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

Bharat Stock Exchange, a recognised stock exchange, suspends trading in a scrip after unusual price movements and its governing body acts on a surveillance report. A trader sues a member of the governing body, alleging loss. The member acted honestly in pursuance of the Securities Contracts (Regulation) Act, 1956 and the exchange bye-laws. What is the legal position under the Act's protection provision?

The member is protected. Section 29 of the SCRA bars any suit, prosecution or other legal proceeding 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 or its rules or bye-laws.

  1. ANo suit, prosecution or other legal proceeding lies against the member for anything done in good faith in pursuance of the Act or its rules or bye-lawsCorrect
  2. BThe member is protected only from criminal prosecution but can be sued for damages
  3. CThe member is protected only if SEBI has approved the action in writing beforehand
  4. DThe member is protected only if the trader consents to the suspension

Explanation

Section 29 of the SCRA says no suit, prosecution or other legal proceeding lies in any court against the governing body or any member, office bearer or servant of a recognised stock exchange for anything done in good faith in pursuance of the Act or its rules or bye-laws. The protection covers suits as well as prosecution, so the option limiting it to criminal cases is wrong. No prior SEBI approval or trader consent is required.

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