Comprehension
SEBI was established as India’s principal capital markets regulator with the aim to protect the interest of investors in securities and promote the development and regulation of the securities market in India. SEBI is empowered to regulate the securities market in India by the SEBI Act 1992, the SCRA and the Depositories Act 1996. SEBI’s powers to regulate the securities market are wide and include delegated legislative, administrative, and adjudicatory powers to enforce SEBI’s regulations. SEBI exercises its delegated legislative power by inter alia framing regulations and appropriately amending them to keep up with the dynamic nature of the securities’ market. SEBI has issued a number of regulations on various areas of security regulation which form the backbone of the framework governing the securities market in India.
Section 11 of the SEBI Act lays down the functions of SEBI and expressly states that it “shall be the duty of the Board to protect the interests of investors in securities and to promote the development of, and to regulate the securities market, by such measures as it thinks fit”. Further, Section 30 of the SEBI Act empowers SEBI to make regulations consistent with the Act. Significantly, while framing these regulations, SEBI consults its advisory committees consisting of domain experts, including market experts, leading market players, legal experts, technology experts, retired Judges of this Court or the High Courts, academicians, representatives of industry associations and investor associations. During the consultative process, SEBI also invites and duly considers comments from the public on their proposed regulations. SEBI follows similar consultative processes while reviewing and amending its regulations.
(Extracted, with edits and revision, from the judgement in Vishal Tiwari v. Union of India, [2024] 1 S.C.R. 171)
Question: 1

Which of the following is not a committee setup by SEBI?

Updated On: Jan 13, 2026
  • Technical Advisory Committee
  • Competition Advisory Committee
  • Intermediary Advisory Committee
  • Market Data Advisory Committee
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The Correct Option is B

Solution and Explanation

The Securities and Exchange Board of India (SEBI) regulates India's securities market. SEBI's purpose is to safeguard investors and foster market development. SEBI forms advisory committees to achieve these goals. These committees offer expert guidance, aiding SEBI in creating and modifying regulations. Key SEBI committees are:
  • Technical Advisory Committee
  • Intermediary Advisory Committee
  • Market Data Advisory Committee
These committees keep SEBI updated on market trends, allowing for informed decisions and effective regulation enforcement.
From the following list:
  • Technical Advisory Committee
  • Competition Advisory Committee
  • Intermediary Advisory Committee
  • Market Data Advisory Committee
the Competition Advisory Committee is not a SEBI committee. SEBI concentrates on securities regulation. While competition is relevant to other entities, it is not within the scope of SEBI's advisory committees.
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Question: 2

Which among the following is not a function of SEBI?

Updated On: Jan 13, 2026
  • regulating substantial acquisition of shares and takeover of companies
  • prohibiting and regulating self-regulatory organisations
  • prohibiting insider trading in securities
  • promoting investors education and training of intermediaries of securities markets
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The Correct Option is B

Solution and Explanation

SEBI (Securities and Exchange Board of India) regulates the Indian securities market, as per the SEBI Act 1992. SEBI's key functions are:

  • Overseeing significant share acquisitions and company takeovers for market fairness.
  • Preventing insider trading to maintain market integrity.
  • Educating investors and training securities market intermediaries to improve market knowledge.

SEBI does *not* directly prohibit or regulate self-regulatory organizations. Its primary focus is on protecting investors, and developing the securities market.

OptionDescription
Regulating substantial acquisition of shares and takeover of companiesSEBI Function
Prohibiting and regulating self-regulatory organisationsNot a SEBI Function
Prohibiting insider trading in securitiesSEBI Function
Promoting investors education and training of intermediaries of securities marketsSEBI Function

Therefore, the answer is: prohibiting and regulating self-regulatory organisations

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Question: 3

Match List I with List II:

List I

(Section of Securities and Exchange Board of India Act, 1992)

List II

(Provision for)

ASection 6IOffences by companies
BSection 11IIPower to make regulations
CSection 27IIIRemoval of member from office
DSection 30IVFunctions of Board
Choose the correct answer:

Updated On: Jan 13, 2026
  • A-I, B-III, C-II, D-IV
  • A-II, B-I, C-IV, D-III
  • A-III, B-IV, C-I, D-II
  • A-IV, B-II, C-III, D-I
Show Solution

The Correct Option is C

Solution and Explanation

To determine the correct matches, correlate the sections from the SEBI Act, 1992 (List I) with their descriptions (List II). Consider these sections:

  • Section 6: Focuses on "Removal of member from office."
  • Section 11: Defines "Functions of Board," encompassing investor protection and securities market regulation.
  • Section 27: Addresses "Offences by companies."
  • Section 30: Grants SEBI "Power to make regulations."

The correct matches are:

  • A-III (Section 6 - Removal of member from office)
  • B-IV (Section 11 - Functions of Board)
  • C-I (Section 27 - Offences by companies)
  • D-II (Section 30 - Power to make regulations)

Therefore, the answer is A-III, B-IV, C-I, D-II.

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Question: 4

The process by which an organisation thinks about and evolves its relationships with stakeholders for the common good, and demonstrates its commitment in this regard by adoption of appropriate business processes and strategies is called

Updated On: Jan 13, 2026
  • Annual general meeting
  • Corporate social responsibility
  • Issuing Shelf prospectus
  • Incorporation of a company
Show Solution

The Correct Option is B

Solution and Explanation

The concept described is Corporate Social Responsibility (CSR). CSR is a business approach where companies consider social and environmental impacts in their operations and stakeholder interactions. This involves stakeholder engagement for mutual benefit and implementing strategies reflecting commitment to sustainable development and ethical behavior.
Option analysis:
  1. Annual General Meeting: A yearly shareholder meeting for discussing performance and decisions; it doesn't encompass the proactive stakeholder engagement of CSR.
  2. Corporate Social Responsibility: Correct, directly aligning with stakeholder relationship development and strategies for the common good.
  3. Issuing Shelf Prospectus: This is for issuing securities, unrelated to stakeholder management or the common good.
  4. Incorporation of a company: The legal formation of a company; not focused on evolving stakeholder relationships.
Therefore, the answer is Corporate Social Responsibility.
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Question: 5

In which of the following cases did the court struck down the attempt of the government to nationalise banks and pay minimal compensation to the shareholders?

Updated On: Jan 13, 2026
  • Shri Sunil Siddharthbhai Etc v. Union of India
  • R.C. Cooper v. Union of India
  • United Bank of India v. Satyawati Tondon & Ors
  • Punjab National Bank v. Union of India
Show Solution

The Correct Option is B

Solution and Explanation

The court case R.C. Cooper v. Union of India saw the invalidation of the Indian government's bank nationalization plan due to insufficient shareholder compensation. This ruling is important because it highlighted the need for fair payment and the protection of property rights as guaranteed by the Indian Constitution.

The Supreme Court of India examined the government's actions in light of Article 31, which addresses property rights. The decision considered the state's power to implement economic changes versus individual rights, ensuring fair and sufficient compensation for property taken by the government.

This judgment established a precedent for future nationalization attempts and reinforced the judiciary's role in defending constitutional rights against possible government overreach. Consequently, the case is a key legal precedent in India regarding property rights and compensation.

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Top Questions on Administrative Law

