9911796707
TMI Blog2013 (9) TMI 1312X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. During the early part of the year 2000 the Company was negotiating to acquire a US based Company named 'Data Inc'. The negotiations resulted in a Memorandum of Understanding (MOU) on 1/4/2000 signed between the Company, represented by the Petitioner and Data Inc., represented by its President Mr. Arun Verma. 4. In accordance with the terms of the 'Memorandum of Understanding', the Company engaged an external consultant and a firm of certified Public Accountants to conduct due diligence on Data Inc including on matters pertaining to tax and accounts. The Company received the report from the firm of certified Public Accountants on 17/7/2000 and due diligence report from the External Consultant on 17/8/2000. 5. The Audit Committee of the Board of Directors of the Company met on 30/9/2000 and reviewed the proposal for acquisition. Based on the diligence report and the report of the Certified Public Accountant, the Audit Committee was of the strong view that the acquisition of Data Inc was not at all in the interest of the shareholders of the Company. The Audit Committee felt that 'Memorandum of Understanding' should not be converted into a comprehensive a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Data Inc was made public, it would have an adverse impact on the marked price of the scrip. (iv) The Petitioner as the Chairman and Managing Director and Chairman of PSLL had dealt in the shares of PSLL on the basis of this unpublished price sensitive information, during this period on behalf of PHPL; (v) The petitioner had engaged in insider trading with the intention of gaining unfair advantage for which he is liable to appropriate action under the SEBI Act." 9. The Petitioner challenged the Adjudication Show Cause Notice and the order of the Respondent appointing an Adjudicating Officer by way of filing a Writ Petition before this Court in W. P.Wos. 40158 and 40261 of 2005 and sought quashing of the Adjudication Show Cause Notice on numerous grounds. This Court, by means of an interim order restrained the Respondent from proceeding with the Adjudication Show Cause Notice. 10. The Respondent preferred a Writ Appeal No. 241 of 2007 as against the interim order granted by this Court in the Writ Petition and during the pendency of the Writ Appeal and Writ Petitions on 20/4/2007 the Respondent issued a Circular No. EFD/ED/Cir-1/2007 on "Guidelines for (i) Consent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of Rs.7,00,000/- towards settlement and legal expenses in the matter. In view of the recommendation of the HPAC, SEBI has in principle agreed to accept the terms of the revised consent terms proposed by the. Writ Petitioner, subject to certain change in the undertaking and waiver. The said amount was also paid by the Petitioner on 24/3/2008, therefore, there remains nothing, to be adjudicated either in the Writ Appeal or in the Writ Petition as the matter has already reached finality. The Learned Counsel for the Writ Petitioner has also produced before this Hon'ble Court a photostat copy of the order dated 17/3/2008 made by the Securities and Exchange Board of India." 15. Accordingly, the Adjudicating Officer, on 21/7/2008, passed the Consent Order which among other things mentioned as follows:-- "6. In view of the above, it is hereby ordered that, (i) This consent order disposes of the said proceedings pending against the Notice under the Securities Exchange Board of India Act, 1992 in the matter of Polaris Software Lab Ltd., and (ii) Passing of this order is without prejudice to the right of SEBI to take enforcement actions including commencing/reopenin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Act, 1992 with a mandate to protect the interest of investors in securities and to promote the development of and to regulate the securities market. The Petitioner's Company shares are listed at Madras Stock Exchange, Bombay Stock Exchange and National Stock Exchange. The Petitioner's Company informed the Exchange that the Company had signed the "Memorandum of Understanding" dated 22/5/2000 with New Jersey based Data Inc for a strategic acquisition, which was expected to further strengthen the focus on providing software solutions to the Adjudicating financial services and insurance segments. In pursuance to the said Memorandum of Understanding, KPMG, was assigned the work of doing the due diligence and the matters pertaining to tax and accounts of Data Inc., were assigned to Pandya Kapadia & Associates, CPA. The report from KPMG was received on 7/8/2000 and the report from Pandya Kapadia was received on 17/8/2000. 