TaxTMI 
TaxTMI 
2026 (3) TMI 1703
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....tra in IAL/40047/2025, IAL/40048/2025, and IAL/40053/2025. For the Petitioners: Mr. Janak Dwarkadas, Senior Counsel a/w Mr. Ameya Gokhale, Mr. Rishabh Jaisani, Mr. Harit Lakhani, Mr. Ansh Kumar, Ms. Anushka Bhardwaj and Ms. Swarupini Srinath i/b. Shardul Amarchand Mangaldas & Co. in WPL/39354/2025. For the Petitioner: Mr. Venkatesh Dhond, Senior Counsel a/w Mr. Ameya Gokhale, Mr. Rishabh Jaisani, Ms. Karishma Rao, Mr. Harit Lakhani, Mr. Ansh Kumar, Ms. Anushka Bhardwaj and Ms. Swarupini Srinath i/b Shardul Amarchand Mangaldas & Co. in WPL/39034/2025. For the Petitioners in WPL/39246/2025: Mr. Ashish Kamat, Senior Counsel a/w Mr. Ameya Gokhale, Mr. Rishabh Jaisani, Mr. Harit Lakhani, Mr. Ansh Kumar, Ms. Anushka Bhardwaj and Ms. Swarupini Srinath i/b Shardul Amarchand Mangaldas & Co. For the Respondent - SEBI: Mr. J.J. Bhatt, Senior Counsel a/w Mr Vishal Kanade, Mr. Mihir Mody and Mr. Yash Sutaria i/b. K. Ashar & Co. in WPL/39034/2025. For the Respondent - SEBI: Mr. Vishal Kanade a/w Mr. Mihir Mody and Mr. Yash Sutaria i/b K. Ashar & Co. in WPL/39354/2025 and WPL/39246/2025. ORDER: (PER R.I. CHAGLA, J.) 1. By these Interim Applications, the Applicants who are min....
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....ernal SEBI documents and files) relating to the settlement applications and the Settlement Order. 7. The Applicants have further stated that the orders of disclosure obtained in their Writ Petition No. 530 of 2023 were resoundingly confirmed by the Supreme Court (despite the Petitioners having appealed against the disclosure order inter alia on the ground that the Applicants lacked locus standi i.e. 'are strangers to the settlement applications'). By a subsequent order of the Supreme Court, it was clarified that the Applicants were entitled to use the documents obtained through the disclosure orders (that relate to the Settlement Order) in inter partes proceedings, further affirming the Applicants' rights and interests in these proceedings. 8. The Applicants have submitted that as to the issue of revocation of the Settlement Order on the ground of failure to comply with its terms, it was the Applicants (during the proceedings in Writ Petition No. 530 of 2023) that first highlighted that BNL had violated its undertaking in the Settlement Order, and that the order would stand revoked by operation of law. SEBI in fact had failed to act on this violation for almost half a year. E....
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....g the Applicants and evade consequential obligations under law. The public shareholders of the Petitioners would continue to be deprived of their legitimate rights (including securing liquidity and price discovery). Thus, the interests of the Applicants would be directly and vitally affected if the Revocation Order is set aside and quashed in the captioned Petitions. 13. Mr. Seervai has placed reliance upon the Judgment of the Supreme Court in Prabodh Verma and Ors., Vs. State of Uttar Pradesh & Ors. (1984) 4 SCC 251, at Paragraph 28. The Supreme Court has held that the High Court ought not to decide a Writ Petition under Article 226 of the Constitution without the persons who would be vitally affected by its Judgment being before it as Respondents or at least by some of them being before it as Respondents. The Supreme Court in the facts of that case held that the Allahabad High Court ought not to have proceeded to hear and dispose of the Sangh's Writ Petition without insisting upon the reserve pool teachers being made Respondents to that Writ Petition, or at least some of them being made Respondents in a representative capacity, and had the Petitioners refused to do so, the Cou....
