Rusoday Securities Ltd V. The National Stock Exchange of India Ltd (2019)

Abstract

The legislature has bestowed upon the Exchange sufficient freedom of action to effectively control and regulate the functioning of stock brokers who use the Exchange as a means to enter into financial relationships with the investors and common public. In the factual scheme of the present case, the foremost thing to be noted is that there are two sets of assets in control of the respondent’s first, security deposits and second, withheld securities. The security deposits came to be deposited on account of membership obligations and the securities were withheld on account of failure to complete settlements. Though the challenge is limited to with held securities, the provisions relating to such securities address both these categories of assets collectively and thus, they are being discussed accordingly for a comprehensive view of their scope and operation. The principles of constructive trust and fiduciary relationships are equitable principles, and equity never operates in an absolute manner or in a vacuum. In fact, the very basis of the law of equity is its flexibility to take care of mutual concerns of the parties. Equity is about balancing the competing interests by preventing the erosion of interests of one party while ensuring a free exercise of legally enshrined discretionary powers to the other. No doubt, specific fiduciary duties could definitely be recognised in the specific facts of the case but the manner of performance of such duties cannot be dictated in regulatory matters.