WP.1440/2010 acd IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1440 OF 2010 MCX Stock Exchange Limited ...Petitioners. Versus Securities And Exchange Board of India. ....Respondents. ---- Mr. Ravi Kadam, Advocate General with Mr. Chirag Balsara and Mr. Nitin Potdon i/b M/s J. Sagar Associates, for the Petitioners. Mr. D. Khambatta, Additinal Solicitor General with Mr. M. Mody i/b K. Ashar & Co., for Respondent No.1. Mr. C.A. Sundaram, Senior Advocate with Ms.Rohini Musa and Ameet Naik, Leena Desai and Sumit Shukla i/b Naik Paranjpe & Co., for Respondent No.2. Mr. Munir Merchant for Respondent No.3. ---- CORAM : MOHIT S. SHAH, C.J. AND S.C. DHARMADHIKARI, J. DATE : 10th AUGUST, 2010. P.C. 1] Learned counsel for the petitioners seeks leave to add ‘Financial Technologies (India) Limited’ and ‘Multi Commodity Exchange (India) Limited, as respondent nos.2 and 3 respectively. Leave is granted as prayed. 1 WP.1440/2010 2] The grievance in this petition under Article 226 of the Constitution of India is against the delay on part of respondent no. 1-Securities Exchange Board of India (SEBI), in deciding the petitioner’s application for approval for commencing trading in other segments/products in addition to the exchange traded currency derivatives. 3] Learned counsel for the petitioners has submitted that in view of the condition imposed by the SEBI by Notification dated 31.8.2009, petitioners are required to ensure full compliance with the relevant provisions of the Securities Contracts (Regulation) (Manner of Increasing and Maintaining Public Shareholding in Recognised Stock Exchange) Regulations, 2006, and particularly with the requirement that no shareholders of the petitioners should hold more than 5%, and that the petitioners should take steps to ensure compliance with the said requirement. As on today, the percentage of shareholding is as mentioned in annexure ‘A’ to the petitioner’s letter dated 7.4.2010 addressed to SEBI (Exhibit ‘D’). It is further submitted that apart from respondent nos.2 and 3, who are the promoters of the petitioner-company, there are as many as 18 shareholders who are scheduled banks or Financial Institutions. A reference is also made to the order passed by this 2 WP.1440/2010 Court on 12.3.2010 in Company Scheme Petition No.43 of 2010 connected with Company Summons for Direction No.59 of 2010 permitting the petitioner-company to reduce equity share capital of the petitioner. By letter dated 21.12.2009, the petitioners also informed SEBI that “promoters once having reduced their shareholding to 5%, shall not be permitted to increase their holding beyond limits specified under MIMPS Regulations, thereafter.” 4] Learned counsel for the petitioners, as well as respondent nos.2 and 3 submit that SEBI ought to see that the process of taking decision should be expedited, as petitioner- company is not only not making profit but is suffering loss of Rs. 15,00,000/- per day. 5] Learned counsel appearing for respondent nos.2 and 3 have supported the petitioners, and have stated that their respective clients will also pass Board Resolutions and ensure that they will not increase their holding beyond the limits specified under the MIMPS Regulation. Learned counsel for respondent nos. 2 and 3 further states that such Resolutions will be passed, and communicated to the SEBI through the petitioners within a period of 10 days from today. 3 WP.1440/2010 6] Shri Khambatta, learned Additional Solicitor General on behalf of respondent no.1-SEBI submits that SEBI has yet to take decision in the matter. He further submits that SEBI has already written to all the shareholders of the petitioner-company seeking necessary information and SEBI has received information from many of them, and information is awaited from other shareholders. It is further submitted that apart from the question whether aforesaid requirement regarding shareholding of 5%, is complied with, SEBI is also required to examine the compliance of various statutory requirements and thereafter decision is to be taken whether the petitioners-Stock Exchange be permitted to commence trading in other segments/products in addition to the exchange traded currency derivatives, for which approval was granted in the year 2008, and renewal was granted on 31.8.2009 for the period till 15th September, 2010. It is further stated that the question of renewal is also under consideration of SEBI, and the decision thereon shall be taken within a period of three weeks from today. 7] As regards the time required for deciding the petitioner’s application for approval of SEBI for commencing trading in other segments/products in addition to the exchange traded currency derivatives, learned Additional Solicitor General states that about six weeks’ time will be necessary to take a final decision in the matter. 4 WP.1440/2010 8] Having heard the learned counsel for the parties, we are of the view that interests of justice will be served if the petition is disposed of in terms of following directions: (a) Respondent No.1-SEBI will take a final decision in the matter latest by 30th September, 2010. In order to ensure that the aforesaid time limit is treated as mandatory and peremptory, SEBI shall write letters to the shareholders of the petitioner-company, from whom such information is awaited, calling upon them to send necessary information to SEBI within 10 days from today. (b) Respondent nos.2 and 3, through petitioner-company shall also convey to SEBI the Board Resolution of the respective co- promoters i.e. respondent nos.2 and 3 indicating their resolve to comply with the requirement of statutory regulations regarding the shareholding not exceeding the prescribed percentage. (c) Upon receiving such information from respondent nos. 2 and 3 and other shareholders of the petitioner-company, if SEBI requires further information/clarification from petitioner or others, the same shall be sought immediately and an opportunity of hearing shall be given to the representatives of the petitioner- company within four weeks from today, and thereafter a final decision shall be taken by SEBI latest by 30th September, 2010. 5 WP.1440/2010 9] The petition is disposed of in terms of the above directions. 10] It is clarified that the question of going into the merits of contentions raised by the petitioners has not arisen, and that we have not expressed any opinion thereon. CHIEF JUSTICE S.C. DHARMADHIKARI, J. 6