The Bombay High Court dismissed IL & FS’s plea challenging SEBI’s SCN imposing penalty for violating provisions of SEBI (Listing Obligations and Disclosure Requirements) 2015 (LODR Regulations).
The petitioner, IL & FS Financial Services Limited challenged the show cause notice issued by the Enforcement Department of the respondent under section 15-I(3) of the Securities and Exchange Board of India Act, 1992 calling upon the petitioner to show cause as to why the penalty should not be imposed in terms of section 15HB and 15A(b) of the Securities and Exchange Board of India Act, 1992 (SEBI Act) for violating the provisions of LODR Regulations as stated in the first show-cause notice. Respondent called upon the petitioner to file their reply within 21 days from the receipt of the said notice.
Mr.Aspi Chinoy, Sr. Advocate for the petitioner, the show cause notice as issued by the respondent itself is bad in law. The respondent issued the said show cause notice without Jurisdiction and contrary to the express provisions of the SEBI Act. The respondent’s power to review its own order is statutorily circumscribed by the second proviso to section 15-I(3), which makes it clear that the power to review is not applicable after expiry of three months from the date of relevant order or disposal of an appeal under section 15T, whichever is earlier. No Appeal under section 15-T was preferred by the respondent against the order and the impugned show cause notice has been issued after the expiry of more than 6 months from the date of the order. For want of Appeal on behalf of the respondent, the order attained finality and the respondent’s attempt to review the said order by issuing the impugned show cause notice is contrary to the provisions of the SEBI Act and without any jurisdiction.
The Counsel for the Petitioner submits that after the lapse of seven months and contrary to the express statutory bar contained in the 2nd proviso to section 15-I(3), respondent issued a show-cause notice to the Petitioner for reopening/revising the order and requiring the Petitioner to show cause why penalties should not be imposed on the Petitioner for violating the LODR Regulations.
Mr.Mustafa Doctor, Senior Counsel for the Respondent submits that the objection raised by the Petitioner in view of section 15-I(3) of the SEBI Act is not applicable in the present case. He further submits that there is no question of setting aside and or stay of the show cause notice as held by the Kerala High Court in Writ Petition No.13682 of 2020. He further submits that even the Apex Court by its order in Civil Appeal filed by the Petitioner held that the order passed by the Respondent SEBI shall be subject to the further order passed by the Apex Court. On the basis of these submissions, the Senior Counsel for the Respondent submits that there is no substance in the present Writ Petition and the same is required to be dismissed with costs.
The division bench Justice Prithviraj Chavan and Justice K.K.Tated noted that the issue involved in the present
Writ Petition is whether show-cause notice issued by the Respondent is required to be set aside. A bare reading of the show cause notice under section 15-I(3) of the SEBI Act, 1992 shows that the Respondent called upon the Petitioner to show cause as to why penalty should
The court without going into merits of the matter, whether Respondents issued show-cause notice according to law or not, whether favorable or not, let the authority decide on its own merits. Therefore, at this stage, the court did not find any substance in the present Writ Petition.
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