TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 458
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....ugh an e-mail dt.10.08.2022 (Annexure P-11) enclosing copy of the document provided by the Tele-marketier with a request to provide complete information. A week later, on 18.08.2022, summons dt.17.08.2022 were issued by respondent No.3, who was appointed as an investigating authority, to the petitioners as well as another Director by name Shailesh Goyal, directing their personal appearance before respondent No.3 on 25.08.2022 at 1.30 P.M. at the Office of the Board at New Delhi under Section 11C(5) of the Securities and Exchange Board of India Act, 1992 (for short "the Act"). A Summon was also issued on the same day to petitioner No.2 as well as Shailesh Goyal for production of documents before the investigating authority on 24.08.2022 under Section 11C(3) of the Act. These summons mention that respondent No.3 was appointed as an investigating authority by respondent No.1 to investigate into the dealings in the scrip of Omaxe Ltd., that there is reasonable ground to believe that transactions in securities were being dealt with in a manner detrimental to the investors or the securities market, and cooperation of the petitioner and other Directors is required in connection with th....
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....hority may require any intermediary or any person associated with securities market in any manner to furnish such information to, or produce such books, or registers, or other documents, or record before him or any person authorised by it in this behalf as it may consider necessary if the furnishing of such information or the production of such books, or registers, or other documents, or record is relevant or necessary for the purposes of its investigation. (4) The Investigating Authority may keep in its custody any books, registers, other documents and record produced under sub-section (2) or sub-section (3) for six months and thereafter shall return the same to any intermediary or any person associated with securities market by whom or on whose behalf the books, registers, other documents and record are produced: Provided that the Investigating Authority may call for any book, register, other document and record if they are needed again : Provided further that if the person on whose behalf the books, registers, other documents and record are produced requires certified copies of the books, registers, other documents and record produced before the Investigating Authority, it....
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....cer of the Central Government, or of both, to assist him for all or any of the purposes specified in sub section (8) and it shall be the duty of every such officer to comply with such requisition. (9) After considering the application and hearing the Investigating Authority, if necessary, the Magistrate or Judge of the Designated Court] may, by order, authorise the Investigating Authority - (a) to enter, with such assistance, as may be required, the place or places where such books, registers, other documents and record are kept; (b) to search that place or those places in the manner specified in the order; and (c) to seize books, registers, other documents and record, it considers necessary for the purposes of the investigation: Provided that the Magistrate or Judge of the Designated Court] shall not authorise seizure of books, registers, other documents and record, of any listed public company or a public company (not being the intermediaries specified under section 12) which intends to get its securities listed on any recognised stock exchange unless such company indulges in insider trading or market manipulation. (10) The Investigating Authority shall keep in its cu....
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....petitioners. CONSIDERATION BY THE COURT The Board was established to protect interests of the investors in Securities and to promote the development of and to regulate the securities market by such measures as it thinks fit. The various measures it is empowered to take are set out under Sub-Section (2) and (2A) of Section 11. It has also been conferred in subsection (3) of Section 11 with the powers which are vested in a Civil Court under the Civil Procedure Code while trying a suit in respect of matters set out including power to summon and enforce the attendance of persons, and examining them on Oath. Under Section 11B of the SEBI Act, the Board is also empowered to issue certain directions and levy penalties if it is satisfied that it is necessary to do so in the interest of investors or orderly development of securities market or to prevent the affairs of any intermediary or other persons referred to in Section 12 being conducted in a manner detrimental to the interest of investors of securities market. Section 11C confers on the Board the power of investigation. It is entitled to exercise this investigative power if it has reasonable ground to believe that the transaction....
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.... functions in its quasi judicial capacity. This is evident from Section 11(4) of the SEBI Act, which, inter alia, reads: "(4) Without prejudice to the provisions contained in subsections (1), (2), (2A) and (3) and section 11B, the Board may, by an order, for reasons to be recorded in writing, in the interests of investors or securities market, take any of the following measures, either pending investigation or inquiry or on completion of such investigation or inquiry, namely:- ..... ..... ..... ..... ....." 59. ... Pertinently, an investigating authority is extensively empowered to unearth facts (see Section 11C(2) to 11C(9) of the SEBI Act), and cause a detailed investigation into the matter. That exercise would get defeated if the Board were to, on the basis of a prima facie view, return findings of fact by itself holding a full fledged hearing. As in the case of Competition Commission of India, in the present case as well, the functions to be performed by SEBI cannot be rendered nugatory by imposition of unnecessary directions or impediments which are not postulated by the plain language of Section 11C." This decision was approved by a Division bench of the Delhi High Court....
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.... the Board has a statutory duty to investigate it; and in the course of such investigation, it can ask for information from the persons against whom such allegations are leveled, to assist it in the investigation. If it is not made obligatory for the persons proceeded against by SEBI to cooperate with the investigation by furnishing information in person or producing documents in their possession (by enacting provisions like Sec.11(3), (5) and (6)) the whole purpose of empowering the SEBI to investigate, would come to a nought. Such powers are necessary to ensure that the complaint is investigated thoroughly and if after such investigation, it is thought prudent, then an adjudication under Sec.15-I of the Act will happen. The penalty of imprisonment of a term which would extends to one year or fine which would extend to 1 Crore become leviable under sub section (6) of Section 11 C only if without reasonable cause a person were to refuse to produce before the investigating authority the books, registers and other documents or furnish information which is his duty to furnish or refuses to appear before the investigating authority personally or to answer any question which is put to....