WTM/SR/SEBI/MRD-DSA/04/01/2017. Case: In Re: Delhi Stock Exchange Limited Vs. Securities and Exchange Board of India

Case NumberWTM/SR/SEBI/MRD-DSA/04/01/2017
JudgesS. Raman, Whole Time Member
IssueSecurities And Exchange Board Of India Act, 1992 - Sections 11(1), 11(2)(j), 19; Securities Contracts Regulation Act, 1956 - Sections 12A, 4, 4B(6), , 5(2)
Judgement DateJanuary 23, 2017
CourtSecurities and Exchange Board of India


S. Raman, Whole Time Member

  1. Delhi Stock Exchange Limited (Derecognized) formerly known as the Delhi Stock Exchange Association Limited ("DSE") was incorporated on June 25, 1947 as a corporate body with limited liability under the Indian Companies Act, 1913. The Central Government granted recognition to DSE under the provisions of Securities Contracts (Regulation) Act, 1956 ("SCRA"). DSE was later granted permanent recognition on March 01, 1982, as a stock exchange under the provisions of Section 4 of SCRA.

  2. Securities and Exchange Board of India ("SEBI"), vide Circular No. MRD/DoP/SE/Cir-36/2008 dated December 29, 2008, issued guidelines and laid down the framework for exit by stock exchanges whose recognition is withdrawn and/or renewal of recognition is refused by SEBI and Recognised Stock Exchanges ("RSEs") who may want to surrender their recognition. These Guidelines were reviewed and modified vide Circular No. CIR/MRD/DSA/14/2012 dated May 30, 2012 ("Exit Circular"). In terms of clause 2.2 of the Exit Circular, a stock exchange where the annual trading turnover on its own platform is less than Rs. 1000 crores can apply to SEBI for voluntary surrender of recognition and exit at any time before the expiry of two years from the date of issuance of the said Circular. In terms of clause 2.3 of the said Circular, if any stock exchange fails to achieve a turnover of Rs. 1000 crores, it would be subject to compulsory exit process as stipulated under clause 2.3 thereof.

  3. Pursuant to the Extraordinary General Meeting held by the shareholders of DSE on May 23, 2014, a resolution was passed for exiting as a stock exchange through voluntary surrender of recognition as per the Exit Circular. Accordingly, vide letter dated May 24, 2014 DSE made a request to SEBI for its exit as stock exchange.

  4. In the meanwhile, SEBI in exercise of the powers conferred upon it in terms of Section 11(2)(j) and Section 19 of the Securities and Exchange Board of India Act, 1992 ("SEBI Act") read with Section 5(2) and 12A of SCRA, vide order dated November 19, 2014 withdrew the recognition granted to DSE. Further, in exercise of the powers conferred under Section 5(2) of SCRA, the Central Government withdrew recognition granted to DSE vide Gazette notification dated March 15, 2016.

  5. DSE filed an appeal before Hon'ble Securities Appellate Tribunal ("SAT") challenging the SEBI order dated November 19, 2014 and to direct SEBI to allow DSE to continue with its voluntary exit in accordance with the SEBI circular dated May 30, 2012 and for such other reliefs as the nature and circumstances of the case may require. Hon'ble SAT vide order dated June 24, 2016 directed DSE to furnish the requisite information to SEBI within three months from the date of order for the voluntary de-recognition sought by DSE. Hon'ble SAT further directed SEBI "to complete the voluntary de-recognition process within a period of five months from the date of the order by determining the quantum amount payable and the time within which the said payment is to be made".

    Subsequently, SEBI determined the amount...

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