SC dismisses petition seeking derecognition of Bombay Stock Exchange
The Supreme Court has dismissed a petition seeking action against the Centre, Securities and Exchange Board of India (SEBI) and derecognition of Bombay Stock Exchange (BSE) for not being able to protect and safeguard the interests of investors.
Petitioner Mahesh Ratilal Shah, who had alleged that he was induced by BSE and its members to buy 4,50,800 shares of Presto Finance Ltd. under the assurance of the exchange, had paid the entire share amount of Rs 71,19,817 to the exchange.
According to Mr Shah, the BSE members had cheated him by giving him delivery of 1,56,100 forged share certificate and refused to cancel the said transaction when the fraud was discovered.
Counsel for the petitioner M L Sharma contended before the Court that the SEBI as a statutory body was empowered under section 11 of SEBI Act to protect the interest of investors in securities and to promote the development of and to regulate the securities market.
A bench comprising Justice Altamas Kabir and Justice Cyriac Joseph, while upholding the decision of Bombay High Court dismissing the petition, noted, ‘agreeing with the views expressed by the high court, we are of the view that the petitioner has not been able to make out any case of mala fide or irregularities on the part of the Bombay Stock Exchange with regard to the listing and subsequent delisting of the scrip of Presto Finance Ltd.
‘We see no reason to interfere with the order of the Bombay High Court impugned in the present petition and the same is, therefore, dismissed’.
The apex court, however, recommended that it may be in the fitness of things to have the pre-recognise rule and bye-laws published in the official Gazette.
The company was first listed in Ahmadabad Stock Exchange and was subsequently listed in the BSE but later, the scrips of the company were delisted when the fraud of issuing bogus share certificate by the company came to light SEBI found all its directors, including its MD Hitendra Vasa, guilty of dealing in fake and bogus shares and cheating the investors at large.
UNI