TaxTMI 
TaxTMI 
2002 (2) TMI 1243
X X X X Extracts X X X X
X X X X Extracts X X X X
....prohibiting them to regulate the Securities and Exchange Board of India (Stock broker and sub-broker) Rules, 1992 SEBI Rules, 1992). He also wants Regulations 1992 to be declared illegal, unconstitutional and void ab initio. He has further challenged the validity of order of prohibition for 'Sale and then purchase of shares'. According to the Petitioner by virtue of regulation excessive powers have been delegated to the SEBI. Regulation 1992 is also against the principles of natural justice. 3. Main thrust of the petitioner's arguments is that the SEBI has framed various rules and regulations which have been framed without following the provisions of the Securities and Exchange Board of India Act, 1992 ('the Act'). This according to him,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r the Court to strike down without any hesitation any arbitrary power conferred on the Executive by the legislature. At the same time we cannot loose sight of the fact that it is for the Court to hold on a fair, generous and liberal construction of an impugned statute whether the Legislature exceeded such limits. The question of delegated legislation came up for interpretation before Supreme Court in the case of Hamdard Dawakhana (supra) wherein their Lordship held that delegated legislation involves delegation of rule making power which constitutionally may be exercised by the administrative agent. This means the Legislature lays down the broad principles of its policy and the details are to be supplied by the administrative authority. In ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or both houses agree that the rule or regulation should not be made, the rule or regulation shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation." 4. Section 31 lays down that any amendment proposed by the Board or any Regulations framed by the SEBI have to be laid before the Parliament where it remains for almost for 30 days. Such regulations or amendment after due deliberation are either accepted or rejected by the parliament....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ding mutual funds; (d)promoting and regulating self-regulatory organisations; (e)prohibiting fraudulent and unfair trade practices relating to securities markets; (f)promoting investors' education and training of intermediaries of securities markets; (g)prohibiting insider trading in securities; (h)regulating substantial acquisition of shares and takeover of companies; (i)calling for information from, undertaking inspection, conducting inquiries and audits of the stock exchanges and intermediaries and self-regulatory organisations in the securities market; (j)performing such functions and exercising such powers under the provisions of the Capital Issues (Control) Act, 1947 and the Securities Contracts (Regulation) Act, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... such application." 6. Reading of the above provision makes it clear that the SEBI is empowered to frame rules and regulations in order to achieve the above objects. These provisions have to be read with section 31. Therefore, the powers exercised by the SEBI by no stretch of imagination can be called excessive delegation of legislative powers nor can be arbitrary powers. 7. The counsel for the petitioner to strengthen his arguments relied on 4(d) of the rules and Explanation to Schedule III of SEBI Regulation 1992 which are reproduced as under :- "Rule 4(d ) He shall pay the amount of fees for registration in the manner provided in the regulations;" "Explanation - For the purpose of paragraphs 1, 2 and 3, "annual turnover" m....