2022 (9) TMI 1485 - HC - SEBI

Maintainability of the writ petition against SEBI - efficacious alternative remedy of preferring an appeal in terms of Section 15T - Recovery proceedings against past director - HELD THAT - It would be open to the Recovery Officer to examine all issues and contentions including that of the petitioner not being liable in terms of the original order passed. Judge had further observed that in case the Recovery Officer find merit in the challenge so raised, it would not continue the proceedings as initiated against the petitioner. It was further observed that in case it reached a contrary conclusion, it would be open for the Board to continue to hold the monies and utilise the same in accordance with law. Learned counsel seeks to draw sustenance from the fact that subsequently and pursuant to the directions issued by this Court on the earlier writ petition, the Recovery Officer had in fact by an order of 22 March 2018 withdrawn all proceedings which had been initiated against the petitioner. It is in aforesaid backdrop that learned counsel contended that the petitioner is not liable to be relegated to the alternative remedy. The Court finds itself unable to sustain the aforesaid submission for the reason that the order of the Recovery Officer does not record any categorical findings on whether the petitioner was or was not liable in terms of the original order which had been made by the Board. The issues which were canvassed before this Court in the earlier writ petition thus do not appear to have been decided or ruled upon on merits. In any case, the present proceedings which flow from the power of the respondents to levy penalties under the Act stand on a completely distinct footing. In that view of the matter, it would be appropriate for the petitioner to raise all objections and contentions before the Appellate Tribunal.

Summary

Issues:
Challenge to maintainability of writ petition due to alternative remedy available under Section 15T of the Act.

Analysis:
The writ petition was filed against an order passed by the Adjudicating Authority under Section 15D of the Securities and Exchange Board of India Act, 1992. The respondents argued that the petitioner had an alternative remedy of appealing under Section 15T of the Act. The petitioner contended that the proceedings stemmed from an order by the Securities and Exchange Board of India in 2013, which was not challenged earlier. The petitioner claimed that past Directors were not held liable in the original decision by the Board. A previous writ petition was disposed of with directions for the Recovery Officer to issue a fresh demand notice. The Court noted that the Recovery Officer's order did not conclusively determine the petitioner's liability as per the original Board decision. The Court found that the issues raised in the previous writ petition were not decided on merits. The present proceedings regarding penalties under the Act were distinct, and the petitioner was directed to raise objections before the Appellate Tribunal.

The Court dismissed the writ petition on the grounds of the availability of an alternative remedy. The judgment emphasized the need for the petitioner to address objections and contentions before the Appellate Tribunal, considering the distinct nature of the current proceedings related to penalties under the Act. The Court highlighted that the Recovery Officer's order did not definitively establish the petitioner's liability based on the original Board decision. Therefore, the petitioner was advised to pursue the available appellate remedy under Section 15T of the Act for a comprehensive resolution of the issues raised.