Judgment

AHMADI, J.-The Delhi Stock Exchange Association Ltd. came to be incorporated under the Companies Act, 1913 on June 25, 1947. The Securities Contracts (Regulation) Act, 1956 was brought into force with effect from February 20, 1957, with a view to preventing undesirable transactions in securities by regulating the business of dealing therein. Certain other incidental provisions prescribing prohibitions etc. were also made therein. Section 4 provided for the necessity to secure recognition for transacting business in securities. In pursuance thereof, the Delhi Stock Exchange secured recognition from the Central Government. With the passage of time the volume of work increased and the total number of members who could transact business in securities in the Delhi Stock Exchange being limited certain difficulties were experienced in the matter of servicing the investors. On the one hand there was the problem of servicing the investors; with the number of members being small there was also considerable difficulty experienced on account of the paucity of accommodation. Correspondence ensued between the Delhi Stock Exchange and the Central Government in this connection to find the ways and means to improve the working of the Delhi Stock Exchange with a view to providing improved services to the investors. Ultimately on February 5, 1987, the Government of India while replying to the letter of the Delhi Stock Exchange dated January 15, 1987, conveyed its approval to the proposal for increasing membership subject to certain conditions as under:

"(i) The membership of the Stock Exchange be increased by 250 members, that is:

(a) 125 members through public issue of shares; and

(b) 125 members through dilution of shareholding of each member from two shares to one share."

It was provided that all new members shall have to pay an admission fee of Rs 1 lakh. New members admitted through public issue of shares and through dilution of existing shareholding were required to pay to the Delhi Stock Exchange an additional non-refundable deposit of Rs 3 lakhs and Rs 1 lakh respectively which amount was to be utilised by the Delhi Stock Exchange for making provision to improve the services and providing a better infrastructure. The selection of 250 members was to be made on objective criteria taking into consideration the experience, professional qualifications and other relevant factors through an Expert Committee to be constituted for that purpose. The issue of shares through dilution of existing members was, however, restricted to authorised assistants of members of Delhi Stock Exchange, daughters/sons or direct dependents of the members. The Delhi Stock Exchange was directed to take immediate steps to increase the membership on the aforesaid terms and conditions. By a subsequent letter dated February 12, 1987, the Central Government modified the term in regard to the deposit money by making it transferable. While this correspondence was in progress a writ petition was filed by one Mr Saigal, being Civil Writ Petition No. 12223 of 1985, in which certain interim orders were made. It is, however, not necessary to refer to the same because after the Central Governments approval conveyed by the letter of February 5, 1987, that writ petition became infructuous and was so disposed of by the order dated February 18, 1987. However, on June 10, 1987, one Rajesh Kumar Maheshwari filed a writ petition in the High Court of Delhi questioning the terms of the approval granted by the Central Government on the ground that they were arbitrary, illegal and void being discriminatory and contrary to public policy and prejudicial to public interest. Obviously, the challenge was based on Article 14 of the Constitution. The constitution of the Expert Committee was also questioned as violative of Article 14 on account of the inclusion of Directors/Members of the Delhi Stock Exchange in the Expert Committee. The High Court rejected the contentions urged in support of t