2009 (4) TMI 1066 - HC - SEBI

Summary

Issues:
Jurisdiction of civil court under SEBI Act, maintainability of suit, applicability of Section 15-Y of SEBI Act, interpretation of Section 15-I of SEBI Act, Company Law Board's jurisdiction.

Analysis:
The civil revision petition challenged the trial court's order on an additional issue regarding the court's jurisdiction, where the trial court held it lacked jurisdiction to entertain the matter. The plaintiff sought a declaration that the transfer of shares to the 2nd defendant was illegal, alleging fraud, cheating, and forgery. The trial court considered the provisions of Sections 15-Y and 15-I of the SEBI Act and concluded the suit was not maintainable due to the bar in Section 15-Y.

The petitioner argued that the trial court erred by not considering whether the relief sought fell under Section 15-I of the SEBI Act before dismissing the suit based on Section 15-Y. The respondent relied on Section 111-A of the Companies Act, claiming the suit's subject matter falls under the Company Law Board's jurisdiction. After reviewing the arguments and relevant provisions, the court had to determine the validity of the trial court's decision.

Section 15-Y of the SEBI Act states that civil courts lack jurisdiction over matters within the SEBI Act's adjudicating officer or Securities Appellate Tribunal's purview. Section 15-I specifies the matters subject to adjudication under the SEBI Act. The court noted that the trial court failed to assess whether the suit's subject matter aligned with the sections specified in Section 15-I before invoking Section 15-Y. Without such examination, the trial court's decision based solely on Section 15-Y was deemed legally unsustainable.

Consequently, the court decided to remand the matter to the trial court for fresh consideration in light of the observations made. The trial court was instructed to evaluate the suit's subject matter in connection with the relevant provisions of the SEBI Act outlined in Section 15-I. Only after such assessment could the trial court determine the suit's maintainability under the SEBI Act.

In conclusion, the revision petition was allowed, setting aside the trial court's order. The matter was remitted to the trial court for a reevaluation based on the SEBI Act provisions, with directions to issue a new order after hearing both parties, if necessary.