20. That apart, starting from the receipt of due diligence of the professional experts till the formal announcement of calling of the deal on 30/9/2000, the sequence of the events can be broadly stated as under:-- DATE EVENT 21/8/2000 Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the relevant period, sending these to the company after getting them "completed this week." 22. On 5/9/2000, another e-mail was sent by the Company to Mr. Arun Verma mentioning inter alia that as per SEBI Rules, the entire transaction/acquisition must have been completed within 90 days i.e., by August 23, 2000 which had already lapsed. This means that as per current RBI Rules, the Company will not be entitled to pursue the "Fast Track" route for acquisition, instead will have to cross many obstacles and obtain several clearances from RBI, FIPB and other appropriate authorities. The main cause of delay should be attributed to the discovery of the fact that Data IncTs accounts were only compiled and not audited as stated in the MOU. Under these circumstances, it was felt that it would be prudent for both the company and Data Inc., to revisit the proposal afresh separately at an appropriate time in future. 23. On 6/9/2000, Arun Verma replied to the Company conveying his "uneasy feeling" at the e-mail dated 5/9/2000. He expressed his strong disagreement with the representation that "the main cause of delay" in the matter was that the accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 1995. The Petitioner's statement in the said investigation was recorded as per section 11C(5) of the SEBI Act, 1992. The said investigation would point out that the Petitioner had violated the provisions of the said Regulations. Pursuant to the findings, the Respondent appointed an Adjudicating Officer to enquire into the violations of the said Regulations on the part of the Petitioner as per order dated 5/9/2005 under Section 15-I of the SEBI Act, 1992 read with Section 19 of the SEIBI Act and Rule 3 of the SEBI (Procedure for Holding Enquiry and Imposing Penalties by Adjudicating Officer) Rules, 1995. The Adjudicating Officer also issued the show cause notice dated 30/9/2005. 26. The Respondent, on 20/4/2007, issued guidelines for Consent Orders. Based on the above guidelines, the Petitioner projected necessary application for passing of Consent Orders as regards the said adjudication proceedings. The said Consent Order was approved by this Court as per Order dated 11/6/2008 which recorded the Consent Order and disposed of the pending writ Petitions. 27. Coming to the plea of the Petitioner that the facts and cause of action mentioned in the show cause notice are identica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave held that adjudication proceedings under SEBI Act are civil proceedings. 31. The Respondent through its order dated 19/10/2012 held with the trades of PHPL done instructions of the Petitioner that he was in position of the unpublished price sensitive, information. The above Company was modified by the information that was available with him. Hence, there was a clear finding that trading of the shares was modified by the Petitioner on the basis of unpublished price sensitive information. Therefore, the Petitioner was restrained from exercising the market in terms of the powers vested under Sections 11 and 11(B) of the SEBI Act, 1992 and SEBI (Insider trading Regulations) 1992. 32. This Court, had not passed any orders on merits and merely recorded the terms of the Consent Order. The Consent Order had not disposed of the proceedings but only disposed of the adjudication proceedings. Also that the two proceedings, adjudication order and 11B are separate since the Petitioner through his letter sought settlement of only one of the said proceedings via, by letter dated 15/2/2008 addressed by the Respondent to SEBI setting out the revised consent terms in the content of show cause n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e acceptance of consent application and affidavit of undertaking is accepted by the Respondent was reported before the Division Bench of this Court and by an order dated 11/6/2008 in W.A.No. 241 of 2007 and W.P. Nos. 40158 and 40261 of 2005, this Court was pleased to hold that "Therefore,- there remains nothing to be adjudicated either in the Writ Appeal or in the writ petition as the matter has already reached finality" and recording the said submission, the Writ Appeal and Writ Petitions were dismissed as nothing remains to be adjudicated. 