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TMI Blog2020 (6) TMI 559X X X X Extracts X X X X X X X X Extracts X X X X ..... cedural defect, the question of invoking the inherent powers to re-open the proceeding does not arise. Though a faint plea is made by the Third Respondent that the Petitioner has played a fraud on him, the letter dated 04.10.2018 issued by the Second Respondent to the First Respondent to re-examine the complaint of the Third Respondent does not suggest of the same. What has been mentioned therein is that the Second Respondent has independently examined the complaint and those findings are examined to initiate appropriate measure as per regulation. A preliminary opinion and no definite conclusion on the culpability of the Petitioner has been expressed to treat that any fraudulent act has been committed by the Petitioner against the Third Respondent. As such, it is not possible to uphold the re-examination of the complaint on the ground of exercise of inherent powers for any act of fraud committed by the Petitioner against the Third Respondent. There is nothing which precludes the Third Respondent to rely on any new evidence which has come to his knowledge after the order dated 18.10.2016 passed by IGRP of the First Respondent in arbitration, which is in the nature of an origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Redressal Mechanism (hereinafter referred to as ' IGRM' for brevity) in the Stock Exchanges to shorten legal proceedings and give monetary relief to the investors during the course of proceedings. 3. The Third Respondent invoking IGRM of the First Respondent, made a claim for ₹ 2.35 Crore as loss of his holdings with the Petitioner and attributed that loss to the misconduct of the dealing official of the Petitioner, who by consistently presenting him with profit statements over a period of four years, induced him to carry on transactions with the Petitioner. The Petitioner responded that the Third Respondent was fully aware of the trades and its resultant impact on his account by the contract notes regularly issued through e-mail and SMS and the statement of accounts and profit and loss computation sent to him by post under written acknowledgment, and the claim made was an after thought having lost his shares to set-off the losses incurred in trading. The Investor Grievance Redressal Panel (hereinafter referred to as IGRP' for brevity) of the First Respondent by its order dated 18.10.2016 made its observations on the rival contentions of the Third Responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the complaint of the Third Respondent against the Petitioner was registered at IGRP of the First Respondent and numbered as 18102181347000684, and the First Respondent by notices dated 30.10.2018 and 01.11.2018 required the Petitioner to provide its response along with documentary evidence on or before 02.11.2018. The Petitioner by reply dated 02.11.2018 sent to the First Respondent contended that the allegations made and relief claimed by the Third Respondent in his complaint attached to the notice dated 30.10.2018 were identical to his earlier complaint dated 04.09.2016, and that after affording opportunity to the Third Respondent and the Petitioner, it was held by IGRP of the First Respondent in its order dated 18.10.2016 that no amicable settlement was reached and the parties were advised to take further course of action in accordance with the Exchange Regulations. In such circustances, it was contended that the First Respondent is not permitted under the Regulations to review and/or re-examine a complaint, which has already been examined, and as responding to the complaint of the Third Respondent would amount to joining in the unauthorized process, the Petitioner was not submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iliation to amicably resolve the disputes between the Third Respondent and the Petitioner, it cannot be claimed by the Petitioner that prejudice is caused, when such efforts are taken; and (iii) that in any event, the Petitioner without taking recourse to the alternative remedy of appeal available before the Securities Appellate Tribunal, could not bye-pass the same and straightaway approach this Court under Article 226 of the Constitution. 6. In the Reply Affidavit dated 08.04.2019, the Petitioner has denied the factual correctness of the claim made by the Second and Third Respondents, apart from dealing with the legal contentions raised by them. It has also been informed that IGRP proceedings by the First Respondent initiated against the Petitioner on the complaint of KTM Investors similar to that made by the Third Respondent, have also ended in favour of the Petitioner without any admissible claim. 7. Having regard to the rival submissions made by the parties, the core question that arises for determination in this Writ Petition is whether IGRP of the First Respondent has jurisdiction to re-examine the complaint of the Third Respondent pursuant to the direction issued b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eluctance to leave the issues open to be decided by the Statutory Authority. (ii) Shri Sitaram Sugar Company Limited v. Union of India (AIR 1990 SC 1277), where the Hon'ble Supreme Court of India has observed as follows:- 57. Judicial review is not concerned with matters of economic policy. The court does not substitute its judgment for that of the legislature or its agents as to matters within the province of either. The court does not supplant the feel of the expert by its own views. When the legislature acts within the sphere of its authority and delegates power to an agent, it may empower the agent to make findings of fact which are conclusive provided such findings satisfy the test of reasonableness. In all such cases, judicial inquiry is confined to the question whether the findings of fact are reasonably based on evidence and whether such findings are consistent with the laws of the land.... (iii) MCX Stock Exchange Limited v. Securities Exchange Board of India [(2012) 172 Comp Cas 602] where the Bombay High Court noted that the SEBI is an expert statutory body and that the High Court would not be justified in substituting the view of an expert adjudicato ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in issue in this Writ Petition is the jurisdiction of IGRP of the First Respondent to re-examine the complaint of the Third Respondent against the Petitioner on the directions issued by the Second Respondent, which falls within the realm of scrutiny of the lawfulness of that impugned action concerning the decision-making process, and it is not directed against the merits of the dispute between the contesting parties touching upon the soundness of that decision itself. As such, the jurisdictional issue which has arisen for determination in this case squarely falls within the aforesaid parameters for judicial review explained in the decisions cited by the Second Respondent, which do not conflict with the exercise of such powers on the facts of this case. 10. Yet another crucial aspect, which has to be analysed relates to the nature of IGRP proceedings of the First Respondent with specific reference to its impact on the rights of the Petitioner, as according to the Third Respondent, it is merely an attempt to amicably settle the disputes between the Investor and the Trading Member and does not cause any prejudice to the Petitioner if he participates in the impugned re-examination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall give a time of 7 days to the Member from the date of signing of IGRC directions as mentioned under sub-para (d) above to inform the Stock Exchange whether the Member intends to pursue the next level of resolution i.e. Arbitration. (h) In case, the Member does not opt for arbitration, the Stock Exchange shall, release the blocked amount to the investor after the aforementioned 7 days. A conspectus of the aforesaid provisions clearly show that if the dispute between the Investor and the Trading Member is not amicably resolved through conciliation process, IGRP of the Stock Exchange has been empowered to ascertain the claim amount admissible to the Investor, which the Stock Exchange shall block from the deposit of the Trading Member. If the Trading Member intends to pursue the next level of arbitration, he would have to inform the Stock Exchange of that decision within 7 days, in which event the Investor would be released 50% of the claim value or ₹ 75,000/- whichever is less from that deposit of the Trading Member with the Stock Exchange. Viewed from this perspective, there is force in the contention of the Petitioner that IGRM cannot be looked as a mere conciliat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s would be contrary to considerations of fair play and justice. In the absence of such principle, great oppression might result under the colour and pretence of law in as much as there will be no end of litigation and a resourceful and malicious litigant may succeed in infinitely vexing his opponent by repetitive suits and actions. This may compel the weaker party to relinquish his right. The universally acclaimed rule of res judicata has been evolved to prevent such anarchy. (See M.Nagabhushana v. State of Karnataka [(2011) 3 SCC 408] and Union of India v. Major S.PSharma [(2014) 6 SCC 351]). (b) The rule of res judicata is common to all civilized system of jurisprudence to the extent that a judgment after a proper trial by a court of competent jurisdiction should be regarded as final and conclusive determination of the questions litigated and should forever set the controversy at rest. That is why it is perceived that the plea of res judicata is not a technical doctrine but a fundamental principle which sustains the Rule of Law in ensuring finality in litigation. This principle seeks to promote honesty and a fair administration of justice and to prevent abuse in the matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Modi v. K.N.Modi [(1998) 3 SCC 573]). (e) The power of review on merits when the error sought to be corrected is one of law and is apparent on the face of the record, is not an inherent power and if it is intended to be exercised, the statute must have specifically conferred it. (See Narshi Thakershi v. Pradyumansinghji [(1971) 3 SCC 844] as explained in Grindlays Bank Ltd v. Central Government Industrial Tribunal [(1980) Supp. SCC 420]). (f) However, when a review is sought due to a procedural defect, such as:- (i) where the court proceeds to make a decision without notice to a party or without making him as party to that proceeding, the power to re-open concluded proceedings at the instance of those adversely affected persons in consonance with the principles of natural justice inheres in every court or Tribunal to thwart the abuse of its process. (See Shivdeo Singh v. State of Punjab (AIR 1963 SC 1909)); and (ii) where a party is prevented from appearing at the hearing due to sufficient cause, and is faced with an ex parte decision, it is as if the party is visited with that decision without notice of the proceedings and the inadvertent error committed must be correc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard of India v. Ajay Agarwal [(2010) 3 SCC 765] where after holding that the Securities and Exchange Board of India Act, 1992, was a social welfare legislation for promoting the orderly growth of the Securities Market and for protecting the interest of the Investors, it has been expressed as follows:- 33 . . . The requirement of such an enactment was felt in view of substantial growth in the capital market by increasing the participation of the investors. In fact such enactment was necessary in order to ensure the confidence of the investors in the capital market by giving them some protection. 34. The said Act is pre-eminently a social welfare legislation seeking to protect the interests of common men who are small investors. It is a well-known canon of construction that when the court is called upon to interpret provisions of a social welfare legislation the paramount duty of the court is to adopt such an interpretation as to further the purposes of law and if possible eschew the one which frustrates it.... Relying on those passages, it is canvassed that the view must be taken in this case that in the absence of any express bar, IGRP of the First Respondent has inheren ..... X X X X Extracts X X X X X X X X Extracts X X X X
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