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2020 (6) TMI 559
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....t, viz., Securities and Exchange Board of India is a statutory authority functioning under the Securities and Exchange Board of India Act, 1992, to protect the investors in securities and to promote the development of, and to regulate the securities market, and as such, in the exercise of regulatory powers on the stock exchanges in the country, by its Circular No. CIR/MRD/ICC/30/2013 dated 26.09.2013 had devised the Investor Grivance Redressal Mechanism (hereinafter referred to as ' IGRM' for brevity) in the Stock Exchanges to shorten legal proceedings and give monetary relief to the investors during the course of proceedings. 3. The Third Respondent invoking IGRM of the First Respondent, made a claim for Rs. 2.35 Crore as loss of his holdings with the Petitioner and attributed that loss to the misconduct of the dealing official of the Petitioner, who by consistently presenting him with profit statements over a period of four years, induced him to carry on transactions with the Petitioner. The Petitioner responded that the Third Respondent was fully aware of the trades and its resultant impact on his account by the contract notes regularly issued through e-mail and SMS a....
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..... Alexander Luke and KTM Investors, without entering into any agreement with them to provide Portfolio Management Services." While the Second Respondent, on its own, was examining the findings to initiate appropriate measures as per regulation, suggested that IGRP of the First Respondent may re-examine the complaint of the Third Respondent keeping the same thing in view and submit the IGRP proceedings within 3 months. 4. In pursuance thereof, the complaint of the Third Respondent against the Petitioner was registered at IGRP of the First Respondent and numbered as 18102181347000684, and the First Respondent by notices dated 30.10.2018 and 01.11.2018 required the Petitioner to provide its response along with documentary evidence on or before 02.11.2018. The Petitioner by reply dated 02.11.2018 sent to the First Respondent contended that the allegations made and relief claimed by the Third Respondent in his complaint attached to the notice dated 30.10.2018 were identical to his earlier complaint dated 04.09.2016, and that after affording opportunity to the Third Respondent and the Petitioner, it was held by IGRP of the First Respondent in its order dated 18.10.2016 that no amic....
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....ntions, the Third Respondent in his affidavit and additional affidavit dated 19.03.2019 has stated: (i) that the fresh IGRP proceedings of the First Respondent are based upon the findings of the Second Respondent mentioned in the letter dated 04.10.2018, which are not the old grounds that had been examined and closed in the order dated 18.10.2016 passed by IGRP of the First Respondent; (ii) inasmuch as IGRP proceedings is in the nature of conciliation to amicably resolve the disputes between the Third Respondent and the Petitioner, it cannot be claimed by the Petitioner that prejudice is caused, when such efforts are taken; and (iii) that in any event, the Petitioner without taking recourse to the alternative remedy of appeal available before the Securities Appellate Tribunal, could not bye-pass the same and straightaway approach this Court under Article 226 of the Constitution. 6. In the Reply Affidavit dated 08.04.2019, the Petitioner has denied the factual correctness of the claim made by the Second and Third Respondents, apart from dealing with the legal contentions raised by them. It has also been informed that IGRP proceedings by the First Respon....
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....ch the Constitutional Court ought to be loathe to interfere. In order to buttress the same, Learned Counsel for the Second Respondent has cited the following decisions:- (i) Agri Gold Farm Estates India Private Limited v. Securities and ' Exchange Board of India (Order dated 17.08.2015 in W.P. No. 12310 of 2015 passed by this Court), where it has been observed that in matters touching upon technical aspects involving economy, the Court should adopt dignified reluctance to leave the issues open to be decided by the Statutory Authority. (ii) Shri Sitaram Sugar Company Limited v. Union of India (AIR 1990 SC 1277), where the Hon'ble Supreme Court of India has observed as follows:- "57. Judicial review is not concerned with matters of economic policy. The court does not substitute its judgment for that of the legislature or its agents as to matters within the province of either. The court does not supplant the "feel of the expert" by its own views. When the legislature acts within the sphere of its authority and delegates power to an agent, it may empower the agent to make findings of fact which are conclusive provided such findings satisfy the t....
