Case Law Details
T. Takano Vs Securities and Exchange Board of India (Supreme Court of India)
The principal issue was whether an investigation report under Regulation 9 of the PFUTP Regulations must be disclosed to the person to whom a notice to show cause was issued. It was held that assessee had a right to disclosure of the material relevant to the proceedings initiated against him. However, all information that was relevant to the proceedings must be disclosed in adjudication proceedings. In any event, the language of Regulation 10 made it clear that the Board forms an opinion regarding the violation of Regulations after considering the investigation report prepared under Regulation 9. The onus was shifted to assessee to prove that the information was necessary to defend his case appropriately; and where some portions of the enquiry report involve information on third-parties or confidential information on the securities market, the respondent could not for that reason assert a privilege against disclosing any part of the report. The respondents could withhold disclosure of those sections of the report which deal with third-party personal information and strategic information bearing upon the stable and orderly functioning of the securities market. The Board shall be duty-bound to provide copies of such parts of the report which concern the specific allegations which had been levelled against assessee in the notice to show cause. However, this did not entitle assessee to receive sensitive information regarding third parties and unrelated transactions that may form part of the investigation report. After a due disclosure was made to assessee in terms as noted above, a reasonable opportunity should be granted to assessee of being heard with reference to the matters of disclosure in compliance with the principles of natural justice before a final decision was arrived at.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
A. Factual Background
1 By a judgment dated 29 September 2020, a Division Bench of the Bombay High Court dismissed the petition instituted by the appellant under Article 226 of the Constitution for challenging a show cause notice which was issued by the first respondent1 alleging a violation of the provisions of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations 20032. A petition seeking a review of the judgment of the Division Bench was disposed of by an order dated 22 October 2020. The appellant moved a Special Leave Petition against the judgment in the writ petition and the order in review. The principal issue is whether an investigation report under Regulation 9 of the PFUTP Regulations must be disclosed to the person to whom a notice to show cause is issued.
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