) Act, 1956 (for short, 'SCRA') and the SEBI Act. The respondent no.3 is the Vadodara Stock Exchange Limited of which the petitioners are Trading Members and shareholders.

5. The case made out by the petitioner in this petition may be summarised as under :

5.1 The VSEL, an RSE (Regional Stock Exchange) was established in the year 1990 as a company limited by guarantee. Initially, in Stock Exchanges all over the world including India, ownership and trading rights were vested upon the Trading Members of the Stock Exchanges. The VSEL was also established in the same manner and got recognition from the Government of India in the year 1990. Today, the VSEL has 289 Trading Members and 456 listed companies, out of which, 59 are exclusively listed on it. Until the expansion of the terminals of the BSE and NSE all over India, the VSEL was one of the most successful RSEs in India. In or around the year 1996-97, the turnover of the VSEL was in the range of approximately Rs.10 to 15 crore per day. Considering the share prices in those times (which would have been only 10 to 20% of today’s prices) and considering the fact that, this was prior to dematerialisation of securities in the year 2000 which led to enormous increase in trading of securities, the said per day turnover figures can be said to be enormous for those times.

5.2 Since its inception, the VSEL has initiated several steps to establish and upgrade its systems and infrastructure keeping the interest of investors in mind and in order to expand its activities. The VSEL introduced computerised system for settlement of transactions and installed systems to disseminate vital and timely information of price movement of various scrips to the investors and also set up the Investor Protection Fund to ensure increased protection of customers. Pursuant to reforms introduced whereby corporate membership in Stock Exchanges was introduced, the VSEL admitted corporate members. Recognising and appreciating the necessity of introducing Screen Based Trading at Vadodara which required a large premises, the VSEL acquired and owns a nine-storey-building having an aggreg