Court upholds validity of SEBI regulations under Section 31, dismisses challenge on constitutionality.

The court concluded that the SEBI regulations were validly laid before Parliament as required by Section 31 of the Act, and there was no modification or annulment. Therefore, the regulations continued to have the force of law. The petitioner's challenge to the constitutionality of the regulations was found to be without merit. As a result, the rule was discharged, and no costs were awarded.

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Issues Involved:
1. Constitutionality of SEBI (Stock-Brokers and Sub-Brokers) Rules, 1992 and Regulations, 1992.
2. Compliance with Section 31 of the Securities and Exchange Board of India Act, 1992.
3. Alleged violation of Article 19(1)(g) of the Constitution of India.
4. Retention of money by the respondents.

Issue-wise Detailed Analysis:

1. Constitutionality of SEBI (Stock-Brokers and Sub-Brokers) Rules, 1992 and Regulations, 1992:
The principal relief sought by the petitioner was to quash and set aside the SEBI (Stock-Brokers and Sub-Brokers) Rules, 1992 and Regulations, 1992, declaring them unconstitutional. The petitioner argued that these regulations were not laid before each House of Parliament as mandated by Section 31 of the Securities and Exchange Board of India Act, 1992, thus rendering them illegal and ultra vires the SEBI Act, 1992, and the Constitution of India.

2. Compliance with Section 31 of the Securities and Exchange Board of India Act, 1992:
The petitioner contended that the regulations were tabled in the Lok Sabha on 27th November 1992 and in the Rajya Sabha on 16th December 1992, but were not re-laid in the subsequent sessions as required. The respondents, relying on the judgment of the Uttaranchal High Court in Manwar Singh Rawat v. Union of India, argued that the regulations were laid in accordance with the procedure and conduct of business of Lok Sabha and Rajya Sabha. The court examined Rule 234 of the Rules of Procedure and Conduct of Business in Lok Sabha and concluded that the regulations were laid as required by Section 31 of the Act. The court noted that the regulations come into force when made and are not dependent on the expiry of the laying period. The court found that there was no modification or annulment of the regulations by Parliament, thus they continued to have the force of law.

3. Alleged violation of Article 19(1)(g) of the Constitution of India:
The petitioner argued that Article 19(1)(g) guarantees the freedom of business, which can only be restricted by a valid and reasonable restriction. The petitioner claimed that the actions taken by the respondents under the said rules and regulations were illegal, null, and void. The court, however, did not find merit in this argument, as the regulations were found to be validly laid before Parliament and thus had the force of law.

4. Retention of money by the respondents:
The petitioner raised a grievance, though no relief was sought on this count, that the respondents had retained a large amount of money. The court noted a letter dated 22nd June 2004 from the Legal Officer of SEBI, which clarified that the petitioner's fee liability was Rs. 18,36,993 and that SEBI had not received any payment of Rs. 32,81,474 either from NSE or the petitioner.

Conclusion:
The court concluded that the regulations were laid in the House as required by Section 31 of the Act and that there was no modification or annulment. The regulations continued to have the force of law, and the challenge made by the petitioner was devoid of merit. Consequently, the rule was discharged, and there was no order as to costs.

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