Case BriefsTribunals/Commissions/Regulatory Bodies

Securities Appellate Tribunal, Mumbai (SAT): The Coram of Justice Tarun Agarwala, (Presiding Officer) and Justice M.T. Joshi (Judicial Member), while dismissing the appeals at the admission stage on not finding any merit, was of the opinion that, there was an application of mind on the basis of which the opinion was so formed to proceed with the inquiry under Rule 4(3) of the Securities and Exchange Board of India (Procedure for Holding Inquiry and Imposing Penalties) Rules, 1995.

In the present matter, the impugned order of SEBI was challenged stating that SEBI had already formed an opinion prior to the filing of the reply given by the appellants. Therefore, it was contended that before forming an opinion the appellants should have been heard and by not giving an opportunity of hearing the impugned order is erroneous and violative of the principles of natural justice.

Therefore the issues were,

  1. Whether the opinion formed by the adjudicating authority to initiate an inquiry, is an order that is appealable under Section 15T of the SEBI Act.
  2. Whether any opportunity of hearing was required to be given before forming an opinion under Rule 4(3) of the Rules of 1995.

The Coram answering in favour of the Respondent referred to Natwar Singh v. Director of Enforcement, (2010) 13 SCC 255, and quoted the Supreme Court in the order, which stated, 

“…a reasonable opportunity of being heard is to be provided by the adjudicating authority in the manner prescribed for the purpose of imposing any penalty as provided for in the Act and not at the stage where the adjudicating authority is required merely to decide as to whether an inquiry at all be held into the matter. Further, the Court opined, Imposing of penalty after the adjudication is fraught with grave and serious consequences and therefore, the requirement of providing a reasonable opportunity of being heard before imposition of any such penalty is to be met. In contradistinction, the opinion formed by the adjudicating authority whether an inquiry should be held into the allegations made in the complaint are not fraught with such grave consequences and therefore the minimum requirement of a show-cause notice and consideration of cause shown would meet the ends of justice.

While clearing further Chandrakant Amratlal Parekh v. AO, SEBI in Appeal No. 91 of 2007 decided on October 23, 2007, referred to by the Counsel for the Respondent to differentiate between an interlocutory order and an adjudicating order, cleared the possibility since the impugned order was not an order rather an opinion.

The Coram opined,

“This Tribunal held that formation of an opinion is an interlocutory order which is not appealable under Section 15T of the SEBI Act. We beg to differ as in our view the opinion formed is not an order”.

[A.T. Rajan v. SEBI, Misc. Application No. 921 of 2021, decided on 30-08-2021]


Counsel for the Parties:

Mr Ashim Sood, Advocate with Ms Shreya Suri, Ms Vaishnavi Rao, Ms Swati Mittal, Mr Rhythm Buaria, Advocates for the Appellants.

Mr Gaurav Joshi, Senior Advocate with Mr Abhiraj Arora, Ms Rashi Dalmia, Mr Karthik Narayan, Advocates i/b ELP for the Respondent.


Agatha Shukla, Editorial Assistant has reported this brief.

Case BriefsHigh Courts

Jharkhand High Court: Deepak Roshan, J., while allowing the present writ application, said, “This court is having no hesitation to hold that there is a procedural irregularity in passing the impugned order of punishment. As such, the impugned order of punishment and all subsequent orders deserve to be quashed and set aside.”

Background

The facts of the instant writ application are briefly mentioned hereunder;

  1. That while the petitioner was posted as Manager at Jamshedpur Branch of the respondent Bank, a memorandum of charge was issued on 19-07-1999 and delivered to him on 30-07-1999 whereby, it was proposed to hold a departmental enquiry against him with regard to imputation of misconduct.
  2. Thereafter, in terms of the aforesaid charge-sheet, departmental enquiry has been conducted in which the petitioner filed a detailed written brief denying all allegations leveled against him.
  3. Thereafter, the Inquiry officer submitted his enquiry report on 18-02-2002, which was delivered to the petitioner on 28-02-2002.
  4. Pursuant to that, petitioner filed a detailed reply against the finding of the Inquiry Officer and finally the order for removal from service was passed against the petitioner by the Disciplinary authority.
  5. Being aggrieved, the petitioner filed an appeal on 16-01-2003, which was also dismissed vide order dated 02-01-2004.
  6. Thereafter, the petitioner filed a writ application; W.P.(S) No. 444 of 2005 before the present Court and the said writ application was disposed of by order dated 1st March, 2012, whereby the petitioner was directed to prefer a review application and the reviewing authority was directed to consider the case of the petitioner.
  7. Pursuant to the aforesaid order of this court, the petitioner filed a review application which was also dismissed.

