Bombay High Court
Amit Goenka vs Securities And Exchange Board Of India ... on 14 August, 2024
Author: A.S. Chandurkar
Bench: A.S. Chandurkar
2024:BHC-OS:12425-DB
31-WPL-12981-24.doc Rameshwar Dilwale
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
RAMESHWAR
LAXMAN
DILWALE WRIT PETITION (L) NO.12981 OF 2024
Digitally signed by
RAMESHWAR
LAXMAN DILWALE
Amit Goenka .. Petitioner
Date: 2024.08.14
18:44:24 +0530 Vs.
Securities and Exchange Board of
India (Through Chairman) & Ors. .. Respondents
...
Mr. Pradeep Sancheti, Senior Advocate with Mr. Vikramaditya
Deshmukh, Ms. Shreni Shetty, Ms. Antara Kalmbi i/by ANB Legal
for petitioner.
Mr. Mustafa Doctor, Senior Advocate with Ms. Vidhi Shah Ajmera,
Mr. Mihir Mody with Mr. Harshavardhan Melanta, Mr. Shreyas
Menkudale i/by M/s. K. Ashar & Co., Advocates for respondent
no.1-SEBI.
Mr. Sagar Divekar with Mr. Abhimanyu Mhapankar Advocates for
respondent no.2.
Mr. Siddhesh Bhole with Adv. Riddhi Natekar i/by SSB Legal and
Advisory, Advocates for respondent no.3.
...
CORAM : A.S. CHANDURKAR &
RAJESH S. PATIL, JJ
DATE : 14th AUGUST, 2024.
P.C. :
1. Heard. The petitioner has raised a challenge to the
communication dated 13th September 2021 that has been issued
by SEBI-Securities and Exchange Board of India-SEBI by which
KPMG-KPMG Assurance and Consulting Services, a limited
liability partnership-KPMG has been appointed as Forensic
Auditor with regard to the financial statements of the fourth
respondent- Shirpur Gold Refinery Limited-SGRL for the financial
years ending 2018-2019 to 2020-2021. The records/documents
31-WPL-12981-24.doc Rameshwar Dilwale
to be verified have been indicated in the said communication.
Consequent upon its appointment as Forensic Auditor, KPMG
has submitted its report dated 21st March 2023 which is also
under challenge.
2. Mr. Pradeep Sancheti, learned Senior Advocate for the
petitioner submitted that KPMG was not eligible to be called upon
to submit a Forensic Report as it did not satisfy the eligibility
criteria prescribed under the tender issued by SEBI. According to
him, KPMG was not registered as required by Section 2(1)(ca) of
the Chartered Accountants Act, 1949. It also did not have any
FRN registration or CIN number. Inviting attention to various
documents on record, it was submitted that KPMG on 21 st March
2023 submitted a Project Aurum Report which could not be called
a Forensic Report as was directed to be submitted. There was no
reference to any Unique Document Identification Number-UDIN in
the said report which was mandatory. In the list of firms
registered with the third respondent-Institute of Chartered
Accountants of India-ICAI, the name of KPMG as a registered firm
was not indicated. He also referred to the objects of KPMG to
indicate that carrying out Forensic Audit was not included
therein. Relying upon the decision in Lakshmanaswami Mudaliar
31-WPL-12981-24.doc Rameshwar Dilwale
& Others Vs. Life Insurance Corporation of India & Anr, AIR 1963
SC 1185 it was submitted that in absence of any such object
behind formation of KPMG, it could not have carried out such
forensic audit. Even in its list of partners, the name of the person
who had prepared the report was not mentioned. KPMG having
failed to file any affidavit in response to the averments made in the
writ petition, an adverse inference was therefore liable to be drawn
against it.
Inviting attention to the judgment of the Supreme Court in
National Securities Depository Limited Vs. Securities and Exchange
Board of India (2017) 5 SCC 517, it was submitted that
appointment of a Forensic Auditor to undertake a forensic audit
was an administrative order and hence no appeal could be filed for
challenging the communication dated 13th September 2021
appointing KPMG for such purpose. The writ petition therefore
ought to be entertained on merits especially in the light of the fact
that the show cause notice was issued by SEBI on 25th April 2023
and inspection of the relevant records was granted only in
September 2023 as well as January 2024. Since the petitioner
had approached the Court diligently, the prayers made in the writ
petition ought to be granted. In addition, it was submitted that
though the petitioner had submitted his reply to the show cause
31-WPL-12981-24.doc Rameshwar Dilwale
notice, it was doubtful whether SEBI would be entitled to go into
these jurisdictional aspects.
3. Mr. Mustafa Doctor, the learned Senior Advocate for SEBI
opposed the writ petition by submitting that it suffered from delay
and laches. KPMG came to be appointed as forensic auditor way
back on 13th September 2021. After inspection of the relevant
records, KPMG submitted its report. SEBI thereafter had passed
an interim order on 25 th April 2023 and also issued a show cause
notice to the petitioner. This interim order was appealable under
the Securities and Exchange Board of India Act, 1992 but the
petitioner did not file any appeal for challenging the said order.
