13. Contracts in notified areas illegal in certain circumstances.—If the Central Government is
satisfied, having regard to the nature or the volume of transactions in securities in any6
[State or States or
area], that is necessary so to do, it may, by notification in the Official Gazette, declare this section to
apply to such4
[State or States or area], and thereupon every contract in such4
[State or States or area]
which is entered into after the date of the notification otherwise than7
[between members of a recognised
stock exchange or recognised stock exchanges] in such4
[State or States or area] or through or with such
member shall be illegal.
8
[Provided that any contract entered into between members of two or more recognised stock
exchanges in such State or States or area, shall—
(i) be subject to such terms and conditions as may be stipulated by the respective stock exchanges
with prior approval of Securities and Exchange Board of India;
1. Subs. by Act 56 of 1974, s. 2 and the First Schedule (w.e.f. 20-12-1974).
2. Ins. by Act 1 of 2005, s. 6 (w.e.f 12-10-2004).
3. Section 12A numbered as thereof by sub-section (1) by Act 13 of 2018, s. 147 (w.e.f. 8-3-2019).
4. Ins. by Act 27 of 2014, s. 24 (w.e.f. 8-9-2014).
5. Ins. by Act 13 of 2018, s. 147 (w.e.f. 8-3-2019).
6. Subs. by Act 1 of 2005, s. 7, for “State or area” (w.e.f. 12-10-2004).
7. Subs. by s. 7, ibid., for “between members of a recognised stock exchange” (w.e.f. 12-10-2004).
8. The proviso ins. by s. 7, ibid. (w.e.f. 12-10-2004).
16
(ii) require prior permission from the respective stock exchanges if so stipulated by the stock
exchanges with prior approval of the Securities and Exchange Board of India.]
1
[13A. Additional trading floor.—A stock exchange may establish additional trading floor with the
prior approval of the Securities and Exchange Board of India in accordance with the terms and conditions
stipulated by the said Board.
Explanation.—For the purposes of this section, “additional trading floor” means a trading ring or
trading facility offered by a recognised stock exchange outside its area of operation to enable the investors
to buy and sell securities through such trading floor under the regulatory framework of that stock
exchange.]
14. Contracts in notified areas to be void in certain circumstances.—(1) Any contract entered
into any State or area specified in the notification under section 13 which is in contravention of any of the
bye-laws specified in that behalf under clause (a) of sub-section (3) of section 9 shall be void—
(i) as respects the rights of any member of the recognised stock exchange who has entered into
such contract in contravention of any such bye-law, and also
(ii) as respects the rights of any other person who has knowingly participated in the transaction
entailing such contravention.
(2) Nothing in sub-section (1) shall be construed to affect the right of any person other than a member
of the stock exchange to enforce any such contract or to recover any sum under or in respect of such
contract if such person had no knowledge that the transaction was in contravention of any of the bye-laws
specified in clause (a) of sub-section (3) of section 9.
15. Members may not act as principals in certain circumstances.—No member of a recognised
stock exchange shall in respect of any securities enter into any contract as a principal with any person
other than a member of a recognised stock exchange, unless he has secured the consent or authority of
such person and discloses in the note, memorandum or agreement of sale or purchase that he is acting as a
principal;
Provided that where the member has secured the consent or authority of such person otherwise than in
writing he shall secure written confirmation by such persons of such consent or authority within three
days from the date of the contract:
Provided further that no such written consent or authority of such person shall be necessary for
closing out any outstanding contract entered into by such person in accordance with the bye-laws, if the
member discloses in the note, memorandum or agreement of sale or purchase in respect of such closing
that he is acting as a principal.
16. Power to prohibit contracts in certain cases.—(1) If the Central Government is of opinion that
it is necessary to prevent undesirable speculation in specified securities in any State or area, it may, by
notification in the Official Gazette, declare that no person in the State or area specified in the notification
shall, save with the permission of the Central Government, enter into any contract for the sale or purchase
of any security specified in the notification except to the extent and in the manner, if any, specified
therein.
(2) All contracts in contravention of the provisions of sub-section (1) entered into after the date of the
notification issued thereunder shall be illegal.
17. Licensing of dealers in securities in certain areas.—(1) Subject to the provisions of sub-section
(3) and to the other provisions contained in this Act, no person shall carry on or purport to carry on,
whether on his own behalf of any other person, the business if dealing securities in any State or area to
which section 13 has not been declared to apply and to which the Central Government may, by
notification in the Official Gazette, declare this section to apply, except under the authority of a 2
[licence
granted by the Securities and Exchange Board of India] in this behalf.