36. Consequent upon the final order passed by this Court in pending Writ Appeal and Writ Petition, the Adjudicating Officer/Respondent, sent a letter to the Petitioner enclosing the consent letter and the relevant portion of the consent order reads thus:-- "6. In view of the above, it is hereby ordered that (i) This consent order disposes of the said proceedings pending against the Noticee under Securities and Exchange Board of India Act, 1992 in the matter of Polaris Software Lab Ltd., and (ii) Passing of this order is without prejudice to the right of SEBI to take enforcement actions including commencing/reopening of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Inquiry and Imposing Penalty by Adjudicating Officer) Rules, 1995 was issued to the Petitioner by the Adjudicating Officer of the Respondent mentioning that the company in respect of the alleged insider trading committed by him on the basis of unpublished price sensitive information in the shares of Polaris Software Lab Ltd., the Adjudicating Officer was appointed through an order dated 5/9/2005 by the Respondent to enquire into and adjudicate under Section 15-I r/w. Section I5-G of the SEBI Act an investigation was conducted into the alleged insider trading done by him in violation of Regulation 3 of SEBI (Prohibition of Insider Trading) Regulations, 1992 etc. and therefore, he was advised to show cause as to why an enquiry could not be held against him in terms of Rule 4 of SEBI (procedure for holding enquiry and imposing , penalty by Adjudicating Officer) Rules, 1995 and penalty not be imposed under Section 15G of the SEBI Act, 1992. 42. The learned Senior Counsel for the Petitioner brings it to the notice of this Court that the show cause notice dated 30/9/2005 was issued to the Petitioner by SEBI in regard to an incident that took place in the year 2000 and this Court, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal and Writ Petitions without costs." 45. According to the Learned Senior Counsel for the Petitioner, the Consent Order dated 21/7/2008 passed by the Adjudicating Officer of the Respondent in EAD-5/VSS/RK/132523/2008 (communicated through Registered Post with Acknowledgement Due), wherein in paragraph 6(i) has pellucidly stated that "This consent order disposes of the said proceedings pending against the Noticee under Securities and Exchange Board of India Act, 1992 in the matter of Polaris Software Lab Ltd." and further in paragraph 6 (ii), it is mentioned that "Passing of this order is without prejudice to the right of SEBI to take enforcement actions including commencing/reopening of the pending proceedings against the Noticee, if SEBI finds that (a) any representation made by the Noticee in the consent proceedings is subsequently discovered to be untrue. (b) the Noticee has breached any of the clauses/conditions of undertakings/waivers filed during the current consent proceedings." 46. The impugned show cause notice dated 26/12/2011 issued by the Respondent to the Petitioner under Sections 11, 11B and 11(4) of the Act for the very sarns c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tently shows that the Petitioner neither admit nor deny the findings of fact and the conclusions of law to be the part of the Consent order etc., and further, by virtue of Clause 19, the petitioner has agreed that he would not plead limitation issue for reopening the case, if he violates/do not comply with the consent order and on 17/3/2008, the Respondent, passed an order relating to the acceptance of consent proposal and in paragraph 4, clearly the petitioner was advised to pay Rs.7,00,000/- (Rupees Fifty thousands only) to the respondent by way of a Demand Draft in favour of "Securities and Exchange Board of India" and in para 5, it was also stated that Demand Draft sent by the Petitioner to the Respondent pursuant to this letter shall he realised to them subject to the consent terms by the Honourable Court and disposing of the said cases by passing an appropriate order in the matter. 52. The Learned Senior Counsel for the Petitioner submits that the Respondent/SEBI never levied penalty of Rs. 25 crores to the Petitioner and in the order dated 17/3/2008 of the Respondent, accepting the consent proposal submitted by the Petitioner, it was mentioned that HPAC had recomm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent had found that the-- "present proceedings before him are independent of the proceedings already settled vide consent order dated July 21, 2008 and the said settled adjudication proceedings were not reopened by the instant show cause notice and these conclusions/observations/finding according to the petitioner were all perverse and an arbitrary one." 57. The Learned Senior Counsel for the Petitioner contends that the question of limitation being a jurisdictional issue, the present writ petition filed by the writ petitioner is perfectly maintainable before this Court. 