 Contentions

Krishna Murari, Counsel for the petitioner, submitted that the impugned order of punishment, as well as the appellate and review order, are bad in law, inasmuch as, the issue raised by the petitioner, right from the stage of enquiry proceedings, has not been considered by either of the authorities. He further referred to Rule 6(5) and 6(10) of the Central Bank of India Officer Employees (Conduct) Regulations, 1976 and contended that it is a mandatory requirement that the Inquiry Authority, where the Officer/Employee does not admit all or any of the article of charge, furnish to such officer a list of documents and list of witnesses along with the article of charge. However, in the instant case, the mandatory requirement as enshrined in the aforesaid Regulation has not been complied with. It was further submitted that the stand taken by the petitioner, wherein it has been specifically stated that the “list of witnesses proposed and the documents relied upon by the Bank were never supplied to the petitioner and the witnesses were produced on a particular date without the knowledge of the petitioner, thus, depriving him of the opportunity to prepare himself for the cross-examination of the witnesses as per rule,” has been replied evasively by the respondent Bank. In this regard, the Counsel emphasized on Order VIII Rule 4 and 5 of the Code of Civil Procedure which clearly says that denial must be specific and not evasive, and further placed reliance on State of U.P. v. Saroj Kumar Sinha, (2010) 2 SCC 772 and G.V. Aswathanarayana v. Central Bank of India, (2004) 1 LLJ 36.

P.A.S. Pati, Counsel for the respondent Bank, supports the impugned order, however, could not demonstrate that the mandatory requirement as envisaged in Rule 6(5) and 6(10) of the Regulation was complied with. He cannot dispute the averment made in the counter affidavit while replying to the categorical statement made in the writ application, however, he reiterated that principle of natural justice has been complied with.

 Observations

Court reproduced the allegation as well as the reply made by the respondent bank and further reproduced the language of Order VIII Rule 4 and 5(1) of the CPC, 1908.

Rule 4. Evasive denial – Where a defendant denies an allegation of fact in the plaint, he must not do so evasively, but answer the point of substance. Thus, if it is alleged that he received a certain sum of money, it shall not be sufficient to deny that he received that particular amount, but he must deny that he received that sum or any part thereof, or else set out how much he received. And if an allegation is made with diverse circumstances, it shall not be sufficient to deny it along with those circumstances.

Rule 5. Specific denial – (1) Every allegation of fact in the plaint, if not denied specifically or by necessary implication, or stated to be not admitted in the pleading of the defendant, shall be taken to be admitted except as against a person under disability: Provided that the Court may in its discretion require any fact so admitted to be proved otherwise than by such admission.”

It went on to conclude, “After going through the specific provision under Code of Civil Procedure and in the background of the statement given in the counter affidavit it can be easily inferred that the statement made in Paragraph 38 of the writ application regarding non-supply of documents and list of witnesses, are not denied specifically by the respondents.

 Decision

Allowing the present writ application, the Court held, “Normally, in such type of cases, the matter should have been remitted back to the competent authority to start the proceeding from the stage of the irregularity commenced, by following principles of natural justice. However, in the instant case, the petitioner has already retired on 31-03-2010 and at present he is about 74 years. Further, the case relates to the year 1999 and calling the management witness now will be a futile exercise, as such, no fruitful purpose would be served to remit the case back to the Disciplinary authority for compliance of mandatory requirements of the Regulation. Consequently, the Impugned Order and all subsequent orders are hereby quashed and set aside. The Respondents are directed to give consequential benefits to the petitioner.”[Rama Shankar v. Central Bank of India, 2020 SCC OnLine Jhar 1039, decided on 15-12-2020]


Sakshi Shukla, Editorial Assistant has put this story together

Case BriefsHigh Courts

Karnataka High Court: Krishna S. Dixit, J. allowed the writ petition in part by quashing the previous order by the Joint Registrar and reassigning the matter to another Registrar.

In the present case, the petitioner who was the president of DCC Bank Shivamogga was disqualified from his presidentship by the Joint Registrar of Co-operative Societies. Jayakumar Patil, counsel appearing on behalf of the petitioner, vehemently opposed this disqualification and submitted that the Joint Registrar took his decision based on a hasty inquiry which trigger the presumption of some ulterior motive. He further submitted that the petitioner was a popular president which resulted in his re-election ten times before his disqualification. Therefore, the petitioner expressed no faith in the Joint Registrar.

Advocate General, Prabhulinga Navadgi, appearing on behalf of the respondents contended that although the Joint Registrar could have refrained from deciding the matter, there cannot be any aspersions cast on him for his decision. Therefore, he suggested that taking into consideration the controversy surrounding the decision, a fresh proceeding should be constituted and be heard by any one of the four Joint Registrars registered in the memo.

