TaxTMI 
TaxTMI 
TaxTMI 
2000 (1) TMI 794
X X X X Extracts X X X X
X X X X Extracts X X X X
....man and the Members. It is in exercise of this power that respondent No. 2 was appointed by the Central Government as Chairman of the Board for a term of five years. 2. The challenge to appointment of respondent No. 2 is mainly on two grounds. The first objection is based on rule 3, sub-rule (2) of the Securities and Exchange Board of India (Terms and Conditions of Service of Chairman and Members) Rules, 1992 ('the Rules'). According to this sub-rule the Chairman and every whole time Member holds office for such period, not exceeding three years as may be specified in the order of appointment. The person concerned is however, eligible for re-appointment. The sub-rule further provides that the Chairman will not hold office after he attains the age of 65 years. For Members the outer age limit is 62 years. Respondent No. 2 was appointed for a term of five years. According to the petitioner this was clearly violative of the aforesaid rule, according to which the term cannot exceed three years. The other point raised by the petitioner is that though the rules contained a relaxation provision under which the Central Government is empowered to relax the provisions of any of the rules, th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the Prime Minister. On the basis of these notes it was submitted that the Government was conscious of the fact that according to the rules the appointment of Chairman could not be for a period of more than three years. Since respondent No. 2 was being given a term of five years special mention was made in the note for the need for a five year term for respondent No. 2. Respondent No. 2 was already holding the post of Deputy Governor of the Reserve Bank of India when he was being considered for appointment as Chairman of SEBI. The Finance Ministry note records. "Shri D.R. Mehta will reach the age of 58 on 25th June, 1995. His appointment as Deputy Governor has been approved upto June 1997 when he will reach the age of 60. He has indicated that he would be willing to take up the new assignment if he is given a five year term. If this were made effective immediately, he would have a term upto February 2000 when he would be below 63 years. Under the SEBI Act the Chairman can serve upto a maximum age of 65. Shri Nadkarni was given a three year term which would have taken him to age 63. Shri G.G. Ramakrishna's appointment also took him to age 63. It is very desirable to have a SEBI C....
X X X X Extracts X X X X
X X X X Extracts X X X X
....form. In substance both the notes show that the Government was relaxing the three year rule by offering a five year term to respondent No. 2. It will be deemed that the Government relaxed the rule in the facts of the present case. In response to this it was submitted on behalf of the petitioner that there cannot be any deemed relaxation. Additionally he argued that relaxation as per rule 20 can be only in respect of a class or category of persons and it cannot be in favour of an individual. The learned counsel for the petitioner further submitted that relaxation cannot be in clear violation of the rule. According to him if the Government was permitted to violate statutory rules under the cover of power to relax, it would mean that the rules have no sanctity at all. Statutory rules cannot be permitted to be violated in this manner. The statutory rules in the present case limit the tenure of the Chairman to three years and the limitation ought to be adhered to. The other proposition advanced on behalf of the petitioner is that as a matter of fact the power to relax rules has not been exercised in this case since there is no mention in either of the notes approved by the Government ab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....was made in the notes for a five year term for respondent No. 2. Specific mention of three year rule was not at all necessary. When the intent regarding the appointment was clear it was not mandatory to indicate the provision under which the power was exercised. An omission to mention the provision or mention of a wrong statutory provision would not vitiate exercise of power of the Government if it was otherwise available to the Government. In support of this contention the learned Attorney General relied on Municipal Corpn. of City of Ahmedabad v. Ben Hiraben Manilal, [1983] 2 SCC 422 wherein it was observed: "5. It is true that the notice impugned in this case was not issued under section 478. This section was also not placed for consideration by the learned Trial Judge or the first appellate court or in the Letters Patent appeal before the High Court. But the question being one of construction of a provision of a statute, in our opinion, that construction must be so made as to be in conformity with the other provisions of that particular statute and the provisions must be read as a whole. This being a question of law, this section can be relied upon in support of the notice und....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ot issue a futile writ. The Central Government had the power to reappoint respondent No. 2. This power was specifically contained in sub-rule (2) of rule 3 of the SEBI Rules. Therefore, the Court would be loath to issue a writ in the nature of quo warranto in such facts. Shri Kirit Rawal, the learned Additional Solicitor General appearing for the SEBI, respondent No. 3, submitted that the present petition seeks issuance of a writ of quo warranto. The writ of quo warranto ought not to business unless there is a serious infirmity or breach. The present petition does not display the required seriousness inasmuch as it is a casual attempt challenging the appointment of respondent No. 2 on the basis of newspaper reports. There is no challenge about eligibility of respondent No. 2 to hold the post. The only challenge is based on interpretation of sub-rule (2) of rule 3 of the SEBI Rules. While eligibility is a condition of recruitment which cannot be relaxed, the requirement regarding term is a condition with can be relaxed especially in view of the relaxation provision. On this basis it was submitted that issuance of a writ of quo warranto in the facts of the present case is wholly unwa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ider public interest entailing ramification to the society at large. The issue raised is in relation to the service condition of an individual officer and is a question of interpretation of the SEBI rules. The Supreme Court has repeatedly depreciated the practice of unnecessary and uncalled for entertainment of petitions by way of PIL by the Courts Sachidanand Pandey v. State of West Bengal AIR 1987 SC 1109; and Chhetriya Pradushan Mukti Sangharsh Samiti v. State of U.P., AIR 1990 SC 2060. 17. Having taken the view that the present is not a fit case for PIL, we are inclined to agree with the learned Attorney General that this petition is highly belated. The appointment of respondent No. 2 was made in February 1995. A Gazette notification to this effect was issued and published in the Official Gazette in February 1995. The appointment was widely circulated in all the daily newspapers and financial magazines and journals. The petitioner who claims to be a keen watcher of the security market ought to have had knowledge of this fact. The present petition filed in March 1998 appears to be highly belated. The petitioner has tried to explain that he was not aware of the relevant Rules an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s where the relaxation Rules required reasons to be recorded in writing for grant of relaxation. In both the cases the relaxation was permissible in public interest or in order to relieve undue hardship in a particular case. For this, reasons had to be recorded in writing before granting relaxation. There is no such requirement in the rule regarding relaxation in the present case, therefore, in our view these cases have no application in the facts of the present case. 19. In support of his contention that there can be deemed relaxation, the learned Attorney General relied on Direct Recruits Class II Eng. Officers Assoc. v. State of Maharashtra [1990] 2 SCC 715, where it was held that where the rules permit the authorities to relax the provisions relating to the quota, ordinarily a presumption should be raised that there was such a relaxation when there is a deviation from the quota rule. In this behalf we would also like to note that omission to mention the provisions which contains the source of power for granting relaxation will not vitiate an order. Reliance in this behalf was also placed on State of A.P. v. M. Lakshmi Devi [1993] 2 SCC 421 and Tulsiram Patel's case (supra). Co....