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....hat the legal consequence of this failure was that the Settlement Order stood revoked by operation of law (Regulation 28, Settlement Regulations). This was done by way of an amendment to the Petition filed by the Applicants in the said Writ Petition. 16. Mr. Seervai has submitted that the revocation of the Settlement Order on 10th November, 2023 occurred in the context and during the course of proceedings instituted by the Applicants and in fact, the revocation appeared to be prompted by an interlocutory disclosure order passed by this Court, that both SEBI and the Petitioners desired to avoid complying with. They relied on the revocation (unsuccessfully) to contend that nothing survived in the said Petition. The impugned Order was passed pursuant to an order of the Supreme Court dated 6th October, 2025 in Special Leave Petition filed by the Applicants. 17. Mr. Seervai has relied upon the fact that the Applicants were admittedly impleaded - without contest from the Petitioners or SEBI - in the earlier writ proceedings filed by the Petitioners (Writ Petition No.3977 of 2024 and tagged Petitions) to challenge the revocation of the Settlement Order in November, 2023. Neither SEB....
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.... their challenge to the Settlement Order which has resulted in its revocation. 21. Mr. Seervai has submitted that a salient fact that the Petitioners have suppressed from this Court in the Petitions is that the term of the Settlement Order that the impugned Order finds had not been complied with was proposed by the Petitioners itself as a "voluntary undertaking". The settlement term in question required that BNL make such an exit offer to all shareholders for a period of 3 months promptly after receiving the Settlement Order, at the stipulated price. Compliance with this term was to be reported within 15 days of the Settlement Order i.e. by 27th September, 2022. BNL proposed this term in correspondence with SEBI over 9 months before the Settlement Order was finalized and issued. BNL's exit offer could only be availed of by 1.067% of its shareholders. It is evident that at the time of proposing this term BNL was aware of these statutory restrictions, but voluntarily and consciously proposed a settlement term that it knew could not be complied with. He has submitted that BNL had clearly entered into the Settlement Order with the fraudulent intention. This is a relevant considerati....
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....ations which provides that settlement orders shall stand revoked upon non-compliance. 25. Mr. Seervai has submitted that the Applicants would be bound by the determination in these proceedings as to whether BNL has complied with the terms of the Settlement Order to provide an exit to all public shareholders. He has placed reliance upon Judgment of the Supreme Court in Aliji Momonji v Lalji Mavji (1996) 5 SCC 379, at Paragraph 5 in support of its contention that the Applicants are necessary parties. He has also placed reliance upon the Judgment of the Supreme Court in Kasturi Vs. Iyyamperumal & Ors (2005) 6 SCC 733, at Paragraph 7, which has also been relied upon by the Petitioners in support of his contention that even applying the test laid down in the said Judgment, given that the public shareholders have rights under the Settlement Order, they are the necessary parties. 26. Mr. Seervai has submitted that it is well settled that even if there is a authority that carries out the objects of a statute, the principal beneficiaries of the law have a right to be heard. In this context he has placed reliance upon the Judgment of the Supreme Court in Fertilizers & Chemicals Tranvan....
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....les of natural justice (which it is well settled may be waived), and the issue of locus standi. He has submitted that if the Applicants had the right / standing to press the contention in WP 530 of 2023 that the Settlement Order stands revoked (by virtue of non-compliance), they also have the right to be heard in a Petition where the revocation is being assailed. The Applicants were not parties to or heard in respect of the settlement applications. However, they were not seen as lacking locus standi to assail to Settlement Order. He has submitted that it is only today that the Petitioners have sought to claim that the Applicants didn't have locus to challenge the Settlement Order. The Petitioners' contention is contrary to the pleadings filed by them in the said proceedings. 32. Mr. Seervai has submitted that the Applicants are not aggrieved by hearing not having been granted by SEBI since the Settlement Order was revoked. However, the Applicants would be aggrieved if the present proceedings culminated in the Revocation Order being quashed. He has accordingly submitted that the Applicants are required to be impleaded in the captioned Petitions to protect their rights and interes....
