The Learned Division Bench of the Hon’ble Calcutta High Court finally delivered its verdict on 19 February 2024 in the now long-pending challenge by Calcutta Stock Exchange against SEBI’s order for compulsory derecognition. SEBI had directed CSE’s compulsory delisting, citing the lack of a necessary tie-up with a separate clearing corporation and the shortfall in meeting the required turnover of INR 1,000 Crores, per Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012 (“SECC Regulations”), and SEBI’s Exit Policy promulgated through its circular dated 30 May 2012, respectively.

The Learned Single Judge of the Hon’ble Calcutta High Court had, in 2016, dismissed the writ petition of the CSE against the said order of derecognition. Intra-court appeals had, therefore, been filed by CSE bearing FMA 3446/2016 and FMA 4398/2016, in which the present judgment was delivered. The crucial takeaways from the learned Division Bench’s judgment are as follows:

• The judgment pertains to appeals challenging the validity of the Exit policy of SEBI and the SECC Regulations.
• The Court upheld the validity of the Exit policy and the SECC Regulations, stating that they align with the provisions of the SCR Act.
• The Court found that SEBI acted within its powers to protect the interests of investors and regulate the securities market.
• The Court directed the Calcutta Stock Exchange (CSE) to establish a tie-up with an existing recognised clearing corporation, as per the SECC Regulations and to achieve the prescribed net worth, as per the SEBI circular dated 30 May 2012 within six months from the date of the judgment.
• If CSE fails to comply, SEBI is authorised to take necessary steps under the law.

The judgment is crucial as it decides the essential issue of the CSE’s very existence; it also recognises the importance of stock exchanges in the securities market. It aims to balance the interests of the CSE and the regulatory authority.

In recent times, CSE has also been on a drive to initiate actions against companies listed on its bourse for non-payment of listing fees and other charges. Thus, in the backdrop of this judgment delivered by the Hon’ble Calcutta High Court, it becomes interesting to now see, understand and analyze what result the actions taken by CSE against listed entities entail when CSE’s own fate stands undetermined.

Nevertheless, it would be intriguing to see if one of the oldest stock exchanges in India survives this test, or will 2024 mark the end of its operations.