58. To lend support to this contention, the Learned Senior Counsel for the Petitioner relies on the decision of the Honourable Supreme Court in State of Punjab v. Bhatinda District Co-Operative Milk Producers Union Ltd. [2007] 11 SCC at page 363, wherein at special page 364, it is held as follows:- "The question of limitation being a jurisdictional question, the writ petition was maintainable of course, ordinarily the writ Court would not entertain the writ application questioning validity of a notice only, particularly, when the writ petitioner has an effective remedy under the Act itse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justice and would vitiate the charge memo." 63. The Learned Senior Counsel for the Petitioner, in regard to his plea 'delay and latches' seeks in aid of the decision of this Court in C.P. Harish v. Central Warehousing Corpn. 2000 (3) LLN 975 at special page 976, whereby and whereunder, it is mentioned that-- "inordinate delay will constitute denial of reasonable opportunity to the petitioner to defend himself land would amount to violation of principles of natural justice." 64. The learned Senior Counsel for the Petitioner submits that 'an appeal as against the order passed by the Adjudicating Officer of the Respondent is to be filed by an aggrieved party within 45 days from the date of receipt of the copy of the order passed by the consent authority, and in the present case an inordinate and unexplained delay in issuing the second show cause notice dated 26/12/2011 to the Petitioner by the Respondent is not tenable and in this regard he relies on the decision of this court in M. Elangovan v. Trichy District Central Co.-operative Bank Ltd. 2006 (2) CTC 635, wharain at special page 637, in paragraph 7, it is observed as follows :-- "7 The learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore this Court. 68. In support of his contention, the Learned Senior Counsel for the Petitioner relies on the decision of the Honourable Supreme Court in Siemens Ltd. v. State of Maharashtra [2006] (12) SCC 33, wherein it is held as follows:-- "Although ordinarily a writ Court may not exercise its discretionary jurisdiction in entertaining a writ petition questioning a notice to show cause unless the same inter alia appears to have been without jurisdiction, but the question herein has to be considered from a different angle viz., when a notice is issued with premeditation a writ petition would be maintainable. In such an event, even if the Court directs the statutory authority to hear the matter afresh, ordinarily such hearing would not yield any fruitful purpose. It is evident in the instant case that the respondent has clearly made up its mind. It explicitly said so both in the counter affidavit as also in its purported show-cause notice." 69. He also cites the decision of Honourable Supreme Court in ORYX Fisheries (P.) Ltd. v. Union of India [2010] 13 SCC 427, wherein at special pages 434 and 435, in paragraph Nos. 22 and 23, it. is observed as follows:-- ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y keep an open mind as they are to act-fairly in adjudging the guilt or otherwise of the person proceeded against and specially when he has the power to take a punitive step against the person after giving him a show-cause notice. 33. The principle that justice must not only be done but it must eminently appear to be done as well is equally applicable to quasi- judicial proceeding. if such a proceeding has to inspire confidence in the mind of those who are subject to it. 34. A somewhat similar observation was made by this Court in Kumaon Mandal Vikas Nigam Ltd. v. Girja shankar Pant. In that case, this Court was dealing with a show-cause notice-cum-charge sheet issued to an employee. While dealing with the same, this Court in para 25 (SCC.p.198 of the Report) by referring to the language in the show-cause notice observed as follows:-- "25. Upon consideration of the language in the show-cause notice-cum-charge sheet it has been very strongly contended that it is clear that the officer concerned has a mindset even at the stage of framing of charges end we also do find some justification in such 9 submission since the chain is otherwise complete." After Para 25 this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned as the reason for the proposed action which was the Subject-matter of the earlier proceedings as well the second proposed action based on the same cause of action proposing to deny promotion or reversion is contemplated under the impugned show-cause notice. Second penalty based on the same cause of action would amount to double jeopardy. The Tribunal was, therefore, right, in law in annulling such an action. We are not expressing any opinion on the ambit