LI Network
Published on: January 8, 2024 at 10:10 IST
The Bombay High Court, called for the Central government’s response to a petition filed by Kotak Securities Limited challenging a National Stock Exchange (NSE) directive.
The NSE had ordered the disinvestment of Kotak Securities Limited’s investments, totaling ₹624.66 crores across four entities, contesting Rules 8(1)(f) and 8(3)(f) of the Securities Contracts (Regulation) Rules of SEBI [Kotak Securities Limited v. National Stock Exchange of India Ltd & Ors.].
Kotak Securities, a subsidiary of Kotak Mahindra Bank, contested an NSE circular that interpreted the Securities Contracts (Regulation) Rules (SCR Rules) of SEBI regarding restrictions on stock exchange members engaging in businesses other than securities trading.
The company argued that the NSE circular introduced additional constraints beyond the plain language of the SCR Rules, suggesting that NSE lacked the authority to amend or modify the statutory rules of the Central government.
The case was first heard on December 11 by a division bench of Justices GS Kulkarni and Jitendra Jain. They decided to involve the Central government as a respondent since the challenge involved government rules. Consequently, the government was added as a party, and the court instructed it to present its stance by January 15, 2024.
Kotak Securities’ plea also contested an NSE order from October 23, 2023, mandating a disinvestment plan submission within 45 days for investments made between 2007 and 2017 in four group entities.
The court extended the time for KSL to comply with NSE’s order till January 30, and the next hearing is scheduled for January 16.