2018 (7) TMI 2334 - HC - SEBI

Determination of jurisdiction of High Court for SEBI violations - Jurisdiction of Mumbai HC or Andhra Pradesh HC - listing of the stocks and shares of that fifth respondent with the appellant appears to have been made the subject matter of the writ petition by levying challenge to the decision of the appellant to de-list the fifth respondent's shares and stocks - HELD THAT - As decision to de-list the shares was taken by the appellant at Mumbai and the trading of the shares is also at Mumbai and suspension of that has also been in compliance with the prescriptions made and imposed on the appellant. Predominantly, the territorial jurisdiction therefore falls exclusively within the jurisdiction of Mumbai Courts may, including the High Court of Judicature at Mumbai. When notice is issued to the public at large informing a particular fact situation, without any adverse decision as against any particular person, particularly, the noticee, it would not be appropriate for the writ Court to deal with the matter as if the authority which issued such public notice has to face litigations in various High Courts of India, rather than confining such litigation to the territorial jurisdiction of the High Court within whose territorial limits, that authority is; and, from where that notice was issued. On a plain consideration of the situation in hand, we do not see that this Court has territorial jurisdiction over the matter in hand. We hold so. In view of the finding recorded above that this Court does not have the territorial jurisdiction to entertain the writ petition from which this appeal arises, the jurisdiction exercised by the learned Single Judge in granting the impugned interlocutory order is also unsustainable. In the result, this Writ Appeal is allowed vacating the impugned order, leaving open all issues inter se the appellant and respondent Nos. 1 and 5.

Summary

Issues:
1. Territorial jurisdiction of the High Court in a writ petition challenging the decision of a stock exchange to de-list shares.
2. Conflict of jurisdiction between National Company Law Tribunal and Securities Exchange Board of India.
3. Validity of an interlocutory order passed by a Single Judge at the stage of admission.

Analysis:
1. The appeal was filed by BSE Limited challenging an interlocutory order related to the listing of stocks of Bheema Cements Limited. The jurisdiction of the High Court was questioned concerning the decision to de-list shares, which the appellant argued falls under the exclusive jurisdiction of Mumbai Courts due to the location of decision-making and trading. However, the respondent contended that the notice issued by the appellant created a cause of action within the territorial jurisdiction of the High Court where the petition was filed.

2. The Senior Counsels presented various propositions regarding conflicts between the National Company Law Tribunal and Securities Exchange Board of India, along with the jurisdiction of the appellant in handling the matter. Ground No. 13 raised by the appellant highlighted the location of decision-making and trading in Mumbai, emphasizing the territorial jurisdiction of Mumbai Courts. The respondent argued that the public notice issued by the appellant provided a cause of action within the jurisdiction of the High Court where the writ petition was filed.

3. The Court held that issuing a notice to the public does not automatically subject the authority to litigations in various High Courts, emphasizing that the territorial jurisdiction should align with where the notice was issued. As a result, the Court found that it did not have territorial jurisdiction over the matter at hand. The Court also noted that further actions had been taken in the case, leading to a different stage of proceedings.

4. Due to the lack of territorial jurisdiction, the Court deemed the interlocutory order unsustainable and allowed the appeal, vacating the order. The writ petition was dismissed without prejudice to other issues between the parties. The Court concluded by closing any pending miscellaneous petitions and making no order as to costs.