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TMI Blog2014 (4) TMI 1326X X X X Extracts X X X X X X X X Extracts X X X X ..... ducted. Further,such information can be called for only by an officer duly authorized by SEBI to call for information with regard to CDRs from the TSP The provisions of Section 11(1), 11(2)(i) (ia) (as amended by Ordinances promulgated by President of India on 16 July 2013, 16 September 2013 and 28 March 2014), Sections 11(3), 11C(3) and 11C(8) of the SEBI Act confer powers on SEBI to call for information and record of CDR of Tower Location from Telecom Service Providers, whether in public sector or in private sector. However, such power is to be exercised after complying with the following safeguards: (i) such CDRs or information regarding tower location can be called for only in respect of the person against whom any investigation or enquiry is being conducted by SEBI, (ii) the information may be called for only by an officer who is duly authorized by SEBI as per the delegation order, (iii) before calling for such information, the opinion of such authorized officer should be recorded in the file indicating application of mind to the effect that CDRs and/or information regarding tower location would be relevant for any investigation or enquiry by SEBI in respect of any transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies Act, 1956 and claims to be promoting, protecting and safeguarding the interest of investors of primary and secondary markets with various authorities including SEBI. 3. SEBI is a Board constituted and established by the Central Government under Section 3 of the Securities and Exchange Board of India Act, 1992 (SEBI Act). It has primarily been constituted to protect the interest of the investors in securities, to promote and regulate the security market. 4. The grievance in the petition as filed is not only in respect of CDRs and details of tower location from such TSP but also the action of SEBI of seeking to intercept and monitor the calls. This is specifically pleaded in ground (i) of the petition as under: "Respondent No.2 being a Government body, ought to have realized that such sensitive information of citizens of the country by seeking to intercept, call monitor as well as calling for Call Data Records of its telephones/cellphones cannot be just randomly sought for as per the whims and fancies of the junior officers of Respondent No.2. A proper reasoned order is required to be passed by an appropriate authority designated for this purpose before any such activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation about interception and/or monitoring of calls by or at the instance of SEBI. The above allegation in the petition is attributed by the Counsel to loose drafting. The grievance of the petitioner is only confined to SEBI calling for CDRs and details of tower location from the TSP. We also find that the prayer clauses in the petition are also confined only to CDRs. Accordingly, the only issue being agitated before us and being considered by us is the power of SEBI to call for CDRs from Telecom Service Providers (TSP). 6. Mr. Darius Shroff, learned counsel for the petitioner has raised the following contentions: (a) SEBI, being a creature of SEBI Act, has no powers to call for any CDRs from TSP conferred upon it. The calling of such information would amount to violation of fundamental right of citizens to privacy. Thus, in violation of Article 21 of the Constitution of India; (b) In any view of the matter, SEBI is prevented/prohibited from calling for any records such as CDRs from any TSP in view of Section 5(2) of the Indian Telegraph Act, 1885. Thus, seeking and receiving CDRs from the TSP is in breach of the law and the Officers responsible for the same be proceeded with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above provision only applies to intercepting calls and/ or prohibiting calls/ messages. It has no application in respect of calling for CDRs from TSP. The action of calling for CDRs from TSP in no manner violates any fundamental rights of the citizens as it is only a static record of calls having already been made to a particular telephone/ mobile number from a particular number. The record of CDRs is called for only in a pending investigation; (d) Power is only delegated to high ranking officers or investigating officers. (e) The correspondence between SEBI, the Government and various Ministries was with regard to specifically empowering SEBI to call for CDRs from TS, this was for the reason that in the absence of a specific provision, some of the TSPs did not provide the CDRs. Therefore, out of abundant caution, a specific provision would enable SEBI in obtaining the CDRs from the TSP ; (f) Without prejudice, in any case, the understanding of the SEBI Officials or of the Government of the legal provision will not decide the issue whether SEBI has the necessary powers or not; and (g) Reliance is also placed on the provisions of the Ordinances issued by Government of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the following matters, namely: (i) the discovery and production of books of account and other documents, at such place and such times as may be specified by the Board; (ii) summoning and enforcing the attendance of persons and examining them on oath; (iii) inspection of any books, registers and other documents of any person referred to in section 12, at any place; (iv) inspection of any book, or register or other document or record of the company referred ton in subsection (2A); (v) issuing commissions for the examination of witnesses or documents. 