The petitioner had replied to the show cause notice on 4 th April
2024 and had raised similar grounds of defence therein. The
petitioner having failed to challenge the interim order dated 25 th
April 2023, there was no explanation furnished for belatedly
challenging the appointment of the Forensic Auditor that was
made on 13th September 2021. It was further submitted that all
contentions that were being now raised for challenging the
communication dated 13th September 2021 could be raised in
answer to the show cause notice. Moreover, if any adverse order
was passed against the petitioner, the remedy of appeal was
31-WPL-12981-24.doc Rameshwar Dilwale
available to him. Since an interim order was passed pursuant to
the report submitted by the Forensic Auditor which was not
challenged despite being a quasi-judicial order, the challenge
raised to the appointment of the Forensic Auditor was merely for
delaying the proceedings. The writ petition was therefore not liable
to be entertained.
4. Having given thoughtful consideration to the rival
submissions, we are of the view that the writ petition is not liable
to be entertained on the ground that a belated challenge has been
raised to the communication dated 13th September 2021 and the
consequent report submitted by KPMG. After KPMG came to be
appointed as Forensic Auditor pursuant to the communication
dated 13th September 2021, it submitted its report on 21 st March
2023. SEBI considered the said report and thereafter passed an
interim order and also issued a show cause notice on 25 th April
2023. Admittedly, this interim order has not been challenged by
availing any statutory remedy. In response to the show cause
notice, the petitioner has submitted his reply on 4 th April 2024
and the matter is under consideration by SEBI. The present writ
petition has been filed only on 15th April 2024.
Thus much water has flown after issuance of the
31-WPL-12981-24.doc Rameshwar Dilwale
communication dated 13th September 2021 appointing KPMG as
Forensic Auditor. We do not find any justifiable reason assigned
by the petitioner in the writ petition for the belated challenge
being raised to the appointment of KPMG as Forensic Auditor on
13th September 2021. The submission that inspection of the
records was given in September, 2023 and January 2024 by itself
would not be of much avail in the present facts as a challenge
could have been raised much earlier.
5. It is further seen that in the reply to the show cause notice
filed on 4th April 2024, the petitioner has also raised an objection
to the eligibility of KPMG for being appointed as Forensic Auditor.
In this regard, we may refer to the stand taken by SEBI. In
paragraphs 41 and 45 of the affidavit-in-reply filed by SEBI, it has
been stated as under:-
41. Further, in paragraphs 8, 17 and 47 of the Petition,
it is the Petitioner's case that the Interim Order has
been passed pursuant to the Forensic Audit Report. In
paragraph 93 of the Interim Order, SEBI has
specifically requested for a reply to the Interim Order.
Therefore, the Petitioner may raise any grievance that
he may have against the Forensic Audit Report in his
reply to SEBI's Interim Order, which he has already
and admittedly done. There is no reason to invoke this
Hon'ble Court's discretionary jurisdiction under Article
226, when an alternatively efficacious remedy is
available.
31-WPL-12981-24.doc Rameshwar Dilwale
45. With reference to paragraphs 18 through 20, it is
submitted that the Petitioner has already raised its
challenge to the Forensic Audit Report, including the
appointment of the Forensic Auditor, before SEBI, which
will be considered by SEBI and is now pending
adjudication. Given these pending proceedings, it is not
open to the Petitioner to raise these grievances before
this Hon'ble Court.
It can thus be seen that the petitioner has already
questioned the appointment of KPMG as forensic auditor. We are
therefore of the view that the petitioner having raised all these
grounds while replying to the show cause notice dated 25 th April
2023, he ought to pursue the same in accordance with law.
6. Hence on the ground that the challenge to the
communication dated 13th September 2021 has been raised
belatedly for which there is no justifiable explanation coupled with
the fact that in the interregnum, an interim order has been passed
by SEBI on 25th April 2023 which has gone unchallenged, we are
not inclined to entertain the petitioner's challenge to the
communication dated 13th September 2021 issued by SEBI as well
as the report dated 21st March 2023 submitted by KPMG. The
petitioner having filed reply to the show cause notice and having
questioned the appointment of KPMG as Forensic Auditor as well
31-WPL-12981-24.doc Rameshwar Dilwale
as the Report as submitted, he is free to pursue the matter before
SEBI in accordance with law. It is clarified that we have not
examined the challenge as raised on merits. All grounds of
challenge raised by the petitioner to the communication dated 13 th
September 2021 issued by SEBI as well as the report dated 21 st
March 2023 submitted by KPMG are kept open. The writ petition
is disposed of as not entertained.
[ RAJESH S. PATIL, J. ] [A.S. CHANDURKAR, J. ]
