JUDGMENT
K.A. Nayar, J.
1. This original petition is for a writ for quashing the registration of the first respondent-company under the Companies Act, and
the certificate issued by the Registrar of Companies for commencement of the business, for a direction to the respondents not to grant recognition as a recognised stock exchange, for a direction to respondents Nos. 14 and 15 to investigate exhibit P-2 complaint and to ensure that no trading in securities is done on the floor of the first respondent, and also for a direction to respondents Nos. 11 to 18 to prosecute the offenders.
2. The first respondent is, admittedly, a company registered under the Companies Act. Under Section 12 of the Companies Act, any seven or more persons, or where the company to be formed will be a private company, any two or more persons, associated for any lawful purpose may, by subscribing their names to a memorandum of association and otherwise complying with the requirements of the Companies Act for registration, form an incorporated company, with or without liability. Once the requirements under the Companies Act are satisfied, the Registrar of Companies will have to register the company. The requirements for registration of companies are laid down in Section 33 of the Companies Act and if the Registrar is satisfied that all the requirements have been satisfied, he has to register the company. That is how the first respondent-company was registered on October 12, 1990. After the registration of the company, it cannot do any business without a commencement certificate under Section 149 of the Act. Even borrowings by the company can be done only after the issue of such certificate. Under Section 13 of the Act, the memorandum of every company has to state, in the case of companies formed after the commencement of the Companies (Amendment) Act, 1965, the main objects of the company to be pursued by the company on its incorporation and objects incidental or ancillary to the attainment of the main objects. The main object of the company is stated to be to run a stock exchange business. For that purpose, the first respondent has to apply for and obtain recognition from the Government of India to function as a recognised stock exchange within the meaning of the Securities Contracts (Regulation) Act, 1956 (for short “the Securities Act”). It is stated that the company, after incorporation and after obtaining the commencement certificate, applied for recognition under the Securities Act on November 8, 1990, and that application is still pending. It is submitted that the first respondent-company has not been granted recognition as a recognised stock exchange yet. Therefore, the position now is that the first respondent is purely a public limited company. It is not a Government company in which more than 51 per cent, of the shares are held by the Government. It is also not a public authority now. Therefore, a writ will not lie against the first respondent. A writ cannot be issued to cancel the registration of the first respondent-company or the commencement certificate issued to it under Section 149 of the Companies Act. If the company is recognised as a recognised stock exchange,
perhaps, to enforce a public duty or to prevent abuse of the powers vested in the first respondent under the Securities Act by virtue of the recognition, a writ may be issu’ed. As it is, the company is only formed by private individuals with intention to do business as a stock exchange. It is not better than any other public limited company in the country. The fact that it is proposing to carry on certain transactions in which the public are involved will not make it a statutory or other authority against which a writ would lie. Unless recognition is granted under the Securities Act, it cannot be stated that it has a statutory power or that a public duty is involved to make it amenable to writ jurisdiction.
3. If the first respondent-company is doing illegal activities, it is for the petitioner to seek remedies available to him under the civil and criminal laws of the land to prevent the same. In fact, the petitioner has approached respondents Nos. 14 and 15 by way of exhibit P-2 complaint to investigate the matter, to seize the documents and also to prevent illegal trading. The Government Pleader appearing on behalf of the respondents submitted that the complaint is being investigated.
4. Counsel for the petitioner referred to the decision of the Supreme Court in Shri Anadi Mukta Sadguru S.V.V.S.J.M.S. Trust v. V.R. Rudani, AIR 1989 SC 1607, to contend that a writ would lie even against a private individual if the private individual is vested with a public duty. It is also submitted that a writ has been issued against managers of aided schools on the ground that the schools are financed and teachers are paid from the public fund. When public duty is involved, then to enforce such a duty, writ will lie. But in this case, the first respondent is only a registered company. To enforce the duties and liabilities under the Companies Act, there are adequate provisions in that Act. Public duty will stem only after recognition is given under the Securities Act. Such recognition has not been given yet. The recognition may or may not be given. The authorities which grant recognition are respondents Nos. 11 to 13. The petitioner’s case is that, in view of the fact that there is already a stock exchange functioning at Ernakulam, there is no need to have another stock exchange at Trivandrum, and that the persons who operate behind the so-called stock exchange proposed at Trivandrum are not persons suitable to conduct such business. These are matters to be taken before the authorities concerned, viz., respondents Nos. 11 to 13, so that they will be equipped with all information required.
5. The petitioner has also a case in support of which he has also produced news items which appeared in newspapers, that members of the first respondent have already commenced stock exchange business. If any business is done without obtaining recognition and in violation of the Securities Act,
there are penalties provided under the Act including prosecuting the company. Section 19 of the Securities Act clearly provides that no person shall, except with the permission of the Central Government, organise or assist in organising or be a member of any stock exchange (other than a recognised stock exchange) for the purpose of assisting in entering into or performing any contracts in securities. If there is any violation of this provision, it is for the petitioner to approach the authorities concerned to prosecute the first respondent. The petitioner can also inform respondents Nos. 11 to 13 about such violation, for taking appropriate action. It may be an additional ground to point out that the persons who are trying to organise the stock exchange are violating the law even before recognition is granted. These are matters to be taken before respondents Nos. 11 to 13 by the petitioner.
6. I find no merit in this writ petition and it is, accordingly, dismissed.