or scope of any rule." 75. The Learned Senior Counsel for the Petitioner contends that Principle of 'Double Jeopardy' is extended to administrative proceedings. He also cites the decision of Honourable Supreme Court in Larsen & Toubro Ltd. v. CCE [2007] 9 (SC) 617), wherein at special page 624, in paragraph 18, it is mentioned as follows:-- "Furthermore, extension of the period of limitation entails both civil and criminal consequences and, therefore, reasons therefor must be specifically stated in the show-cause notice, in absence whereof the Court would be entitled to raise an inference that the case was not one where the extended period of limitation could be invoked (CCE v. Punjab Laminates (P) L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n fact, the 'Principle of Res Judicata' is extended to the administrative proceedings as per decision in Hope Plantations Ltd v. Taluk Land Board [1999] 5 SCC 590, at special page Nos.607 and 608, in paragraph No.26, it is held as follows:-- "It is settled law that the principles of estoppel and res judicata are based on public policy and justice. Doctrine of res judicata is often treated as a branch of the law of estoppel though these two doctrines differ in some essential particulars. Rule of res judicata prevents the parties to a judicial determination from litigating the same question over again even though the determination may even be demonstratedly wrong. When the proceedings have attained -finality, parties are bound by the judgment and are sstopped from questioning it. They cannot litigate again on the same cause of action nor can they litigate any issue which was necessary for decision in the earlier litigation. These two aspects are "case of action estoppel" and "issue estoppel". These two terms are of common law origin. Again, once an issue has been finally determined, parties cannot subsequently in the same suit advance arguments or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Honourable Supreme Court in Virgo Industries (Engg.) (P.) Ltd. v. Venturetech Solutions (P.) Ltd. [2013] 1 SCC 625 at special page Nos. 626 and 627, wherein it is held as follows:-- "Ordar 2 Rule 1 CPC requires every suit to include the whole of the claim to which the plaintiff is entitled in respect of any particular cause of action. However, the plaintiff has an option to relinquish any part of his claim if he chooses to do so. Order 2 Rule 2 CPC contemplates a situation where a plaintiff omits to sue or intentionally relinquishes any portion of the claim which he is entitled to make. If the plaintiff so acts, Order 2 Rule 2 makes it clear that he shall not, afterwards, sue for the part or portion of the claim that has been omitted or relinquished. Leave of the Court is contemplated by Order 2 Rule 2(3) in situations where a plaintiff being entitled to more than one relief on a particular cause of action, omits to sue for all such reliefs. In such a situation, the plaintiff is precluded from bringing a subsequent suit to claim the relief earlier omitted except in a situation where leave of the Court had been obtained. It is clear from a conjoint reading of the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 020W was restrained from accessing the securities market and further prohibit him from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner for a period of two years from the date of this order and this was passed by the concerned Authority by exercising powers conferred under Section 19 r/w. Sections 11(1) and 11B of the Securities and Exchange Board of India Act, 1992 and Regulation, 11 of the SEBI (Prohibition of Insider Trading) Regulations, 1992. 86. Further, it is the contention of the Learned Senior Counsel for the Respondent that as against the impugned order dated 9/10/2012 passed by the Respondent under Section 15T of the SEBI Act, 1992, an appeal lies before the Securities Appellate Tribunal, refers to Section 15T(1) and (2) which reads as under:-- 15 T: Appeal to the Securities Appellate Tribunal:-- (1) Save as provided in Sub-Section (2), any person aggrieved -- (a) by an order of the Board made, on and after the commencement of the Securities Laws (Second Amendment) Act, 1999, under this Act, or the rules or regulations made thereunder; or (b) by an order made by an adjudicati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restrained from associating with any corporate body in accessing the securities for a specified period. "Offence" is an act of omission or commission which is punishable by any law for the time being in force. Protection under Article 20 (1) of the Constitution is not available to the respondent." 