2024 (12) TMI 615 - HC - SEBI

Writ against private communications in which the SEBI has only expressed its opinion on a legal provision - Availability of alternate remedy under Section 15-T of SEBI Act - Petitioner s case is that Respondent Nos. 4 and 6 had borrowed amounts from the Petitioner bank and have defaulted in the payment of the same and involves initiating proceedings under the SARFAESI Act 2002, in which the Petitioner has already taken possession of the properties of Respondent Nos. 4 and 5. SEBI has already made an order dated 11 January 2023 prejudicing the Petitioner s interest to deal with the property of Respondent Nos. 4 and 5, the possession of which is already taken over by the Petitioner by resort to the provisions of SARFAESI Act 2002. HELD THAT - In this case, the SEBI has made an order directing Respondent Nos. 4 and 6 in this Petition not to dispose of or alienate any of the assets, whether movable or immovable (including funds in their bank accounts), or create any interest or charge in any such assets, till such time the refunds/repayments as directed in paragraphs 61 (f) and 61 (g) are completed. This order is not challenged in this petition. Assuming this is so, there can be no ambiguity about appealing the order dated 11 January 2023 made by SEBI based on the opinion communicated by SEBI to the Petitioner vide the impugned communications. As indicated earlier, a Petition to challenge or question an opinion expressed by SEBI in its private communication to the Petitioner should not be entertained. Since the Petitioner is aggrieved by SEBI s order dated 11 January 2023, in which such opinion has been translated or reiterated, it will surely be open to the Petitioner to appeal SEBI s order dated 11 January 2023. In its return, the SEBI has, in any case, raised the issue of maintainability or entertainability by relying upon the alternate remedy available to the Petitioner under Section 15-T of the SEBI Act. Therefore, interest of justice would be met if the Petitioner is relegated to the remedy of appeal under Section 15-T of the SEBI Act. Such an appeal had to be filed within forty-five days. However, the proviso to Section 15T (3) provides that the Securities Appellate Tribunal ( SAT ) may entertain an appeal after the expiry of the said period of forty-five days if it is satisfied that there was sufficient cause for not filing it within that period. Petitioner was pursuing this Petition bona fide. The Petitioner, possibly based on legal advice, may not have found it appropriate to institute an appeal against SEBI s order dated 11 January 2023 at that stage. However, it is not as if the Petitioner was not pursuing its remedies. The petitioner was not indolent or had not acquiesced with the opinion in the impugned communications, which forms the basis of the SEBI s order dated 11 January 2023. Considering the legal position and the SEBI s objection to the entertainability of this petition against the impugned communications on the grounds of the availability of alternate remedy, the interests of justice would be met if liberty, as prayed for, is now granted. Liberty in the above terms is now granted. If an appeal is instituted within four weeks of uploading this order, we request the SAT dispose of it on the merits without mentioning the limitation issue. The learned Counsel for the Respondents have also agreed that they will not raise the limitation issue and will argue the matter on the merits. Accordingly, we dispose of this Petition by granting the Petitioner liberty to avail of the alternate remedy under Section 15-T of the SEBI Act. All contentions of all parties on merits are left open to be decided by the SAT.

Summary

Issues:
Challenge to SEBI communications under SARFAESI Act, SEBI's opinion in private communications, Maintainability of Writ Petition against private communications, SEBI's order dated 11 January 2023, Availability of alternate remedy under Section 15-T of SEBI Act, Liberty to appeal SEBI's order, Disposal of the Petition.

Analysis:
The Petitioner challenged SEBI communications dated 18 May 2023 and 8 January 2024 under the SARFAESI Act. The impugned communications reiterated SEBI's opinion on the precedence of SEBI Act over SARFAESI Act. SEBI clarified that these were private communications expressing opinions and not binding orders. SEBI's Senior Counsel argued that no Writ Petition should be entertained against such private communications challenging legal opinions. The Court agreed that challenging opinions in private communications directly was not appropriate but allowed challenging actual orders based on those opinions.

SEBI had issued an order on 11 January 2023, not challenged in this petition, restricting disposal of assets by certain parties. The Petitioner contended that this order prejudiced its rights under the SARFAESI Act as it had taken possession of the assets. SEBI argued that the Petitioner could appeal under Section 15-T of the SEBI Act. The Court noted that while challenging the opinion directly was not permissible, appealing the order based on that opinion was allowed.

The Court held that in the present case, the Petitioner could appeal SEBI's order dated 11 January 2023 under Section 15-T of the SEBI Act. It granted liberty to the Petitioner to file an appeal within four weeks. The Court emphasized that the appeal should be decided on merits without considering the limitation issue. The Respondents agreed not to raise the limitation issue during the appeal process. The Petition was disposed of, granting the Petitioner liberty to pursue the alternate remedy under Section 15-T of the SEBI Act, leaving all contentions on merits open to be decided by the Securities Appellate Tribunal.

In conclusion, the Court allowed the Petitioner to appeal SEBI's order while emphasizing the importance of following the proper appeal process under the SEBI Act. The judgment focused on maintaining the distinction between challenging opinions in private communications and appealing actual orders based on those opinions, ensuring justice and procedural fairness in the legal proceedings.