Rrpr Holding Private Limited vs Securities And Exchange Board Of ...
2018 Latest Caselaw 6463 Del

    * IN THE HIGH COURT OF DELHI AT NEW DELHI
    %                               Date of decision: 26th October, 2018

+    W.P.(C) 9114/2018, CM Nos. 35180-35181/2018 & 44300/2018

     RRPR HOLDING PRIVATE LIMITED
                                                                   ..... Petitioner
                           Through:       Mr. Balbir Singh, Sr. Adv. with
                                          Mr. Pawan Sharma, Mr. Anuj Shah,
                                          Mr. Rishabh Sharma and
                                          Ms. Monica Benjaman, Advs.

                           versus

     SECURITIES AND EXCHANGE BOARD OF INDIA & ANR
                                                 ..... Respondents
                   Through: Mr. Tushar Mehta, Solicitor General
                            with Ms. Sandhya Kohli, Adv. For R1
                            Mr. Anurag Ahluwalia, CGSC with
                            Mr. Abhigyan Siddhant, Adv. For R2
    CORAM:
    HON'BLE THE CHIEF JUSTICE
    HON'BLE MR. JUSTICE V. KAMESWAR RAO

    V. KAMESWAR RAO, J. (ORAL)

CM No. 44300/2018 (for interim relief)

1. This application has been filed by the petitioner with the

following prayers:

"In the premises, it is most respectfully prayed that this Hon‟ble Court may be pleased to:

(i) Direct that the proceedings relating to the Impugned SCN dated 14.03.2018 be kept in

abeyance during the pendency of the present writ petition.

(ii) Pass any other and / or further order(s) which tis Hon‟ble Court may deem fit and proper in the facts and circumstances of the present case."

2. As seen from the above, in substance the petitioner is

seeking stay of show cause noted dated March 14, 2018 which has

been impugned in this writ petition.

3. It is the submission of Mr. Balbir Singh, learned Senior

Counsel appearing for the petitioner that when the matter was listed

before this Court on August 29, 2018 this Court had passed the

following order:

"Issue notice. Mr. Sandhya Kohilar, Advocate for respondent No.1 and Mr. Anurag Ahluwalia, Advocate for respondent No.2 accept notice.

We have heard learned counsel for the parties.

It is apparent that no notice of inquiry has been issued by the respondent-Securities and Exchange Board of India (hereinafter „SEBI‟), which can result in an adverse finding. In these circumstances, the investigation-which is alleged to be carried out by SEBI would not be presently interfered with.

The SEBI shall ensure the inspection of all materials that have been investigated pertaining to the show cause notice, which is the subject matter of the investigation, is provided. However, if there is any confidential material concerning a third party, which too might be under investigation or other confidential material, which the SEBI feels would be prejudicial, it is open to it to segregate or de-tag such material while complying with the order.

List on 27th November, 2018.

A copy of the order be given dasti under the signature of the Master."

4. Pursuant thereto, the petitioner vide e-mail dated September

03, 2018, requested the respondent No.1 to provide inspection of all

file notings / internal orders / communications relating to the

proceedings pending before the respondent No.1 whether relied /

referred in the impugned show cause notice or not.

5. Vide e-mail dated September 05, 2018 the respondent No.1

permitted the petitioner to conduct inspection on September 12,

2018 of all materials that have been investigated pertaining to the

impugned show cause notice. He states that the respondent No.1

did not provide inspection of all the materials as directed by this

Court. According to him, the respondent No.1 with mala fide intent

as the petitioner had approached this Court issued another show

cause notice dated September 05, 2018 for adjudication proceedings

for imposing financial penalties against the petitioner. He states

from the observation of this Court which has been reproduced

above, this Court has at this stage permitted for continuing the

investigation because of proceedings were not at a stage which can

result in any adverse finding against the petitioner. He also states

that the respondent No.1 has fixed the date of hearing in the

impugned show cause notice as October 30, 2018 i.e. even before

the next date of hearing of the writ petition. The intention appears

to make the writ petition infructuous. In the end, he states as the

matter is listed before this Court on November 27, 2018, it would be

appropriate the respondent No.1 be restrained from taking further

action till the next date of hearing.

6. On the other hand, Mr. Tushar Mehta, learned Solicitor

General appearing for the respondent No.1 submits that the writ

petition has been filed challenging the provisions of Section 11 and

11(B) of the Securities and Exchange Board of India Act, 1992 as

being ultra vires. He justifies the said provisions. That apart,

prayer has been made challenging the show cause notice dated

March 14, 2018. The petitioner is within its right to reply to the

show cause notice to enable the respondent No.1 to pass a final

order, if aggrieved against the same the petitioner can avail the

remedy of appeal before the SAT. That apart, he states that a

particular transaction may result in separate violation of the

provisions of the SEBI Act and as such the respondent No.1 is

within its right to issue a show cause notice(s) to those violations. It

is appropriate for the petitioner to reply to the said notices and

thereafter, seek such remedy as available in law. He has taken us

through show cause notices issued by the respondent No.1 to the

petitioner on March 14, 2018 and dated September 05, 2018, to

contend both the show cause notices are at variance.

7. Having heard the learned counsel for the parties, it is noted

a similar prayer as prayed for in the present application has been

made in CM 35180/2018 which was also considered by this Court

on August 29, 2018. The Court had not interdicted the proceedings

arising from the show cause notice dated March 14, 2018.

8. Mr. Mehta is correct that the petitioner is required to reply

to the show cause notice to enable the respondent No.1 pass a final

order against which the petitioner has a remedy of appeal before the

SAT. We have been informed one of the noticee has already

approached the SAT.

9. That insofar as the subsequent notices are concerned, we

agree with the submission of Mr. Mehta, appropriate for the

petitioner is to give reply to the said notices. In any case, if any

order is passed to the prejudice of the petitioner, remedy is for the

petitioner to approach the SAT. The Court is not inclined to

entertain this application, the same is dismissed.

V. KAMESWAR RAO, J

CHIEF JUSTICE

OCTOBER 26, 2018/aky