11C Investigation. 11C. (1) & (2) ….... (3) The Investigating Authority may require any intermediary or any person associated with securities market in any manner to furnish such information to, or produce such books, or registers, or other documents, or record before it or any person authorized by it in this behalf as it may consider necessary if the furnishing of such information or the production of such books, or registers, or other documents, or record is relevant or necessary for the purposes of its investigation. (4) to (7) …...... (8) Where in the course of investigation, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... censed telegraphs and to order interception of messages.-- (1) …. …. …. (2) On the occurrence of any public emergency, or in the interest of the public safety, the Central Government or a State Government or any officer specially authorized in this behalf by the Central Government or a State Government may, if satisfied that it is necessary or expedient so to do in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign states or public order or for preventing incitement to the commission of an offence, for reasons to be recorded in writing, by order, direct that any message or class of messages to or from any person or class of persons, or relating to any particular subject, brought for transmission by or transmitted or received by any telegraph, shall not be transmitted, or shall be intercepted or detained, or shall be disclosed to the Government making the order or an officer thereof mentioned in the order: Provided that the press messages intended to be published in India of correspondents accredited to the Central Government or a State Government shall not be intercepted or detained, unle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the petitioner is that the aforesaid provisions do not empower SEBI for calling for CDRs from TSP either under Section 11(2)(i) or (ia) of the SEBI Act. This is for the reason that the TSP is not associated with Security Market nor are all the TSPs constituted under a Central, State or Provincial Act. This according to the petitioner is further supported by (information obtained through Right to Information Act) letter dated 24 June 2009 of Chairman of SEBI to the Department of Economic Affairs seeking to make them eligible to access emails and CDRs from TSP. Further, correspondence also seems to indicate the view of the officers that SEBI is not empowered to call for CDRs from the TSP. 14. So far as powers of SEBI as existing prior to the amendments made by the Ordinances is concerned, we find that the Supreme Court in Sahara India Real Estate Corporation Limited and others v/s. Securities and Exchange Board of India and another 2013(1) SCC 1 while considering the powers of SEBI has made the following significant observations: "303.1 Subsection (1) of Section 11 of the SEBI Act casts an obligation on SEBI to protect the interest of investors in securities, to promote the deve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the attendance of persons and examining them on oath, inspection of any books, registers or other documents. The power aforementioned specifically governs matters relating to calling for information already referred to herein-above (under clauses (i) and (ia) of subsection (2), and subsection (2A) of Section 11. 303.4 to 308…. …. 309. From a collective perusal of Sections 11, 11A, 11B and 11C of the SEBI Act, the conclusions drawn by SAT that on the subject of regulating the securities market and protecting interest of investors in securities, the SEBI Act is a stand alone enactment and SEBI's powers thereunder are not fettered by any other law including the Companies Act, is fully justified. (emphasis supplied) Thus, the power of SEBI is very wide even de hors the amendments by the ordinances and is entitled to take such measures as it deems fit to protect the investors. 15. The President of India issued Ordinances on 16 July 2013 (lapsed), 16 September 2013 (lapsed) and 28 March 2014 wherein Section 11(2)(ia) of the SEBI Act was substituted to enable SEBI to call for information/ record from "any person" as opposed to the earlier provisions, empowering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find any prohibition to calling of CDRs from any TSP. It only only prohibits an authority not authorized by Central Government from intercepting and/or prohibiting the sending of calls/messages. The calling of static information like CDRs from a TSP does not in any manner violate Section 5(2) of the Indian Telegraph Act, 1885. Thus, on the face of it, we do not find the above objection sustainable. 18. Thus, there can be no dispute that the SEBI is authorized under the SEBI Act to call for CDRs from the TSP. However, this power is capable of misuse and can violate a citizen's right to privacy guaranteed by Article 21 of the Constitution. Therefore, it is made clear that such a power cannot be exercised by SEBI for conducting a fishing enquiry. It cannot be a blanket power to hunt out information without any pending inquiry or investigation. This power can only be exercised by SEBI in respect of any person against whom any investigation or enquiry is being conducted. Further,such information can be called for only by an officer duly authorized by SEBI to call for information with regard to CDRs from the TSP. SEBI had issued delegation order dated 3 May 2010 which, inter alia, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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