The Court held that the interplay between justice and fairness needed the said matter to be put under inquiry again. Hence, the Court quashed the previous order of the Joint Registrar and placed the matter to be heard by the Joint Registrar, Chitradurg.[R.M. Manjunath Gowda v. State of Karnataka, 2020 SCC OnLine Kar 1283, decided on 14-08-2020]

Case BriefsHigh Courts

Punjab and Haryana High Court: Gurvinder Singh Gill, J., disposed of the petition directing the respondents to issue written advance notice to the petitioner in terms of Section 160 of Criminal Procedure Code, 1973 in case of any inquiry or investigation.

The facts of the case are that the brother-in-law of the petitioner 1, son of petitioner 2 and husband of petitioner 3, have been falsely involved in one FIR under Sections 457, 380, 120-B read with 34 of Penal Code, 1860. Further, in order to pressurize the petitioners, the police have been raiding their house and issuing threats to involve them in some false case, in case aforesaid brother-in-law is not produced. The petitioners have approached this court seeking directions for protection of their lives and liberty.

The Court disposed of the petition with a direction to respondent 4, Senior Superintendent of Police, Amritsar to ensure that in case, the petitioners are required to be associated with any inquiry or investigation or some information is to be elicited from them, then a written advance notice in terms of Section 160 of Criminal Procedure Code, 1973 be served upon them. The Court further clarified that this order would not act as immunity for the petitioners in case if any wrongful act done by the petitioner has been found. [Prabhleen Kaur v. State of Punjab, 2019 SCC OnLine P&H 1948, decided on 11-10-2019]

Case BriefsHigh Courts

Allahabad High Court: Dinesh Kumar Singh, J. disposed of the petition on the ground that no substantial ground was made for exercising the power under Section 482 of Code of Criminal Procedure, 1973.

A petition was filed in order to quash the summoning order passed by 1st Additional Chief Judicial Magistrate under Section 498-A, 323, 504 and 506 of the Penal Code, 1860.

Rajendra Prasad, counsel for the petitioner submits that First Information Report had been lodged against the petitioner on the basis of false and fabricated facts. It was also submitted that the petitioner was ready to surrender before the court below and some protection may be granted to him.

The Additional Government Advocate had opposed the petition. It was discussed that the  power under Section 482 of the Code of Criminal Procedure, 1973 was not to be exercised in a routine manner, but it is for limited purposes, namely, to give effect to any order under the Code, or to prevent abuse of process of any Court or otherwise to secure ends of justice. It was reiterated that according to the precedents the power under Section 482 of Code of Criminal Procedure, 1973 should not preempt a trial and cannot be used in a routine manner so as to cut short the entire process of the trial before the courts below.

Case of  Lee Kun Hee v. State of U.P., JT 2012 (2) SC 237, was brought in light,  in which it was held that “Court in exercise of its jurisdiction under Section 482 CrPC cannot go into the truth or otherwise of the allegations and appreciate evidence, if any, available on record. Interference would be justified only when a clear case of such interference is made out. Frequent and uncalled interference even at the preliminary stage by High Court may result in causing an obstruction in the progress of inquiry in a criminal case which may not be in public interest”

High Court after perusal of matter on record opined it cannot be said that a cognizable offence was not made out and thus there was no sufficient ground to quash the impugned proceedings, although it was directed that if the petitioner surrenders before the court within ten days with an application for bail the same shall be considered and disposed of expeditiously in accordance with the law.[Anil Kumar Srivastava v. State of U.P, 2019 SCC OnLine All 2299, decided on 01-04-2019]

Case BriefsHigh Courts

Delhi High Court: A Single Judge Bench comprising of Sunil Gaur, J., disposed of a writ petition before it. The petitioner, an unsuccessful candidate for the post of Trained Graduate Teacher (TGT) in Mathematics, had filed the writ petition against the appointment of Respondent 7, who was selected as TGT in Dhanpatmal Virmani Secondary School, Roop Nagar, Delhi.

The petitioner’s case was that the Masters’ degree held by Respondent 7 was fabricated and that there was interpolation of marks scored by Respondent 7 in the interview. The petitioner submitted that while she was working as a guest teacher in another school, Respondent 7’s ineligibility gave her a valid claim to be appointed as TGT. The petitioner submitted that several representations in this regard were made but to no avail. She also brought to light the fact that she had sent a legal notice to the respondents but there was no response to it.

The Court adjudged that a proper inquiry was called for, considering the fact that Respondent 7’s marks were handwritten whereas the other candidates’ were printed in the interview score sheet and that Respondent 7 claimed to have earned an MA in Mathematics from Kalinga University, Raipur, Chhatisgarh, which is a full time regular course, while she was in regular service in a MCD school within the same period. The Court directed that the conclusions of the inquiry be communicated to the petitioner so she may avail remedy available under law. Petition disposed of. [Ashu Rani v. Dhanpatmal Virmani Senior Secondary School,2018 SCC OnLine Del 7127, decided on 07.02.2018]