Questions Asked in CLAT PG exam

An unpleasant tussle ensured between the TATA Sons and Cyrus Pallonji Mistry (“CPM”) in October 2016, when Mistry, who was the sixth chairman of Tata Sons, was ousted from the position of Executive Chairman of Tata Sons Limited. CPM took over as the chairman in 2012 after Ratan Tata announced his retirement. Tata Group patriarch Ratan Tata had personally asked Cyrus Mistry to resign as chairman of Tata Sons as the board had lost faith in him, but his refusal led to the removal via majority vote. Cyrus Investments Private limited and Sterling Investment Corporation Private Limited belonged to the Shapoorji Palloni Group in which CPM held a controlling interest (about 2% of the issued share capital of Tata Sons). Seven out of the nine directors of Tata Sons voted for CPM’s replacement after Farida Khambata abstained and Mistry was declared ineligible to vote as he was an interested director. Mistry challenged his removal, accusing the board of mismanagement and of oppressing minority shareholders. however, the National Company Law Tribunal (NCLT) rejected his petition. After this Mistry challenged his removal in National Company Law Appellate Tribunal (NCLAT). In 2018, NCLAT order restored Mistry as the group’s executive chairman. Tata Sons challenged that NCLAT order in Supreme Court. CPM also challenged the order for few more relief. Supreme Court stayed NCLAT’s order reinstating Cyrus Mistry as the executive chairman of Tata Sons and restoring his directorships in the holding company as well as three group companies, with a preliminary observation that the first impression of the order was “not good” and that the tribunal ‘could’ not have given consequential relief that had not been sought in the first place. Ultimately, the Supreme Court decided the case in favour of Tata Sons. One of the issues decided by Supreme Court was that “whether the case was fit to be qualified as a situation of ‘Oppression and Mismanagement’ under Section 241 of the Companies Act, 2013?”. On this issue, the Supreme Court observed that “unless the removal of a person as a chairman of a company is oppressive or mismanaged or done in a prejudicial manner damaging the interests of the company, its members or the public at large, the NCLT cannot interfere with the removal of a person as a Chairman of a Company in a petition under Section 241 of the Companies Act, 2013.” This case highlighted the point that “an executive chairman does not have sovereign authority over the company. In corporate democracy, decision making always remains with the Board as long as they enjoy the pleasure of the shareholders. Likewise, an executive chairman will continue as long as he/she enjoys the pleasure of the Board. An assumption by the executive chairman that he/she would have a free hand in running the affairs of the company is incongruous to corporate governance and corporate democracy. The Tribunal held that the concept of ‘free hand rule’ is antithesis to collective responsibility and collective decision making”.
[Based on Tata Consultancy Services Ltd. v. Cyrus Investment Pvt. Ltd., 2021 SCC 122].
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Alastair Hudson in his book ‘Securities Law’ First Edition (Sweet & Maxwell), 2008 at page 342, refers to ‘Restricted Offers’ and noticed that there is no contravention of Section 85 of FSMA 2000, if: “(b) the offer is made to or directed at fewer than 100 persons, other than qualified investors, per EEA State”. The purpose underlying that exemption, the author says, is mainly the fact that the offer is not being made to an appreciable section of “the public” such that the policy of the prospectus rules generally is not affected. Further, the author says that “Self-evidently, while an offer to 99 ordinary members of the public would be within the literal terms of the exemption, it would not be the sort of activity anticipated by the legislation. Moreover, if a marketing campaign were arranged such that ordinary members of the people were approached in groups of 99 people at a time in an effort to avoid the prospectus rules, then that would not appear to be within the spirit of the regulations and might be held to contravene the core principle that a regulated person must act with integrity.”
I may, therefore, indicate, subject to what has been stated above, in India that any share or debenture issue beyond forty-nine persons, would be a public issue attracting all the relevant provisions of the SEBI Act, regulations framed thereunder, the Companies Act, pertaining to the public issue. Facts clearly reveal that Saharas have issued securities to the public more than the threshold limit statutorily fixed under the first proviso to Section 67(3) and hence violated the listing provisions which may attract civil and criminal liabilities. Principles of listing, which I may later on discuss, is intended to assist public companies in identifying their obligations and responsibilities, which are continuing in nature, transparent in content and call for high degree of integrity. Obligations are imposed on the issuer on an ongoing basis. Public companies who are legally obliged to list their securities are deemed to accept the continuing obligations, by virtue of their application, prospectus and the subsequent maintenance of listing on a recognized stock exchange. Disclosure is the rule, there is no exception. Misleading public is a serious crime, which may attract civil and criminal liability. Listing of securities depends not upon one’s volition, but on statutory mandate.
