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2020 (10) TMI 582 - HC - Money LaunderingDisposal of representations dated 21.08.2018 by passing a reasonable and speaking order, within a reasonable time period that may be fixed by this Court - HELD THAT - The interest of the petitioner is only private and if the same is a public interest, the locus will be tested in a different way. The term dual test is whether the petitioner is a person aggrieved, as admittedly, he is an advocate and had never traded with the NSE nor had suffered any loss on account of the alleged co-location service. The petitioner being a complete stranger, there is no cause of action for him to maintain a writ petition, much less, any cause of action that arose within the jurisdiction of this court to maintain a writ petition here. Therefore, on the ground of maintainability itself the petitioner has to be nonsuited. Admittedly, there were issues when co-locations were introduced on 22.05.2017. The first show cause notice was issued by SEBI to NSE, to conduct an extraordinary investigation. Deloitte, a private independent professional agency was appointed and a report was filed and other private investigators were also engaged to find out whether any profits were made by the brokers. On 3.7.2018, a second show cause notice was issued and a full-fledged encquiry by SEBI was conducted. The enquiry was held from February 2019 to April 2019. On 30.04.2019, SEBI passed an order of imposing a disgorgement penalty of ₹ 624.00 Crores for certain failures for not having safeguards. However, no case was made out against NSE for fraud - NSE had preferred an appeal before the Securities Appellate Tribunal (SAT). Before the Securities Appellate Tribunal, the appeal was also heard in length and reserved for orders on 05.03.2020. The petitioner also has impleaded himself in the appeal, besides filing an independent appeal. From the above, it is evident that the representation of the petitioner has already been disposed of. Section 6(3) of the Securities Contracts (Regulation) Act, 1956, mentions about the power of the Central Government to call for periodical reports or direct enquiries to be made. Already show cause notice was issued under Section 11 of the Securities Contracts (Regulation) Act. When the prayer in both the writ petitions, is to consider the representation of the petitioner dated 21.08.2018, and action has already been taken and that the SAT is seized of the matter and having reserved orders in the appeal, issuance of mandamus, is not warranted. Petition dismissed.
Issues:
1. Allegations of fraud and misconduct by National Stock Exchange (NSE) officials. 2. Delay in disposal of representations by respondents. 3. Jurisdiction of the court to entertain the writ petitions. Analysis: 1. The petitioner alleged that NSE officials conspired with a Software Vendor and OPG Securities to provide illegal co-location services, resulting in manipulative price discovery and preferential access opportunities. Despite SEBI guidelines, NSE was accused of violating statutory and regulatory norms. An Expert Committee found that select brokers gained wrongful advantages due to lack of system checks, and NSE failed to cooperate with investigations, leading to loss of public confidence. 2. The petitioner sought action against NSE under the Prevention of Money Laundering Act, 2002, for various frauds and misconduct. Representations to SEBI and respondents were made, but no action was taken, prompting the petitioner to seek a writ of mandamus for disposal of representations. NSE argued that the petitioner lacked standing as he had not availed co-location services and suffered no legal injury. NSE also challenged the court's jurisdiction, stating the matter falls under SEBI's purview. 3. SEBI conducted investigations, issued show cause notices, and imposed penalties on NSE for failures in safeguards. NSE appealed the order, and the Securities Appellate Tribunal reserved judgment. The court held that SEBI is the appropriate regulatory body to address co-location issues, and the petitioner's representations had been disposed of. Dismissing the writ petitions, the court found no grounds for mandamus issuance, considering ongoing regulatory actions and appeals. In conclusion, the court dismissed the writ petitions, emphasizing SEBI's regulatory role in addressing co-location issues and ongoing investigations. The judgment highlighted the need for regulatory bodies like SEBI to handle financial market misconduct allegations, underscoring the importance of established regulatory mechanisms in addressing financial fraud and misconduct.
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