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2023 (3) TMI 1334 - HC - SEBIAllegation on Karvy Stock Broking committed fraud with respect to thousands of investors - petitioners, pray that this court in exercise of power under Article 226 of the Constitution of India should constitute appropriate committee of experts to examine the details of the manner in which the innocent investors have been fraudulently cheated - HELD THAT - As it is seen that with respect to respondent No. 9-Karvy, the respondent No.3-NSE has taken appropriate steps in accordance with the applicable Bye-Laws. The cases of the individual investors including the petitioners have also been taken into consideration and appropriate orders have been passed therein. The facts of the present case are to be seen in the right perspective which has been discussed hereinabove and it would clearly reveal that not only the grievance of the petitioners but the grievance of similarly situated investors has also been considered by the appropriate authority as per the procedure prescribed by law. The manner in which grievances have been considered of course, would not be relevant at this stage as the investors and the petitioners would have appropriate remedy to test the validity of those decisions. Under the facts of the present case, this court is not inclined to accept the prayer for constitution of any individual committee or to monitor the further action to be taken by respondent No.3-NSE. Accordingly, the instant petitions stand dismissed alongwith pending application.
Issues Involved:
1. Preventing the disposal of Property in the shape of Securities. 2. Constitution of a Committee to examine the fraudulent activities and ensure refunds to investors. 3. Award of costs for the writ petition. 4. General directions for justice. Summary: 1. Preventing the disposal of Property in the shape of Securities: The petitioners sought a writ of mandamus to prevent respondents from disposing of Property in the shape of Securities and to restore the same to the Petitioners and other small investors. The court noted that respondent No. 9, Karvy Stock Broking Ltd. (Karvy), registered under the SEBI Act, 1992, allegedly committed fraud affecting thousands of investors. The National Stock Exchange (NSE) had declared Karvy a defaulter, expelled it, and constituted a defaulter committee to handle claims. The court found that the NSE had taken appropriate steps under its Bye-Laws, including facilitating the settlement of funds and securities to Karvy's clients/investors. 2. Constitution of a Committee: The petitioners requested the court to constitute a committee of experts to examine the fraud and ensure refunds to innocent investors. The court referenced the Supreme Court decisions in Indian Bank v. Godhara Nagrik Cooperative Credit Society Limited and Another (2008) and Vishal Tiwari v. Union of India (2023), which involved the constitution of committees in the larger public interest. However, the court distinguished the present case, noting that the NSE had already taken significant steps, including settling claims and facilitating refunds. The court rejected the petitioners' request for constituting a separate committee, stating that the grievances of the petitioners and similarly situated investors had been considered by the appropriate authority as per the law. 3. Award of Costs: The petitioners sought the award of costs for the writ petition. The court did not specifically address the issue of costs in the judgment, indicating no award of costs was granted. 4. General Directions for Justice: The court emphasized that the grievances of the petitioners and other investors had been appropriately addressed by the NSE. It noted that the petitioners had the remedy to test the validity of the decisions made by the NSE. The court concluded that it was not inclined to accept the prayer for constituting any individual committee or to monitor further actions by the NSE. Consequently, the petitions were dismissed along with pending applications. Conclusion: The court dismissed the petitions, finding that the NSE had taken appropriate steps to address the grievances of investors, including the petitioners. The court rejected the request for constituting a separate committee, emphasizing that the existing procedures and actions taken by the NSE were adequate and in accordance with the law.
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