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CMA Final · Corporate and Economic Laws · SEBI Laws and Regulations

A complaint alleges breach of a bye-law made under the Securities Contracts (Regulation) Act, 1956. The complaint is filed by an ordinary investor, who is neither a government nor an exchange. As per Section 26 of that Act, what is the position on a court taking cognizance?

A court may take cognizance. Section 26 of the SCRA allows a complaint by the Central Government, State Government, SEBI, a recognised stock exchange or any person, so an ordinary investor qualifies, and no sanction or joining by SEBI or an exchange is needed.

  1. AThe court cannot take cognizance, because only SEBI may file such complaints
  2. BThe court cannot take cognizance unless a recognised stock exchange joins the complaint
  3. CThe court cannot take cognizance unless the Central Government sanctions it
  4. DThe court may take cognizance, because a complaint can be made by any personCorrect

Explanation

Section 26(1) bars cognizance save on a complaint by the Central Government, a State Government, SEBI, a recognised stock exchange or by any person. So an investor can complain. The other options impose conditions that the section does not contain.

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