2011 (3) TMI 1461 - HC - Indian Laws

SEBI - Supreme Court, in its order dated 4.1.2011, has specifically directed that SEBI would also be entitled to call for any information which in deems fit, including the names of the investors who have invested in OFCD (optionally fully convertible debentures) in the course of the inquiry - Petitioners had agreed to give information that SEBI would call upon them to furnish during inquiry - However, petitioners failed to give information as asked for Held that - conduct of petitioners, by not giving required information, regarding investors, despite orders of Court and their agreement could not be appreciated. petitioners directed to furnish information regarding investors to SEBI, failing which interim order granted by High Court in their favour would be vacated

Summary

Issues:
Amendment of writ petition, interim order granted by the court, furnishing information to SEBI, time-limit for providing information, conduct of petitioners in providing data, last opportunity to furnish information, apprehension of misuse of information by SEBI.

Amendment of Writ Petition:
The senior advocates for the petitioners and SEBI agreed to allow the amendment of the writ petition for just adjudication. The court allowed the application for amendment, emphasizing the necessity for proper adjudication and ordered the amendments to be incorporated during the hearing of the case.

Interim Order and Furnishing Information to SEBI:
SEBI urged the court to vacate the interim order and allow them to proceed with the inquiry, citing delays in receiving investor information despite court orders. The petitioners claimed to have already provided relevant information to the Registrar of Companies and SEBI. The Supreme Court had directed the petitioners to furnish information to SEBI during the inquiry, which the petitioners had agreed to. The court found no valid reason for the delay in providing the requested information.

Time-Limit for Providing Information:
The petitioners argued that the Supreme Court did not specify a time-limit for submitting information to SEBI. However, the court rejected this argument, emphasizing the need to provide information within a reasonable time during the inquiry. The court deemed the petitioners' argument baseless and emphasized the importance of honoring court orders promptly.

Conduct of Petitioners and Last Opportunity to Furnish Information:
SEBI highlighted a letter indicating that 50% of relevant investor data was available in electronic form and could be provided immediately. The court expressed dissatisfaction with the petitioners' conduct in withholding information despite court orders and agreements. As a final opportunity, the court granted two weeks for the petitioners to furnish the investor information to SEBI, warning that failure to comply would lead to the interim order being vacated.

Apprehension of Misuse of Information by SEBI:
The petitioners expressed concerns about potential misuse of the investor information by SEBI. SEBI assured the court that the information was solely required for the inquiry purposes and would not be misused. SEBI emphasized the importance of the information for conducting a fair and thorough investigation.

This judgment primarily revolves around the petitioners' obligation to provide investor information to SEBI during an inquiry, emphasizing the need for timely compliance with court orders and agreements. The court addressed concerns regarding the conduct of the petitioners, the necessity of honoring court directives promptly, and the assurance of information security by SEBI. The judgment underscored the importance of cooperation and transparency in regulatory investigations, setting a clear deadline for the petitioners to furnish the required data.