1. Ins. by Act 9 of 1995, s. 21 (w.e.f. 25-1-1995).
2. Subs. by Act 15 of 1992, s. 33 and the Schedule, for “licence granted by the Central Government” (w.e.f 30-1-1992).
17
(2) No notification under sub-section (1) shall be issued with respect to any State or area unless the
Central Government is satisfied, having regard to the manner in which securities are being dealt with in
such State or area, that it is desirable or expedient in the interest of the trade or in the public interest that
such dealings should be regulated by a system of licensing.
(3) The restrictions imposed by sub-section (1) in relation to dealings in securities shall not apply to
the doing of anything by or on behalf of a member of any recognised stock exchange.
1
[17A. Public issue and listing of securities referred to in sub-clause (ie) of clause (h) of section
2.—(1) Without prejudice to the provisions contained in this Act or any other law for the time being in
force, no securities of the nature referred to in sub-clause (ie) of clause (h) of section 2 shall be offered to
the public or listed on any recognised stock exchange unless the issuer fulfils such eligibility criteria and
complies with such other requirements as may be specified by regulations made by the Securities and
Exchange Board of India.
(2) Every issuer referred to in sub-clause (ie) of clause (h) of section 2 intending to offer the
certificates or instruments referred therein to the public shall make an application, before issuing the offer
document to the public, to one or more recognised stock exchanges for permission for such certificates or
instruments to be listed on the stock exchange or each such stock exchange.
(3) Where the permission applied for under sub-section (2) for listing has not been granted or refused
by the recognised stock exchanges or any of them, the issuer shall forthwith repay all moneys, if any,
received from applicants in pursuance of the offer document, and if any such money is not repaid within
eight days after the issuer becomes liable to repay it, the issuer and every director or trustee thereof, as the
case may be, who is in default shall, on and from the expiry of the eighth day, be jointly and severally
liable to repay that money with interest at the rate of fifteen per cent. per annum.
Explanation.—In reckoning the eighth day after another day, any intervening day which is a public
holiday under the Negotiable Instruments Act, 1881(26 of 1881), shall be disregarded, and if the eighth
day (as so reckoned) is itself such a public holiday, there shall for the said purposes be substituted the first
day thereafter which is not a holiday.
(4) All the provisions of this Act relating to listing of securities of a public company on a recognised
stock exchange shall, mutatis mutandis, apply to the listing of the securities of the nature referred to in
sub-clause (ie) of clause (h) of section 2 by the issuer, being a special purpose distinct entity.
18. Exclusion of spot delivery contracts from sections 13, 14, 15 and 17.—(1) Nothing contained
in sections 13, 14,15 and 17 shall apply to spot delivery contracts.
(2) Notwithstanding anything contained in sub-section (1), if the Central Government is of opinion
that in the interest of the trade or in the public interest it is expedient to regulate and control the business
of delaying in spot delivery contracts also in any State or area (whether section 13 has been declared to
apply to the State or area or not), it may, by notification in the Official Gazette, declare that the provisions
of section 17 shall also apply to such State or area in respect of spot delivery contracts generally or in
respect of spot delivery contracts for the sale or purchase of such securities as may be specified in the
notification, and may also specify the manner in which, and the extent to which, the provisions of that
section shall so apply.
2
[18A. Contracts in derivatives.—Notwithstanding anything contained in any other law for the lime
being in force, contracts in derivative shall be legal and valid if such contracts are—
(a) traded on a recognised stock exchange;
(b) settled on the clearing house of the recognised 3
[stock exchange; or] in accordance with the
rules and bye-laws of such stock exchange.]
1. Ins. by Act 27 of 2007, s. 3 (w.e.f. 28-5-2007).
2. Ins. by Act 31 of 1999, s. 3 (w.e.f. 22-2-2000).
3. Subs. by Act 20 of 2015, s. 134, for “stock exchange” (w.e.f. 14-5-2015).
18
1
[(c) between such parties and on such terms as the Central Government may, by notification in
the Official Gazette, specify.]
19. Stock exchanges other than recognised stock exchanges prohibited.—(1) No person shall,
except with the permission of the Central Government, organise or assist in organising or be a member of
any stock exchange (other than a recognised stock exchange) for purpose of assisting in, entering into or
performing any contracts in securities.
