Bombay High Court: A Division Bench of Akil Kureshi and S.J. Kathawalla, JJ. addressed the petition filed by NDTV challenging orders passed by Securities Exchange Board of India (SEBI). Orders passed by SEBI pertained to the rejection of applications filed by NDTV for condonation of delay in filing settlement applications.

Facts pertaining to the present case

SEBI had initiated adjudication proceedings against the petitioner. The ‘first show-cause notice’ dated 12-02-2015 alleged violation of Clause 36 of Listing Agreement on the ground that there was non-disclosure of a tax demand of Rs 450 Crores which was raised under an assessment order against the Company for the assessment year 2009-2010.

04-03-2015 – Petitioner filed reply contending that he was under legal advice and bonafide belief that the tax demand was not required to be reported under Clause 36 of the Listing Agreement.

04-06-2015 – SEBI passed order holding the petitioner liable for the violation of Clause 36 of Listing Agreement and imposed a penalty of Rs 25 lakhs under Section 23-A of the Securities Contracts (Regulation) Act, 1956.

23-07-2015 – Petitioner filed an appeal against the above-stated order of SEBI before SAT, Mumbai.

28-08-2015 – SEBI issued ‘second show-cause notice’ against the company and its directors and key managerial personnel in which the allegations included non-disclosure of tax demand of Rs 450 Crores, delayed disclosure of certain sale of shares by KVL Narayan Rao, Group CEO and Executive Vice-Chairman and delayed disclosure by the petitioner under the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992.

08-06-2016 – SEBI issued the ‘third show cause notice’ alleging the petitioner for violation of certain provisions of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.


Petitioner stated that there was no contravention of non-disclosure of tax demand which was the main subject matter of the first and second show-cause notices. In regard to the allegations in the third show cause notice, the petitioner stated that it could trace the proof of some of the disclosures but could not trace the proof of the rest. Under the circumstances, without conceding to the correctness of the allegations made, the petitioner took a decision to seek settlement of all three cases.

21-03-2017 – Petitioner filed settlement application with respect to the first and second show-cause notices.

24-07-2017 – In respect to the third show-cause notice, the settlement application was filed.

15-05-2017 – Petitioner filed an application for condonation of delay in filing settlement application dated 21-03-2017. Further, it was stated that the settlement application was re-presented on 26-09-2017 confined to the second show-cause notice.

Additionally to the above contentions, counsel for the petitioner stated that:

  • No personal hearing was granted.
  • Impugned orders are non-reasoned orders, due to no reasons being cited for rejection of delay of condonation
  • Petitioner made out sufficient grounds for condoning the delay.
  • Delay in view of the statutory provisions should be construed liberally. SEBI committed a serious error in not entertaining settlement applications on merits simply rejecting on the ground of delay.

Counsel for SEBI opposed the petition contending that the delay in both the cases was substantial which was not satisfactorily explained. SEBI considered the applications on merits and recorded that for want of satisfactory reasons, delay cannot be condoned. Orders, therefore cannot be termed as unreasoned orders.


The High Court perused relevant statutory provisions, i.e. Securities and Exchange Board of India Act, 1992 and SEBI (Settlement of Administrative and Civil Proceedings) Regulations 2014.

With the stated statutory framework in mind, Court perused the relevant documents on record. Further perusal of both the impugned orders suggested that the Board had not cited any reasons for rejecting the respective obligations of the petitioner for condonation of the delay. “Mere statement that the panel of whole-time members did not find the reason given as sufficient would not constitute proper reasons for dealing with the applications.”

“Facts and grounds stated in both the delay condonation applications were different. However, both the applications met with the same response from the Board. Citing identical one line consideration both applications were rejected. It ought to have been appreciated that the result of the rejection of delay condonation applications would be to terminate respective settlement applications without consideration on merits.”

Court stated that the Board committed a serious error in rejecting both the applications for condonation of delay.

Court further added that, “In the present case, we are not inclined to express any conclusive opinion with respect to the right of an applicant of settlement application to be heard in person at the stage where application for condonation is being decided by the Board.”

Thus, the Court set aside both the impugned orders and the applications for condonation of delay stood allowed. [NDTV v. SEBI, 2019 SCC OnLine Bom 1772, decided on 04-09-2019]

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