CS Executive · Capital Market and Securities Laws · Secondary Market in India
A recognised stock exchange's governing body suspends trading in a scrip after noticing abnormal price movements. An aggrieved trader threatens to file a suit against the governing body members personally. Under the Securities Contracts (Regulation) Act, 1956, what is the position if the action was taken in good faith in pursuance of the Act or its rules or bye-laws?
No suit, prosecution or other legal proceeding lies in any court against the governing body, members, office bearers or servants of a recognised stock exchange for anything done in good faith in pursuance of the Act, rules or bye-laws. Section 29 gives this protection regardless of the trader's loss.
- ANo suit, prosecution or other legal proceeding lies against the governing body or its members for such actionCorrect
- BA suit lies only if the trader proves actual monetary loss
- COnly a criminal prosecution is barred, while civil suits remain allowed
- DThe protection applies only to the exchange as a body, not to its office bearers
Explanation
Section 29 protects the governing body, members, office bearers and servants of a recognised stock exchange from any suit, prosecution or other legal proceeding for anything done in good faith in pursuance of the Act, rules or bye-laws. The protection covers both civil and criminal proceedings and is not tied to proof of loss. The option limiting it to criminal cases is wrong because the text says 'suit, prosecution or other legal proceeding'.
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