92. In support of the contention that the present writ petition No.29352 of 2012 filed by the Petitioner is not maintainable before this Court the Learned Senior Counsel for the Respondent cites an order of this Court dated 24/7/2009 between N. Narayanan v. SEBI [2009] 94 SCL 206 (Mad.), wherein in paragraph 37, it is observed and laid down as follows:-- "Therefore, having regard to the fact that alternative remedy is available to the petitioner and that alternative remedy is effective and efficacious as the Securities Appellate Tribunal is presided over by a retired Judge of High Court and two persons, having full expertise in respect of securities and further appeal remedy is provided to the Hon'ble Supreme Court against the decision of the Tribunal, the present writ petition 'filed by the Petitioner cannot be entertained and hence, it is dismissed. Conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titution would apply to the Petitioners ease, the Learned Senior Counsel for the Respondent submits that the principle of double jeopardy will only apply in respect of criminal action and in the present case, direction issued under Section 11 is of civil nature and as such the principle of double jeopardy will not apply to the present case on hand. 96. At this stager the Learned Senior Counsel for the Respondent relies on the decision in Ajay Agarwal case (supra), wherein in paragraph Nos.7 and 9, it is observed as follows:-- "7. Pursuant to such show-cause notice, the respondent gave his reply on 1/3/2000 and 10/7/2002. Thereafter, an opportunity of personal hearing was granted to the respondent on 14/5/2002 and the same was adjourned to 5/7/2002 end on that date the Board made its submissions. Ultimately, on 31/3/2004, the Chairman of the Board passed an order, the concluding portion whereof is as under: "Therefore,- in exercise of the powers conferred upon me by virtue of. Section 4 (3) read with Section 11 and Section 11 - B off the SEBI Act,- 1 hereby direct that Bhri Ajay Agarwal be restrained from associating with any corporate body in accessing the securities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38 and 40 it is observed an laid down as follows:-- "34. The said Act is .-pre-eminently a social welfare legislation seeking to protect the interests of common men who are all 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 adapt such an interpretation as to further the purposes of law and if possible eschew the one which frustrates it. Keeping this principle in mind if we analyse some of the provisions of the Act, it appears that the Board has been established under Section 3 as a body corporate and the powers and functions of the Board have been clearly stated in Chapter' IV and under Section 11 of the said Act. 37. Section 11 - B which empowers the Board to issue certain directions also came up by way of amendment in 199$ by Act 9 of 1995. The Statements of Objects and Reasons of such amendments show that one of the objects is to empower the Board to issue regulations without the approval of the Central Government. [See Para 3] (a) of the Statements of objects and Reasons] Section 11-B of the Act thus empowers the Board t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;Res Judicata' raised on behalf of the .Petitionee the Learned Senior Counsel for the Respondent submits that in the Consent Order dated 21/7/2008, there is no finding or any decision being rendered on merits and as a matter of fact, the proceeding under Sections 11 and 15 I of the SEBX Act are different and in .fact, the purpose of the SEBI Act is to protect the interest of investors. Also, that the ingredients of Order 2 Rule 2 of CP.C, cannot come into operative play because it applies only to the Court proceedings not to the proceedings of the Respondent/Board. 102. The Learned Senior Counsel for the Respondent submitb that no limitation is .prescribed under the SSBJ for the Board to take further action and therefore, the contra plea taken on behalf of the Petitioner in regard; to the purported delay of issuance of second-show cause notice dated 26/12/2011 is -to be rejected. 103. The Learned Senior Counsel, for the Respondent submits that in the second show-cause notice dated 26/12/2011 issued by the Respondent,- the Petitioner submitted his replies through Advocate letters dated 11/1/2012 and 7/2/2012 and only after considering the same, the impugned: order dated 9/10/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter 11 years of delay, without assigning proper reasons by the Respondent is an improper one. 107. It is the plea of the learned Senior Counsel for the Petitioner that "Limitation" means one has to act within a reasonable time. But the aspect of delay being one of limitation which is a jurisdictional issue and therefore, there is no question of availing of an alternative remedy by the Petitioner. 