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2025 (1) TMI 853 - HC - SEBICompounding of offences - Order passed by Additional Sessions Judge dismissing an application filed by the Petitioner under Section 91 Cr.P.C - Petitioner had filed the said application seeking directions to SEBI to place on record all the statements/findings/documents considered by the High Powered Advisory Committee (hereinafter HPAC ) and the panel of Whole Time Members (WTC) while rejecting the request of the Petitioner herein for compounding the offence alleged in the complaint against the Petitioner herein - HELD THAT - Regulation 29(1) of the Settlement Regulation provides that these documents cannot be given to public if the same prejudices the Board and/or the applicant. Regulation 29 (2) of the Settlement Regulation provides that these documents cannot be used as evidence before any court or Tribunal. In the opinion of this Court, these Regulations cannot prohibit any Court to look into the material which was placed before the HPAC or the SEBI Board before it comes to the conclusion, to agree for compounding or not to agree for compounding of the offence. Under Regulation 29 of the Settlement Regulation, the decision taken by the Board is not binding on the Court even if HPAC recommends for compounding of the offence. The Court can take a different view and reject the compounding if they do not meet the guidelines as laid down by the Apex Court as laid down in Prakash Gupta 2021 (7) TMI 971 - SUPREME COURT The materials sought by the Petitioner become exceedingly important for the Court to take a decision as to allow or not allow the compounding application of the Petitioner. This Court is inclined to set aside the Order passed by the Ld. Additional Sessions Judge, Tiz Hazari, dismissing an application filed by the Petitioner under Section 91 Cr.P.C. The SEBI is directed to produce all the documents before the Court. These documents can be given in a sealed cover and it is for the Court to take a decision as to whether these documents should be supplied to the Petitioner or not. 1. ISSUES PRESENTED and CONSIDERED The core legal questions considered in this judgment are:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Entitlement to Access Documents Relevant Legal Framework and Precedents: The Petitioner sought documents under Section 91 of the Cr.P.C., arguing that access to these documents is necessary to challenge the decision of the HPAC. The Petitioner relied on precedents such as Prakash Gupta v. SEBI and T. Takano v. SEBI, which emphasize the duty of SEBI to disclose relevant investigative material. Court's Interpretation and Reasoning: The Court acknowledged the Petitioner's right to access documents that are crucial for challenging the HPAC's decision. It emphasized that while SEBI's recommendations are not binding, they are influential and should be scrutinized by the Court. Key Evidence and Findings: The Court noted that SEBI, in its reply, did not object to producing documents if the Court deemed it necessary. This acknowledgment by SEBI reinforced the Petitioner's claim for access. Application of Law to Facts: The Court applied Section 91 of the Cr.P.C. to conclude that the Petitioner's request for documents was legitimate and not merely a tactic to delay proceedings. Treatment of Competing Arguments: SEBI argued confidentiality under Regulation 29, but the Court held that such regulations cannot override the Court's authority to access necessary documents for judicial scrutiny. Conclusions: The Court concluded that the documents were essential for the adjudication of the compounding application and directed SEBI to produce them. Issue 2: Binding Nature of SEBI's Decision Relevant Legal Framework and Precedents: Section 24A of the SEBI Act and the judgment in Prakash Gupta v. SEBI were pivotal, establishing that SEBI's consent is not mandatory for compounding offences. Court's Interpretation and Reasoning: The Court interpreted that SEBI's role is advisory and not determinative. The Court must consider SEBI's opinion but is not bound by it. Key Evidence and Findings: The Court referenced the Supreme Court's guidance that SEBI's views should be given deference but are not conclusive. Application of Law to Facts: The Court applied these principles to affirm that it retains the discretion to compound offences despite SEBI's recommendations. Treatment of Competing Arguments: The Petitioner argued for judicial independence in compounding decisions, which the Court upheld against SEBI's position of confidentiality. Conclusions: The Court concluded that SEBI's decision is not binding, and the Court has the autonomy to decide on compounding applications. Issue 3: Confidentiality under Regulation 29 Relevant Legal Framework and Precedents: Regulation 29 of the SEBI (Settlement Proceedings) Regulations, 2018, was examined concerning confidentiality and disclosure. Court's Interpretation and Reasoning: The Court interpreted Regulation 29 as not prohibiting judicial access to documents necessary for adjudicating compounding applications. Key Evidence and Findings: The Court noted that SEBI's willingness to provide documents to the Court indicated that confidentiality concerns could be managed without denying access. Application of Law to Facts: The Court applied the regulation to affirm its authority to access documents, balancing confidentiality with judicial necessity. Treatment of Competing Arguments: SEBI's confidentiality argument was countered by the Court's emphasis on judicial transparency and fairness. Conclusions: The Court concluded that confidentiality provisions do not prevent judicial access to relevant documents. 3. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: "While SEBI does not have a veto, having regard to the language of Section 24-A, its views must be elicited. The view of SEBI...must undoubtedly be sought by SAT or the court, to decide on whether an offence should be compounded." Core Principles Established:
Final Determinations on Each Issue:
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