2023 (12) TMI 915 - HC - SEBI

Determination of jurisdiction of High Court for SEBI violations - Violation of SEBI s minimum public shareholding norms and violation of SEBI s minimum public shareholding norms - Separate and independent settlement applications were also filed by respondent nos. 2 to 8 - Whether this court is the appropriate forum for deciding the present writ petitions and granting the reliefs as prayed for? - HELD THAT - A perusal of Clause 2 of Article 226 indicates that the writ jurisdiction can be exercised by the High Court primarily in relation to the territories within which the cause of action, wholly or in part arises. However, the location of such Government or authority or residence of such person, outside the territories of the High Court will not deter the High Court from issuing the appropriate writ. The introduction of Clause (2) in Article 226 of the Constitution of India widened the width of the area for issuance of writs by different High Courts, however, the same cannot be construed to completely dilute the original intent of the Constitution makers which is succinctly encapsulated in Clause (1) of Article 226. Rather, Clause (2) is an enabling provision, which supplements Clause (1) to empower the High Courts to ensure an effective enforcement of fundamental rights or any other legal right. Therefore, the power of judicial review cannot be circumscribed by the location of the authority against whom the writ is issued, however, the same does not mean that the constitutional mandate enshrined under Article 226 (1) can be completely neglected or whittled down. The cause of action means a bundle of facts, which is necessary for the plaintiff to prove in order to succeed in the proceedings. It does not completely depend upon the character of the relief prayed for by the plaintiff. It is rather the foundation upon which the plaintiff lays his/her claim before the court to arrive at a conclusion in his/her favour. It depends on the right which the plaintiff has and its infraction. Section 20 of the Civil Procedure Code, 1908, provides a generic definition of the term cause of action to mean fact, which is necessary to establish to support a right to obtain a judgment. The question whether cause of action has arisen within the territorial jurisdiction of a court, has to be answered based on the facts and circumstances of the case. The cause of action, thus, does not comprise of all the pleaded facts; rather it has to be determined on the basis of the integral, essential and material facts which have a nexus with the lis. It is also a settled proposition of the law that the location where the tribunal/appellate authority/revisional authority is situated would not be the sole consideration to determine the situs of the accrual of cause of action, ignoring the concept of forum conveniens in toto. Hence, even if a small part of the cause of action is established, and the same is found to be non-integral or non-material to the lis, the court may invoke the doctrine of forum non-conveniens and decline to exercise its writ jurisdiction, if an alternative, more efficacious forum for the same exists. It is, thus, unequivocally clear that the petitioners participated before SEBI s Internal Committee on different dates at Mumbai and thereupon, a settlement had arrived at. It is, thus, seen that it is not merely the location of the respondent-SEBI s Head Office at Mumbai, but rather the entire genesis of the dispute lies in Mumbai itself. The settlement was finalized at Mumbai. The determination of the settlement not being fulfilled was made at Mumbai. The consideration to that effect has taken place at Mumbai and the decision to revoke the settlement has also been passed at Mumbai only. Merely because some of the writ petitions were entertained by this court relating to certain violations of norms and regulations of respondent-SEBI by the respondent companies therein and issues arising out of consequential settlement application, that in itself would not determine the integral, essential and material part of the cause of action as the pendency of the writ petition before this court has no relation with the impugned revocation order which has taken place subsequent to the said writ petition. The law relating to the doctrine of forum conveniens, as discussed above, already makes it explicitly clear that the jurisdiction has to be determined on the facts and circumstances of each case. With respect to the averment that this court is the most convenient forum for the petitioners, it would be inappropriate and myopic to assume that while determining the jurisdiction, only the convenience of the aggrieved party approaching the court has to be looked into. In fact, with the advent of technology in contemporary times, the courts have transcended the geographical barriers and are now accessible from remote corners of the country. Therefore, the convenience of the parties cannot be the sole criterion for the determination of jurisdiction considering the broader perspective of dynamism of technology and increased access to justice. The determination of cause of action and territorial jurisdiction has to be in line with the constitutional scheme envisaged under Article 226 of the Constitution of India. Moreover, the litigation history of the present writ petitions reveals that the parties have, in fact, agitated their concerns before the Hon ble High Court of Judicature at Bombay. Nothing has been put before this court, that shall allow the conclusion of the Hon ble High Court of Judicature at Bombay being a non-convenient forum. The forum, in the considered opinion of this court, is available, convenient, as also approachable. In all fairness, the petitioners herein ought to have disclosed the said fact before the Hon ble High Court of Bombay regarding reserving the right to challenge the settlement order. Undoubtedly, they can challenge the same without prior intimation to the Hon ble High Court of Bombay, but the recourse must have been taken before an appropriate forum/court. The burden of a fair demeanour on the part of litigants considerably amplifies when they approach the courts under the extraordinary jurisdiction. Therefore, at times, it is the constitutional courts upon which falls the burden to prevent the abuse of jurisdiction and eliminate any susceptibility of forum shopping. It is, thus, seen that under the facts of the instant matters, the integral, essential and material part of the cause of action had arisen with the territorial jurisdiction of the Hon ble High Court of Judicature at Bombay and even assuming that a slender part of cause of action has arisen within the jurisdiction of this court, applying the principles of forum conveniens as has been held by the Hon ble Supreme Court in the case of State of Goa 2023 (3) TMI 683 - SUPREME COURT , this court does not deem it appropriate to entertain the instant writ petitions. The instant writ petitions are, therefore, dismissed.

Summary

Issues Involved:
1. Territorial Jurisdiction: Whether the Delhi High Court has the territorial jurisdiction to entertain the writ petitions.
2. Forum Non-Conveniens: Whether the principle of forum non-conveniens applies, necessitating the transfer of the case to another jurisdiction.

Summary:

1. Territorial Jurisdiction:
The primary issue is whether the Delhi High Court has the territorial jurisdiction to entertain the writ petitions filed by the petitioners. The petitioners argued that their registered offices and businesses are in Delhi, and they received the impugned order in Delhi. They also contended that SEBI and other respondents have offices in Delhi, and the effect of the impugned order is felt in Delhi. The petitioners further argued that the convenience of the petitioners should be a decisive factor, citing various Supreme Court judgments to support their claim.

However, the court noted that the entire genesis of the dispute lies in Mumbai, where the settlement application was filed, considered, and the settlement order was passed. The court emphasized that the material, integral, and essential part of the cause of action arose in Mumbai, not Delhi. The court referred to various judgments, including those of the Supreme Court, to highlight that the location of the respondent's office or the receipt of the order does not confer jurisdiction if the cause of action did not arise in that location.

2. Forum Non-Conveniens:
The court also considered the principle of forum non-conveniens, which allows a court to refuse to exercise jurisdiction if another forum is more appropriate for the case. The respondent-SEBI argued that the entire deliberation and decision-making process occurred in Mumbai, and the petitioners had actively participated in proceedings before the SEBI and the Bombay High Court. The court agreed, noting that the petitioners had already contested the matter before the Bombay High Court and that the major part of the cause of action arose in Mumbai. The court emphasized that the convenience of the petitioners is not the sole criterion for determining jurisdiction and that the broader perspective of access to justice should be considered.

Conclusion:
The Delhi High Court dismissed the writ petitions, concluding that the integral, essential, and material part of the cause of action arose within the territorial jurisdiction of the Bombay High Court. The court applied the principles of forum non-conveniens and determined that the Bombay High Court was the appropriate forum for the case. The petitioners were granted liberty to approach the jurisdictional High Court, and the Delhi High Court did not express any opinion on the merits or demerits of the case.