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CS Executive · Capital Market and Securities Laws · Secondary Market in India

A servant of a recognised stock exchange, in a surveillance exercise, deliberately misreports a broker's positions to harm a rival firm owned by his relative. The broker sues him. Under the SCRA protection provision, what is the position?

He is not protected. Section 29 shields servants of a recognised stock exchange only for things done or intended in good faith in pursuance of the Act or its rules or bye-laws. A deliberate misreport made to harm a rival lacks good faith.

  1. AProtected, because he is a servant of a recognised stock exchange
  2. BProtected, because the act related to surveillance duties
  3. CNot protected by the provision, because the act was not done in good faithCorrect
  4. DProtected, but only against prosecution and not against a civil suit

Explanation

Section 29 protects only what is done or intended to be done in good faith in pursuance of the Act or its rules or bye-laws. A deliberate misreport to harm a rival is not good faith, so status as a servant does not give protection. The partial-protection option is wrong because the section covers suits and prosecution alike when its condition is met.

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