[Extract from Sahara India Real Estate Corporation Limited v. Securities and Exchange Board of India (SEBI), Para 89-91, Civil Appeal No. 9833/2011 (SC)]
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The aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words, they do not supplant the law of the land but supplement it. The concept of natural justice has undergone a great deal of change in recent years. In the past, it was thought that it included just two rules namely: (1) no one shall be a judge in his own case (Nemo debet esse judex propria causa) and (2) no decision shall be given against a party without affording him a reasonable hearing (audi alteram partem).
Very soon thereafter a third rule was envisaged and that is that quasi-judicial enquiries must be held in good faith, without bias and not arbitrarily or unreasonably. But in the course of years many more subsidiary rules came to be added to the rules of natural justice. Till very recently it was the opinion of the courts that unless the authority concerned was required by the law under which it functioned to act judicially there was no room for the application of the rules of natural justice. The validity of that limitation is not questioned.
If the purpose of the rules of natural justice is to prevent miscarriage of justice one fails to see why those rules should be made inapplicable to administrative enquiries. Often times it is not easy to draw the line that demarcates administrative enquiries from quasi-judicial enquiries. Enquiries which were considered administrative at one time are now being considered as quasi-judicial in character. Arriving at a just decision is the aim of both quasi-judicial enquiries as well as administrative enquiries. An unjust decision in an administrative enquiry may have more far reaching effect than a decision in a quasi-judicial enquiry as observed by this Court in Suresh Koshy George v. University of Kerala [Civil Appeal No. 990/68, decided on 15-07- 1968], the rules of natural justice are not embodied rules. What particular rule of natural justice should apply to a given case must depend to a great extent on the facts and circumstances of that case, the framework of the law under which the enquiry is held and the constitution of the Tribunal or body of persons appointed for that purpose. Whenever a complaint is made before a court that some principle of natural justice had been contravened the court has to decide whether the observance of that rule was necessary for a just decision on the facts of that case.
[Extract from the judgment of the Supreme Court in A.K. Kraipak v. Union of India, (1969) 2 SCC 262, decided on April 29, 1969, hereafter ‘A.K. Kraipak’].
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The doctrine of promissory estoppel is by now well recognized and well defined by a catena of decisions of this Court. Where the Government makes a promise knowing or intending that it would be acted on by the promise and, in fact, the promise, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promise notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract as required by Article 229 of the Constitution. The rule of promissory estoppel being an equitable doctrine has to be moulded to suit the particular situation. It is not a hard-and-fast rule but an elastic one, the objective of which is to do justice between the parties and to extend an equitable treatment to them. This doctrine is a principle evolved by equity, to avoid injustice and though commonly named promissory estoppel, it is neither in the realm of contract nor in the realm of estoppel. For application of the doctrine of promissory estoppel the promise must establish that he suffered in detriment or altered his position by reliance on the promise.
Normally, the doctrine of promissory estoppel is being applied against the Government and defence based on executive necessity would not be accepted by the court. However, if it can be shown by the Government that having regard to the facts as they have subsequently transpired, it would be inequitable to hold the Government to the promise made by it, the court would not raise an equity in favour of the promise and enforce the promise against the Government. Where public interest warrants, the principles of promissory estoppel cannot be invoked. The Government can change the policy in public interest. However, it is well settled that taking cue from this doctrine, the authority cannot be compelled to do something which is not allowed by law or prohibited by law. There is no promissory estoppel against the settled proposition of law. Doctrine of promissory estoppel cannot be invoked for enforcement of a promise made contrary to law, because none can be compelled to act against the statute. Thus, the Government or public authority cannot be compelled to make a provision which is contrary to law.
[Extract from the judgment of the Supreme Court in Shree Sidhbali Steels Limited v. State of Uttar Pradesh, (2011) 3 SCC 193, decided on January 20, 2011, hereafter ‘Shree Sidhbali Steels’].
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