2013 (4) TMI 236 - HC - Companies Law

Maintainability of writ petitions filed challenging the orders of SEBI - orders passed against the company as well as Mr. A. Venkatramani, the promoter - Held that - Section 29 of the Act, 1992, enables the Government to make Rules for carrying out the purposes of the Act and the notification issued by the Central Government under Rule 5(2) is valid in law. The petitioners herein have not challenged the Rules nor the notification issued thereunder. In the absence of that, the petitioners are bound to follow the provisions of law by filing an appeal before the Appellate Tribunal. The contention that only one member that too, a non-judicial member is functioning as on today would not hold water as the Appellate Tribunal is functioning as on today and discharging its functions as per law. Any rule has to be read meaningfully and what is applicable to two members is applicable to one member. It is a necessity which has to be accepted. It is an admitted fact that, a number of appeals have been filed before the Appellate Tribunal and the same are heard and orders passed. Whether alternative remedy of appeal as provided in Act 15 of 1992 is a bar to entertain these writ petitions - Held that - On a perusal of the Act and the Rules made thereunder, it is a considered view that a fully-fledged appeal is provided under the Act, that too, with member having special and technical knowledge in the relevant field. In such circumstances, no reason found to waive on the appeal remedy and to entertain the writ petition. Therefore, the two writ petitions are not maintainable before the Court and the petitioners have to avail the statutory appellate remedy available under the Act - both the writ petitions are to be dismissed as not maintainable.

Summary

Issues involved:
Challenge to the maintainability of writ petitions against SEBI order under Sections 11 and 11(b) of the Securities and Exchange Board of India Act, 1992 due to availability of appeal before the Appellate Tribunal.

Detailed Analysis:

Issue 1: Maintainability of writ petitions vs. availability of appeal before the Appellate Tribunal
- The respondent argued that the writ petitions are not maintainable under Article 226 of the Constitution of India as an appeal can be filed before the Appellate Tribunal within 45 days as per Section 15(T)(3) of the Act, 1992.
- The petitioner contended that the impugned order was passed with jurisdictional errors, making it appropriate for redressal before the High Court, especially when no enquiry was conducted by the adjudicating officer as required by Section 15(i) of the Act.
- The petitioner also highlighted the inadequacy of the one-man Appellate Tribunal, lacking the necessary forum, and pointed out that every order of the Appellate Tribunal should be signed by the Presiding Officer and two other members as per Rule 18.
- The High Court noted that the petitioners did not challenge the Rules or the notification regarding the functioning of the Appellate Tribunal with a single non-judicial member, emphasizing that the Tribunal is functioning and hearing appeals as per law.
- The Court concluded that the availability of a fully-fledged appeal with members having special and technical knowledge under the Act rendered the writ petitions not maintainable, and directed the petitioners to avail the statutory appellate remedy provided.

Separate Judgments:
- The Court referred to various judgments, including L. Chandrakumar v. Union of India, Whirlpool Corpn. v. Registrar of Trade Marks, Union of India v. R. Gandhi, and Babu Verghese v. Bar Council of Kerala, to support its decision on the maintainability of the writ petitions.
- The Court emphasized that the decisions of Tribunals created under Article 323A and 323B are subject to scrutiny before a Division Bench of the High Court, as per the basic structure of the Constitution.
- The Court highlighted the plenary power of High Courts under Article 226 of the Constitution and the exceptions where the existence of an alternative remedy does not bar the High Court's jurisdiction, such as violation of fundamental rights or lack of jurisdiction.
- The Court concluded that the judgments cited by the petitioners did not support their case, as they were rendered in different contexts and situations, and dismissed the writ petitions as not maintainable, directing the petitioners to file an appeal before the Appellate Tribunal.

This detailed analysis covers the issues involved in the legal judgment while preserving the key legal arguments and decisions made by the High Court.