(2) This section shall come into force in any State or area on such date as the Central Government
may, by notification in the Official Gazette, appoint.
20. [Prohibition of options in securities.] Omitted by the Securities Laws (Amendment) Act, 1995
(9 of 1995), s. 22 (w.e.f. 25-1-1995).
2
[21. Conditions for listing.—Where securities are listed on the application of any person if any
recognised stock exchange, such person shall comply with the conditions of the listing agreement with
that stock exchange.]
3
[21A. Delisting of securities.—(1) A recognised stock exchange may delist the securities, after
recording the reasons therefor, from any recognised stock exchange on any of the ground or grounds as
may be prescribed under this Act:
Provided that the securities of a company shall not be delisted unless the company concerned has
been given a reasonable opportunity of being heard.
(2) A listed company or an aggrieved investor may file an appeal before the Securities Appellate
Tribunal against the decision of the recognised stock exchange delisting the securities within fifteen days
from the date of the decision of the recognised stock exchange delisting the securities and the provisions
of sections 22B to 22E of this Act, shall apply, as far as may be, to such appeals:
Provided that the Securities Appellate Tribunal may, if it is satisfied that the company was prevented
by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period
not exceeding one month.]
4
[22. Right of appeal against refusal by stock exchanges to list securities of public companies.—
Where a recognised stock exchange acting in pursuance of any power given to it by its bye-laws, refuses
to list the securities of any public company 5
[or collective investment scheme], the company 2
[or scheme]
shall be entitled to be furnished with the reasons for such refusal, and may,—
(a) within fifteen days from the date on which the reasons for such refusal are furnished to it, or
(b) where the stock exchange has omitted or failed to dispose of, within the time specified in
sub-section (1) of section 73 of the Companies Act,1956 (1of 1956) (hereafter in this section referred
to as the “specified time”), the application for permission for the shares or debentures to be dealt with
on the stock exchange, within fifteen days from the date of expiry of specified time or within such
further period, not exceeding one month, as the Central Government may, on sufficient cause being
shown, allow,
appeal to the Central Government against such refusal, omission of failure, as the case may be, and
thereupon the Central Government may, after giving the stock exchange an opportunity of being heard,—
(i) vary or set aside the decision of the stock exchange, or
(ii) where the stock exchange has omitted or failed to dispose of the application within the
specified time, grant or refuse the permission,
1. Ins. by Act 20 of 2015, s. 134 (w.e.f. 14-5-2015).
2. Subs. by Act 9 of 1995, s. 23, for section 21 (w.e.f. 25-1-1995).
3. Ins. by Act 1 of 2005, s. 8 (w.e.f. 12-10-2004).
4. Subs. by Act 41 of 1974, s. 42, for section 22 (w.e.f. 1-2-1975).
5. Ins. by Act 31 of 1999, s. 5 (w.e.f. 22-2-2000).
19
and where the Central Government sets aside the decision of the recognised stock exchange or grants the
permission, the stock exchange shall act in conformity with the orders of the Central Government:]
1
[Provided that no appeal shall be preferred against refusal, omission or failure, as the case may be,
under this section on and after the commencement of the Securities Laws(Second Amendment) Act, 1999
(32 of 1999).]
2
[22A. Right of appeal to Securities Appellate Tribunal against refusal of stock exchange to list
securities of public companies.—(1) Where a recognised stock exchange, acting in pursuance of any
power given to it by its bye-laws, refuses to list the securities of any company, the company shall be
entitled to be furnished with reasons for such refusal, and may,—
(a) within fifteen days from the date on which the reasons for such refusal are furnished to it, or
(b) where the stock exchange has omitted or failed to dispose of, within the time specified in subsection (1A) of section 73 of the Companies Act, 1956 (1 of 1956) (hereafter in this section referred to
as the “specified time”), the application for permission for the shares or debentures to be dealt with on
the stock exchange, within fifteen days from the date of expiry of the specified time or within such
further period, not exceeding one month, as the Securities Appellate Tribunal may, on sufficient cause
being shown, allow,
appeal to the Securities Appellate Tribunal having jurisdiction in the matter against such refusal, omission
or failure, as the case may be, and thereupon the Securities Appellate Tribunal may, after giving the stock
exchange, an opportunity of being heard,—
(i) vary or set aside the decision of the stock exchange; or
(ii) where the stock exchange has omitted or failed to dispose of the application within the
specified time, grant or refuse the permission,
and where the Securities Appellate Tribunal sets aside the decision of the recognised, stock exchange or
grants the permission, the stock exchange shall act in conformity with the orders of the Securities
Appellate Tribunal.
