CONTRACTS AND OPTIONS IN SECURITIES
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 the stock exchange.] 29 Contracts in notified areas to be void in certain circumstances 14. (1) Any contract entered into in 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:
(ii) as respects the rights of any other person who has knowingly participated in the transaction entailing such contravention.
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 person 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 out that he is acting as a principal. Power to prohibit contracts in certain cases 16. (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. Licensing of dealers in securities in certain cases 17. (1) Subject to the provision 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 or on behalf of any other person, the business of dealing in 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 licence granted by the [Securities and Exchange Board of India]30 in this behalf.
(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. Exclusion of spot delivery contracts from sections 13, 14, 15 and 17 18. (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 dealing in spot delivery contracts also in any State or are (whether
section 13 has been declared to apply to that 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 contract 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
provision of that section shall so apply.
(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.
[Prohibition of options in securities
20. Omitted by the Securities Laws (Amendment) Act, 1995, w.e.f. 25-1-1995]32
1. Notwithstanding anything contained in this Act or in any other law for the time being in force, all options in securities entered into after the commencement of this Act shall be illegal.