108. In other words, the Learned Counsel for the Petitioner contends that the Writ Petition filed by the Petitioner is maintainable and availing of an alternative remedy is not an embargo for the Petitioner to file the present Writ Petition before' this Court. 109. The Learned Senior Counsel for the Petitioner submits that in paragraph 9 of the decision of Hon'ble Supreme Court AJAY Aggarwal's case (supra), wherein at special page: No.770, the question arose whether any direction could be issued under Section 11 - B for the alleged misconduct said to have been committed prior to introduction of Section 11 B of the SEBI Act and as such, the said decision would not apply to the facts of the present case on hand. 110. Also, in the aforesaid decision at page 775, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other contention of the Learned Senior Counsel for the Petitioner is that the- Petitioner has-approached this Court by filing the present Writ Petition and somebody should raise his/their voice against the Respondent. 118. Glimpse of decisions relied on petitioner's side:- At this point of time, this Court refers to the decisions: relied on by the Petitioner. (i) In the decision of the Hon'ble supreme Court in Himmatlal Harilal Mehta v. State of Madhya Pradesh AIR 1954 SC 403 it is held as follows:-- "The contention that because a remedy under the impugned Act is available to the asseesee, he is disentitled to relief under Art.226' stands negatived by the decision in AIR 1953 SC 252 of this Court in the State of Bombay v. The United Motors (India) Ltd. The principle that a Court will not issue a prerogative writ when an adequate alternative remedy was available does not apply where a party come to the Court with an allegation that his fundamental right had been infringed and sought relief under Art.226. Moreoverr since the remedy provided by the C.P. and Barer sales Tax Act is of en onerous and burdensome character and before the assessee can avail of it he ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal Eights or when on the undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess, these can be the grounds an which the writ petitions can foe entertained. But normally the High Court should not entertain writ petitions unless it is shown that there is .something more in a case,, something going to the root of the jurisdiction of the .officer, something which would show that it would be a case, of palpable injustice to the writ petitioner to force him to adopt the remedies provided by the statute." (vii) In the decision of the Hon'ble Supreme Court in Sangeetaben Mahendrabhai Patel v. State of Gujarat [2012] 7 SCC 621) it is held as follows:-- 'The fundamental right which is guaranteed under Article 20 (2) enunciates the principle of "Autrefois convict" or "double jeopardy" i.e, a person must not be put in peril twice for the same offence. The doctrine is based on the ancient maxim nemo debet bis punire pro uno delicto, that is to say,, that no one ought to be punished twice for one offence. The plea of autrefois convict or autrefois acquit avers that the person has been previously convicted or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quot;The claim of the appellants is barred under the principles of res judicata/constructive res judicata, the earlier judgment having attained finality. The principle of res judicata applies also to the writ proceedings.." 120. More importantly, this Courr at this juncturer pertinently makes a significant reference to the fact that the Respondent/SBIBI has been empowered to provide measures far preventing 'insider trading' and in. pursuance of the same, SEBI: [Prevention of Insider Trading Regulations 1992) has been framed. 121. A Panoramic Spectrum of Some Provisions of SEBI Act:- In terms of Section 4 (5) of the SEBI Act, the Chairman and other members of the Board are noted experts. In fact, SEBI/Boardr under Section 11 of the Act has been empowered to take appropriate measures for protecting the Investors in Securities and to promote the development of and to. regulate the securities market. 122. Indeed Section 15M of the SEBI Act, prescribes the Qualification for appointment as Presiding' Officer or Member of Securities Appellate Tribunal. 123. Under Section 15T of the Act any person aggrieved by an order of the SEBI .may file an appeal to the Securities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said that the opinion of the Board is to be formed only after applying its mind and examining the record which is not an exercise of mere acting on the recommendations of the Investigating Officer. 