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TMI Blog2024 (12) TMI 413X X X X Extracts X X X X X X X X Extracts X X X X ..... pute should be resolved by a consensual settlement does not merely involve a private lis between the violator and the regulator but involves a consideration of wider issues of public interest. The Court also held that the whole purpose of the settlement guidelines which were the subject matter of the said decision was to ensure that the time and effort of the regulator is devoted to cases which duly merit trial and enforcement. SEBI has devoted sufficient time to the Petitioner s settlement proposal. The same was rejected earlier but, by way of indulgence, the Petitioner was granted further opportunity in March 2024. From April to October, the Petitioner supplied documents or certificates that were found to be deficient upon examination. The impugned communication also refers to the inter se correspondence, which gives an idea of the time spent by SEBI in considering the Petitioner s settlement proposal. At this stage, Mr Doctor, on behalf of SEBI, is therefore justified in contending that enough was enough and no further indulgence was deserved by the petitioner. We are satisfied that the Petitioner s proposal was fairly considered and rejected. There is no arbitrariness involved. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reconsider the Petitioner s Settlement Applications. 7. Mr Doctor learned Senior Advocate for the SEBI submitted that even earlier, the Petitioner had defaulted in adhering to the timelines for submitting documents. However, by order dated 19 March 2024 in Writ Petition (L) No.393 of 2024, this Court indulged the Petitioner by granting additional time. Despite repeated opportunities, he submitted that the Petitioner has been providing deficient documents from April to October. He submitted that even the net worth requirement is not complied with. 8. Mr Doctor submitted that the documents supplied and the net worth requirements have been examined by the Internal Committee and, finally, the Whole Time Members of SEBI. Several opportunities were granted to the Petitioner, but still, the Petitioner has failed to avail of the same. Therefore, Mr Doctor submitted that there was no unfairness, and the action of the SEBI called for no interference. 9. Mr Doctor pointed out that two show-cause notices have been issued to the Petitioner. Therefore, it is in the petitioner's interest to keep the Settlement Applications pending. He submitted that final orders cannot be made in the show-ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly, in its order dated 19 March 2024, this Court directed the SEBI to grant the Petitioner an additional opportunity and dispose of the Petitioner s Settlement Applications within eight weeks. All parties' contentions were left open, and it was made explicit that the order should not be treated as a precedent since it was passed in the peculiar facts and circumstances of the case. Therefore, though there was nothing wrong with rejecting the Petitioner s settlement proposal in the earlier round, considering the peculiar facts and mostly by way of indulgence, the Petitioner was granted yet another opportunity, with consequential directions to the SEBI to dispose of the Petitioner s Settlement Applications expeditiously. 15. Based on the record, we do get an impression that the Petitioner was interested in keeping these applications pending because of the provision in the Settlement Regulations about no final orders being passed on the show cause notices until the Settlement Applications are finally disposed of. There is correspondence on record exchanged between the parties regarding the supply of documents by the Petitioner and the Respondent, pointing out the deficiencies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, it is essential to ensure that the applicant has complied with the capital adequacy requirement before its applications may be considered for settlement. In that regard, the IC noted that your compliance with the net-worth requirement is under investigation and proceedings are proposed to be initiated for the same. In view the same, you do not appear to be presently meeting the net-worth requirement. 6. In view of the same, the IC recommended rejection of your settlement applications on the ground that you have failed to comply with the condition precedents within the time required by it. The recommendation of the IC to reject your settlement applications was placed before the Panel of Whole Time Members who in terms of Regulation 6 (1) (f) of the Settlement Regulations and in exercise of their power under Regulation 5(5) of the Settlement Regulations have approved rejection of your settlement applications. 18. In exercising the limited scope of judicial review in such matters, we have no reason to second guess the observations in paragraphs 4 and 5. The observations indicate the number of opportunities granted to the Petitioner and the lack of compliance. Even on net wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effort of the regulator is devoted to cases which duly merit trial and enforcement. 22. As noted earlier, the SEBI has devoted sufficient time to the Petitioner s settlement proposal. The same was rejected earlier but, by way of indulgence, the Petitioner was granted further opportunity in March 2024. From April to October, the Petitioner supplied documents or certificates that were found to be deficient upon examination. The impugned communication also refers to the inter se correspondence, which gives an idea of the time spent by SEBI in considering the Petitioner s settlement proposal. At this stage, Mr Doctor, on behalf of SEBI, is therefore justified in contending that enough was enough and no further indulgence was deserved by the petitioner. 23. For all the above reasons, we are satisfied that the Petitioner s proposal was fairly considered and rejected. There is no arbitrariness involved. The petitioner was given ample opportunities; in that sense, no breach of natural justice was involved. The decision-making process was not defective. Accordingly, we are satisfied that no case has been made to interfere with the impugned communication. 24. This Petition is liable to be d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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