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Synopsis

The Bombay High Court has recently said that the Securities Exchange Board of India (SEBI) is a public body which is required to act in the public interest.

“There has been persistent non-compliance of such orders passed by the Court, despite the Special Leave Petition of the SEBI being rejected, is too far to be imagined nay totally unacceptable. SEBI is a public body, it is required to act in public interest, it needs to comply with the orders passed by this Court,” the high court said.

The division bench of the high court, comprising Justice GS Kulkarni and Justice Jitendra Jain, was hearing a petition filed by minority shareholders who had made several complaints against Bharat Nidhi Limited. 

The high court had directed SEBI to provide the investigation documents to the minority shareholders. 
SEBI had challenged the order of the high court before the Supreme Court, and it was dismissed.

The regulatory body had issued a show-cause notice to the company. However, SEBI had passed a settlement order, which was subsequently withdrawn. 

The minority shareholders contended that the investigation done by SEBI was a farce, and they were not provided with any investigation details or documents. 

The division bench criticized the regulatory body, stating that such an approach by SEBI would dent the confidence of investors. 

“Such approach of the SEBI, in our opinion, would cause a dent to the confidence, the investors would repose in the SEBI, which needs to function solely to further the object and purpose, for which it is created by the Act of the Parliament,” the order reads. 

The high court also said that there was persistent non-compliance by SEBI even after the Special Leave Petition was rejected by the Supreme Court.

“It is quite intriguing to note the approach of the SEBI, as clearly seen from the events which had transpired, and from the obstinate stand taken by the SEBI in not furnishing the documents to the petitioners in relation to respondent Nos.2 to 9,” the order reads. 

The bench wondered why SEBI was not providing the details to the minority shareholders and said that,

“Now the SEBI is before the Court taking a stand that the documents need not be furnished and the petitions be disposed of as they are rendered infructuous. We wonder, as what can weigh with the SEBI, in not complying our order dated 23 October, 2023 and not furnishing the documents to the petitioners, except to benefit respondent Nos.2 to 9.,” the order states.

The division bench directed the regulatory body to provide the investigative documents and reports to the minority shareholders and asked SEBI to comply with the earlier order.

Case title: Ashok Dayabhai Shah And Ors vs SEBI & Ors