128. An Adjudicating Officer under the SEBI is to hold an "Enquiry" in the prescribed manner for the purpose of holding an enquiry for awarding, penalties. SEBI (Procedure for Holding Enquiry and imposing penalties by Adjudicating Officer) Rules, 1995 have been framed by the Central Government in exercise of power under Section 29 (2) (d) (c) of the Act. The Adjudicating Officer in the first instance is required to send a show cause notice giving the notice a time period of minimum 14 days to reply. Such notice is to indicate the nature of defaults alleged. An opportunity to represent against an envisaged action is the prime essence rather than form of hearing. Proviso to Rule 4 (5) of the SEBI (Procedure for holding enquiry and imposing penalties by Adjudicating Officer) Rules 195 provides that- personal hearing can be waived at the request of the Noticee only. Also that, an Adjudicating officer while taking/recording the evidence is not bound by the provisions of the Indian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sty Scheme Stock Exchanges'. 133. The Securities Appellate Tribunal, as per Section 15T off the SEBI Act has power to plenary review where it lies and is empowered to look into all relevant materials and consider the law and decide those facts based on which an order can be passed in respect of Appeals filed before it. Also, the Securities Appellate Tribunal has powers to examine the facts of the case afresh, evaluate the evidence and test the benefit- of the order passed with reference to the applicable law. 134. A statutory obligation is showered on the Securities Appellate Tribunal as par section 15 (6) of the SEIBI Act to dispose of Appeals finally within six months from the date of receipt of the appeals. 135. Section 15U(1) of the SEBI Act, 1992 specifies that the Securities Appellate Tribunal shall not be bound by the procedure laid down by the Code of Civil Procedure, 1908 (5) but shall be guided by the principles of natural justice and subject to other provisions of the Act and of any Rules, the Securities Appellate Tribunal shall have the power to locate.. There, is no procedure including the places on which they shall have their sittings. Also, Section 15(12) enjo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Respondent, whereby the said order disposed of the said proceedings pending against the Petitioner/Notices under the SEBI Act in the matter of Polaris Software Lab Limited and in fact, the said consent order para 6 (2) clearly points out that Passing of this order i.e without prejudice to the right of SEBI to take enforcement actions including commencing/ reopening of the pending proceedings against the Notices, if SEBI finds that a. any representation made by the Notices in the consent proceedings is subsequently discovered to be untrue, b the Notices has breached any of the clauses/conditions of undertakings/waivers filed during the current consent proceedings. 141. In the present case on hand before this Court, the Respondent issued the second show cause notice dated 26/12/2011 to the Petitioner under Sections 11, 11 B and 11 (4) of the SEBI Act, 1992 r/w. Regulation 11 of SEBI (Prohibition of Insider Trading) Regulations 1992. The petitioner submitted his reply/objections dated 11/1/2012 to the second show cause notice dated 26/12/2011. On 20/6/2012 the petitioner filed an application before the Whole Time Member of the Respondent praying for request of the show c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions, 1992, in and by which the show cause notices dated 26/12-2011 was disposed of. 143. It is not out of place for this Court to make an apt mention that before entertaining a Writ Petition,- the High Court should consider parameters relating to the existence of an alternate remedy and in appropriate facts and circumstances regulate the Petitioner to avail of such remedy at the first instance as per decision of" the Honourable Supreme Court in CCT v. Indian Explosives Ltd. [2008] 3 SCC-688. 144. This Court also recalls the further decision of the Honourable Supreme Court in A.P. Foods v. Samuel 2006 (5) SCC 469 it is held that-- '"Where" statutory remedy is provided, the Writ Petition may not be entertained.' 145. Be that as it may on a careful consideration of respective contentions and in view of the fact that the parties have taken a divergent view in the subject matter-in issue and also this Court taking note of an important fact that SEBI Act being an inbuilt one which provides for an effective. efficacious viable and alternative remedy of filing of an Appeal by an aggrieved before the Securities Appellate Tribunal (Specific Dispute Redressal Mec ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