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....ution, encroach into this field. We should not be understood to have meant that the judiciary should never interfere with administrative decisions. However, such interference should be only within the narrow limits e.g. When there is clear violation of the statute or a constitutional provision, or there is arbitrariness in the Wednesbury sense. It is the administrators and legislators who are entitled to frame policies and take such administrative decisions as they think necessary in the public interest. The Court should not ordinarily interfere with policy decisions, unless clearly illegal...." As already stated, the matter in issue in this Writ Petition is the jurisdiction of IGRP of the First Respondent to re-examine the complaint of the Third Respondent against the Petitioner on the directions issued by the Second Respondent, which falls within the realm of scrutiny of the lawfulness of that impugned action concerning the decision-making process, and it is not directed against the merits of the dispute between the contesting parties touching upon the soundness of that decision itself. As such, the jurisdictional issue which has arisen for determination in this....
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....ve the investor complaint. (d) IGRC shall adopt a two-fold approach i.e. for proceedings leading to direction to the Member to render required service in case of service related complaints and proceedings leading to an order concluding admissibility of the complaint or otherwise in case of trade related complaints. (e) In case the matter is not resolved through the conciliation process, IGRC would ascertain the claim value admissible to the investor. (f) Upon conclusion of the proceedings of IGRC, i.e. in case claim is admissible to the investor, Stock Exchanges shall block the admissible claim value from the deposit of the Member. (g) The Stock Exchange shall give a time of 7 days to the Member from the date of signing of IGRC directions as mentioned under sub-para (d) above to inform the Stock Exchange whether the Member intends to pursue the next level of resolution i.e. Arbitration. (h) In case, the Member does not opt for arbitration, the Stock Exchange shall, release the blocked amount to the investor after the aforementioned 7 days." A conspectus of the aforesaid provisions clearly show that if the dispute between the Investor ....
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.... sit finis litium which signifies that it is in the interest of the State that there should be an end to litigation, and the other principle, viz., nemo debet bis vexari, si constat curiae quod sit pro una et eademn causa conveys that no one ought to be vexed twice in a litigation if it appears to the Court that it is for one and the same cause. One important consideration of public policy is that the decisions pronounced by courts of competent jurisdiction should be final, unless they are modified or reversed by appellate authorities or by adopting a procedure prescribed by law. The other principle is that no one should be made to face the same kind of litigation twice over, because such a process would be contrary to considerations of fair play and justice. In the absence of such principle, great oppression might result under the colour and pretence of law in as much as there will be no end of litigation and a resourceful and malicious litigant may succeed in infinitely vexing his opponent by repetitive suits and actions. This may compel the weaker party to relinquish his right. The universally acclaimed rule of res judicata has been evolved to prevent such anarchy. (See M.Nagabh....
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....CC 719], Direct Recruit Class II Engg. Officers' Assn. v. State of Maharashtra [(1990) 2 SCC 715], M.Nagabhushana v. State of Karnataka [(2011) 3 SCC 408] and Union of India v. Major S.P.Sharma [(2014) 6 SCC 351]). (d) It is an abuse of the process of the court and contrary to justice and public policy for a party to re-litigate the same issue which has already been tried and decided earlier against him. The re-agitation may or may not be barred as res judicata, but if the same issue is sought to be reagitated, it also amounts to an abuse of the process of court. The court then has the power to stop such proceedings summarily and prevent the time of the public and the court from being wasted. (See K.K.Modi v. K.N.Modi [(1998) 3 SCC 573]). (e) The power of review on merits when the error sought to be corrected is one of law and is apparent on the face of the record, is not an inherent power and if it is intended to be exercised, the statute must have specifically conferred it. (See Narshi Thakershi v. Pradyumansinghji [(1971) 3 SCC 844] as explained in Grindlays Bank Ltd v. Central Government Industrial Tribunal [(1980) Supp. SCC 420]). (f) However, wh....
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..... What has been mentioned therein is that the Second Respondent has independently examined the complaint and those findings are examined to initiate appropriate measure as per regulation. At best, it is a preliminary opinion and no definite conclusion on the culpability of the Petitioner has been expressed to treat that any fraudulent act has been committed by the Petitioner against the Third Respondent. As such, it is not possible to uphold the re-examination of the complaint on the ground of exercise of inherent powers for any act of fraud committed by the Petitioner against the Third Respondent. 13. Learned Counsel for the Third Respondent has referred to the decision of the Hon'ble Supreme Court of India in Securities and Exchange Board of India v. Ajay Agarwal [(2010) 3 SCC 765] where after holding that the Securities and Exchange Board of India Act, 1992, was a social welfare legislation for promoting the orderly growth of the Securities Market and for protecting the interest of the Investors, it has been expressed as follows:- "33 . . . The requirement of such an enactment was felt in view of substantial growth in the capital market by increasing the particip....