(2) Every appeal under sub-section (1) shall be in such form and be accompanied by such fee as may
be prescribed.
(3) The Securities Appellate Tribunal shall send a copy of every order made by it to the Board and
parties to the appeal.
(4) The appeal filed before the Securities Appellate Tribunal under sub-section (1) shall be dealt with
by it as expeditiously as possible and endeavour shall be made by it to dispose of the appeal finally within
six months from the date of receipt of the appeal.
22B. Procedure and powers of Securities Appellate tribunal.—(1) The Securities Appellate
Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5 of 1908),
but shall be guided by the principles of natural justice and, subject to the other provisions of this Act and
of any rules, the Securities Appellate Tribunal shall have powers to regulate their own, procedure
including the places at which they shall have their sittings.
(2) The Securities Appellate Tribunal shall have, for the purpose of discharging their functions under
this Act, the same powers as are vested in a civil court under the Code of Civil Procedure, 1908
(5 of 1908), while trying a suit, in respect of the following matters, namely:—
(a) summoning and enforcing the attendance of any person and examining him on oath;
(b) requiring the discovery and production of documents;
(c) receiving evidence on affidavits;
(d) issuing commissions for the examination of witnesses or documents;
1. The proviso ins. by Act 32 of 1999, s. 4 (w.e.f. 16-12-1999).
2. Ins. by s. 5, ibid. (w.e.f. 16-12-1999).
20
(e) reviewing its decisions;
(f) dismissing an application for default or deciding it ex parte;
(g) setting aside any order of dismissal of any application for default or any order passed by it ex
parte; and
(h) any other matter which may be prescribed.
(3) Every proceeding before the Securities Appellate Tribunal shall be deemed to be a judicial
proceeding within the meaning of sections 193 and 228, and for the purposes of section 196 of the
Indian Penal Code (45 of 1860) and the Securities Appellate Tribunal shall be deemed to be a civil
court for all the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973
(2 of 1974).
22C. Right to legal representation.—The appellant may either appear in person or authorise one or
more chartered accountants or company secretaries or cost accountants or legal practitioners or any of its
officers to present his or its case before the Securities Appellate Tribunal.
Explanation.—For the purposes of this section,—
(a) “chartered accountant” means a chartered accountant as defined in clause (b) of sub-section
(1) of section 2 of the Chartered Accountants Act, 1949 (38 of 1949) and who has obtained a
certificate of practice under sub-section (1) of section 6 of that Act;
(b) “company secretary” means a company secretary as defined in clause (c) of sub-section (1) of
section 2 of the Company Secretaries Act, 1980 (56 of 1980), and who has obtained a certificate of
practice under sub-section (1) of section 6 of that Act;
(c) “cost accountant” means a cost accountant as defined in clause (b) of sub-section (1) of
section 2 of the Cost and Works Accountants Act, 1959 (23 of 1959) and who has obtained a
certificate of practice under sub-section (1) of section 6 of that Act;
(d) “legal practitioner” means an advocate, vakil or an attorney of any High Court, and includes a
pleader in practice.
22D. Limitation.—The provisions of the Limitation Act, 1963 (36 of 1963) shall, as far as may be,
apply to an appeal made to a Securities Appellate Tribunal.
22E. Civil Court not to have jurisdiction.—No civil court shall have jurisdiction to entertain any
suit or proceeding in respect of any matter which a Securities Appellate Tribunal is empowered by or
under this Act to determine and no injunction shall be granted by any court or other authority in respect of
any action taken or to be taken in pursuance of any power conferred by or under this Act.
22F.Appeal to High Court.—Any person aggrieved by any decision or order of the Securities
Appellate Tribunal may file an appeal to the High Court within sixty days from the date of
communication of the decision or order of the Securities Appellate Tribunal to him on any question of
fact or law arising out of such order:
Provided that the High Court may, if it is satisfied that the appellant was prevented by sufficient cause
from filing the appeal within the said period, allow it to be filed within a further period not exceeding
sixty days.]