TaxTMI 
TaxTMI 
2014 (4) TMI 1326
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.... (c) to disclose on oath all investigation, adjudication, prosecution and other action that may have been taken and is being taken on the basis of CDRs collected. The petitioner Council has also alleged that the action of calling for CDRs from TSP by SEBI violates and infringes the fundamental right of privacy available to citizens of India. 2. The petitioner is a company incorporated under section 25 of the Companies Act, 1956 and claims to be promoting, protecting and safeguarding the interest of investors of primary and secondary markets with various authorities including SEBI. 3. SEBI is a Board constituted and established by the Central Government under Section 3 of the Securities and Exchange Board of India Act, 1992 (SEBI Act). It has primarily been constituted to protect the interest of the investors in securities, to promote and regulate the security market. 4. The grievance in the petition as filed is not only in respect of CDRs and details of tower location from such TSP but also the action of SEBI of seeking to intercept and monitor the calls. This is specifically pleaded in ground (i) of the petition as under: "Respondent No.2 being a Governmen....
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....elecom service providers have provided these call data records willingly / voluntarily and where and when SEBI's request for data was refused by the telecom service providers, SEBI has taken no legal action to either seek / attain the data or file any legal proceedings against these operators." (emphasis supplied) 5. At the hearing, learned counsel for the petitioner concedes that the petitioner Council is not making and/or pressing its allegation about interception and/or monitoring of calls by or at the instance of SEBI. The above allegation in the petition is attributed by the Counsel to loose drafting. The grievance of the petitioner is only confined to SEBI calling for CDRs and details of tower location from the TSP. We also find that the prayer clauses in the petition are also confined only to CDRs. Accordingly, the only issue being agitated before us and being considered by us is the power of SEBI to call for CDRs from Telecom Service Providers (TSP). 6. Mr. Darius Shroff, learned counsel for the petitioner has raised the following contentions: (a) SEBI, being a creature of SEBI Act, has no powers to call for any CDRs from TSP conferred upon it. The cal....
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....for information from TSP in respect of pending investigation. Therefore, de hors the specific powers under the SEBI Act SEBI has inherent power to call for information such as CDRs. At times, the TSPs have given and at others declined to provide information about CDRs. SEBI has acted wherever information is furnished but not taken any action against TSP not providing the CDRs. (c) Section 5(2) of the Indian Telegraph Act, 1885 has no application in respect of calling for CDRs from TSP. The above provision only applies to intercepting calls and/ or prohibiting calls/ messages. It has no application in respect of calling for CDRs from TSP. The action of calling for CDRs from TSP in no manner violates any fundamental rights of the citizens as it is only a static record of calls having already been made to a particular telephone/ mobile number from a particular number. The record of CDRs is called for only in a pending investigation; (d) Power is only delegated to high ranking officers or investigating officers. (e) The correspondence between SEBI, the Government and various Ministries was with regard to specifically empowering SEBI to call for CDRs from TS, ....
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....(j) to (l) ............ (la) calling from or furnishing to any such agencies, as may be specified by the Board, such information as may be considered necessary by it for the efficient discharge of its functions. (m) ..... (3) Notwithstanding anything contained in any other law for the time being in force while exercising the powers under clause (i) or clause (ia) of subsection (2) or subsection (2A), the Board shall have the same powers as are vested in a civil Court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit, in respect of the following matters, namely: (i) the discovery and production of books of account and other documents, at such place and such times as may be specified by the Board; (ii) summoning and enforcing the attendance of persons and examining them on oath; (iii) inspection of any books, registers and other documents of any person referred to in section 12, at any place; (iv) inspection of any book, or register or other document or record of the company referred ton in subsection (2A); (v) issuing commissions for the examination of witnesses or documents. 11C I....
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....ful for, or relevant to, the investigation, then, the Chairman may, after being satisfied that it is necessary so to do, after recording the reasons thereof in writing, authorise the Investigating Authority or any other officer of the Board (the officer so authorized being hereinafter referred to as the authorized officer), to: (i) enter and search, with such assistance, as may be required, the building, place, vessel, vehicle or aircraft where such information or documents are expected or believed to be kept..." (emphasis supplied) 10. Section 5 of Indian Telegraph Act, 1885 reads as under: "5. Power for Government to take possession of licensed telegraphs and to order interception of messages.- (1) .... .... .... (2) On the occurrence of any public emergency, or in the interest of the public safety, the Central Government or a State Government or any officer specially authorized in this behalf by the Central Government or a State Government may, if satisfied that it is necessary or expedient so to do in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign states or pu....
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....t transactions in the securities market. Further, under Section 11(3) of the SEBI Act, SEBI has the powers of a Civil Court while exercising its power for calling information from any person under Section 11(2)(i) or (ia) of the SEBI Act and direct the authority concerned to produce documents, if so required, by the SEBI in the course of its investigation. Moreover, Section 11C(3) of the SEBI Act which was introduced into the SEBI Act in 2002 also empowered SEBI during the course of investigation to require any person associated with the securities market to produce documents, books etc. which is considered necessary for the purpose of investigation. 13. However, the objection of the petitioner is that the aforesaid provisions do not empower SEBI for calling for CDRs from TSP either under Section 11(2)(i) or (ia) of the SEBI Act. This is for the reason that the TSP is not associated with Security Market nor are all the TSPs constituted under a Central, State or Provincial Act. This according to the petitioner is further supported by (information obtained through Right to Information Act) letter dated 24 June 2009 of Chairman of SEBI to the Department of Economic Affairs seeking ....
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....n in securities which is under investigation or inquiry (at the hands of SEBI) by adding clause (ia) to subsection (2), Subsection (2A) of Section 11 of the SEBI Act extents to SEBI the power to inspect (in addition to power already delineated in subsection (2) of Section 11 referred to above) books, registers or other documents or records 'of any listed public company or a public company' which intends to get its securities listed on any recognized stock exchange. 303. Subsection (3) of Section 11 of the SEBI Act vests with SEBI the same powers as are conferred on a civil Court, in the manner of discovery and production of books of account and other documents, summoning and enforcing the attendance of persons and examining them on oath, inspection of any books, registers or other documents. The power aforementioned specifically governs matters relating to calling for information already referred to herein-above (under clauses (i) and (ia) of subsection (2), and subsection (2A) of Section 11. 303.4 to 308.... .... 309. From a collective perusal of Sections 11, 11A, 11B and 11C of the SEBI Act, the conclusions drawn by SAT that on the subject of re....
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....icate in favour of such opinion." We also take note of the submission on behalf of SEBI that the correspondence was being exchanged only so as to specifically authorize SEBI to call for CDRs from TSP and also for providing the consequence of not furnishing the CDRs. This became necessary for the reason that at times, the TSP did not furnish information of CDRs when asked for on the ground that there was no specific provision in the SEBI Act for calling for CDRs. 17. The next objection of the petitioner is that SEBI is prevented/prohibited from calling CDR from any TSP by virtue of Section 5(2) of the Indian Telegraph Act 1885. We have reproduced Section 5(2) of the Indian Telegraph Act, 1885 herein above and do not find any prohibition to calling of CDRs from any TSP. It only only prohibits an authority not authorized by Central Government from intercepting and/or prohibiting the sending of calls/messages. The calling of static information like CDRs from a TSP does not in any manner violate Section 5(2) of the Indian Telegraph Act, 1885. Thus, on the face of it, we do not find the above objection sustainable. 18. Thus, there can be no dispute that the SEBI is authorized un....