The Hindu Business Line : HC upholds power of SEBI to revamp Coimbatore SE

The Madras High Court has upheld an order issued by the Securities and Exchange Board of India to restructure the Coimbatore Stock Exchange to "safeguard the securities market and the investing public".

Mr Justice V. Dhanapalan, who dismissed the writ petition preferred by the exchange challenging the SEBI order, said: "I find no infirmity in the impugned order giving directions to the Exchange".

The SEBI, in its order, restrained the Coimbatore Stock Exchange (CSX) from transferring or alienating in any manner any of its movable or immovable property.

It vested power to ensure day-to-day functioning of the CSX with a three-member committee and empowered the committee to operate the bank accounts of the Exchange.

It was not possible, the Judge said, to interfere with the impugned order since an emergent situation had arisen warranting the SEBI to pass such an order through its whole-time member to safeguard the interests of the stock market and the investing public and to ensure orderly development of the securities market in the process of development of the national economy.

The petitioner challenged the order dated April 17, 2006 of SEBI contending it was against the Securities Contract (Regulations) Act and the SEBI Act.

Opposing the petitioner's contention, the respondent (SEBI) narrated the story behind the founding of the CSX and said by efflux of time, the manner and conduct of business resulted in a situation where the role of regional stock exchanges was diminishing in trading in securities. In his 70-page order, the Judge dealt with several case laws of the Supreme Court and said in view of an emergent situation that had developed, a need arose warranting the SEBI to pass the impugned order.

The three-man committee constituted by the Court would comprise Mr V. Selvaraj (SEBI nominee), Mr C.A. Venkatesan and Mr K.R. Raman and was authorised to incur the necessary expenses to meet its cost and also operate the bank accounts of the CSX.

In view of this, the writ petition was liable to be dismissed and was accordingly dismissed.

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