R.Balia, J. - (1.) The two petitions raise substantively identical questions and have been heard together at the request of counsel for the parties. Hence, I propose to deal with same by a common order. First about Facts: Facts and Preliminary Objections Relating to Special Civil Application No. 2224 of 19%
(2.) This petition has been filed in the circumstances to be stated hereinafter and raises the issue about the authority of Securities and Exchange Board of India (for short, "SEBI") to order impounding and/or confiscation of whole or part of consideration of a completed transaction, which in ordinary circumstances concerned party to transaction is entitled to receive and for whom which is an actionable claim, under the existing provisions of law under which SEBI functions. This issue is similar to one raised in Special Civil Application No. 5483 of 1996 M/s. D.M. Investment vs. Securities & Exchange Board of India & Ors., which also has been heard along with this petition.
(3.) The petitioner is a company registered under Indian Companies Act, 1956 and is having its registered office at Ahmedabad. As per the case set out in the petition, in pursuance of notice No. B.20/96 dated 7.2.1996 issued by the Bombay Stock Exchange (hereinafter called, "the Stock Exchange") inviting from the members of the Exchange offers for sale of shares of M/s Magan Industries Limited (for short, "MIL") because transaction of purchases of shares of MIL, remaining outstanding for want of availability of adequate number of shares with the sellers to fulfil their corresponding selling obligation. In response to the said notice dated 7.2.1996 (Annexure A), the petitioner who was holding shares in MIL offered 50,000 shares for sale at auction to the Stock Exchange through its member, respondent No. 3 Inderlal Agarwal. The transaction of sale of petitioner's shares at auction was at Rs. 118/- per share inclusive of chargeable expenses. After deducting charges the petitioner was to receive consideration of the said shares from the Stock Exchange through the said broker at Rs. 116.80 ps. per share. The price of the shares so offered by the petitioner at auction for sale was recovered by the Stock Exchange respectively from purchasers and short sellers, as per its byelaws and practice of auctioning the Exchange were to recover part of the consideration for such shares from the purchasers, at the rate at which transaction of purchase has been entered by the purchases who were to take delivery of shares, and difference between the auction price and the purchase price so payable by the purchasers was to be recovered from respective short sellers. The amount so recovered by the Stock Exchange becomes payable to the offered by crediting his account after deducting chargeable expenses. The SEBI in its impugned order dated 4.7.1996 has referred to this aspect.;