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....Applicants do not meet the threshold as laid down in the said Judgment as they are neither necessary nor proper parties to the Writ Petition. 39. Mr. Dwarkadas has submitted that the captioned Writ Petition challenges the Revocation Order passed by SEBI revoking the Settlement Order. The scope of determination in the Writ Petitions are narrow and limited to the compliance or non-compliance of the Settlement Order by the Petitioners. This is a lis between Petitioners and SEBI and will be decided based on the findings of SEBI in the Revocation Order. Thus, SEBI is the only proper, competent and sole Respondent required to defend its decision contained in the Revocation Order which is impugned in the Petition. There is therefore no question of joinder of any third party, much less the Applicants. 40. Mr. Dwarkadas has submitted that the Applicants' presence is neither necessary nor proper to explain, supplement or supplant SEBI's reasons, which are contained in the Revocation Order. He has placed reliance upon the Judgment of the Supreme Court in Mohinder Singh Gill Vs. Chief Election Commissioner New Delhi (1978) 1 SCC 405, at Paragraph 8 in this context. 41. Mr. Dwarkadas h....
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....refore, the Applicants are not vitally interested in the present Writ Petition and their right to agitate their grievances, including qua the Settlement Order, would not be foreclosed by any orders passed in the present Writ Petition (including if the Petitioners were to succeed in their challenge to the Revocation Order). 44. Mr. Dwarkadas has submitted that the disclosure of documents granted by Order dated 23rd October, 2023 was related to the subject matter of the prior Applicants Writ Petitions i.e. challenge to the validity of the Settlement Order. The entitlement of the Applicants to certain documents in proceedings instituted by them (wherein the scope of the proceeding was distinct) is an irrelevant factor and cannot be construed to mean that the Applicants have locus in the present Writ Petition. 45. Mr. Dwarkadas has submitted that the Applicants are accordingly neither necessary nor proper parties to the present Writ Petition and ought not to be impleaded or else allowing the Applicants to implead themselves in the present proceedings would protract the litigation and expand the scope of the Writ Petition. 46. Mr. Dwarkadas has submitted that the reliance place....
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....the present case, (i) the Applicants are not successful parties in whose favour a decision has been taken, (ii) the Applicants are neither necessary nor desirable for the adjudication of the Writ Petition, (iii) there is no lis between the Petitioners and the Applicants which is the subject matter of the Writ Petition, and (iv) any order passed in the Writ Petition will not in any manner affect the rights of the Applicants. 52. Mr. Dwarkadas has submitted that the Applicants' contention that they are successful parties is a red herring and an attempt to self-credit themselves and is completely bogus. The fact that the Applicants are not successful is evident from the fact that the prior Applicant's Writ Petitions were disposed of without any adjudication on merits. Further, the Applicants' contention that prior Applicants' Writ Petitions were amended to contend that the Settlement Order stands automatically revoked is completely irrelevant and a red herring. As per the Applicants themselves SEBI revoked the Settlement by the Previous Revocation Order, as a knee-jerk reaction to the Order dated 23rd October 2023. Therefore, the revocation of th....
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.... the present case. In that case, this Court held that the ESI Court ought to have determined whether certain persons were employees or not to whom benefit by ESIC could be extended. It is in this context the Court held that the persons/employees ought to have been impleaded. The ESIC is merely an agency to implement and has nothing to lose if the decision is given against the employees. This certainly cannot be equated with SEBI which in addition to regulating the securities market, acts in the interest of the investors. 58. Mr. Dwarkadas has submitted that in so far as Rule 644 of the OS Rules which has been relied upon by the Applicants, this Rule does not come to the aid of the Applicants as they neither have any substantial interest nor are proper parties to be heard. In fact, clearly, the OS Rules enshrine the principles of proper and necessary party enshrined in the CPC. Therefore, the reliance on OS Rules is to the benefit of the Petitioners. 59. Mr. Dwarkadas has submitted that in Public Service Commission, Uttaranchal v. Mamta Bisht and Others (2010) 12 SCC 204 at Paragraph 9-10, after considering Prabodh Verma (Supra) and Udit Narain (Supra), the Supreme Court has h....
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....liefs in the present proceedings (and no reliefs are being sought against the Applicants) nor it is the case that in their absence, the challenge to the Revocation Order passed by SEBI cannot be adjudicated upon. 66. Mr. Dhond has submitted that the Applicants are neither a proper party i.e. a party in whose presence it would be necessary to enable the Court to completely adjudicate upon the issues / questions raised in the proceedings. There is absolutely no legal impediment in proceeding with the present Writ Petition in the absence of the Applicants. 67. Mr. Dhond has submitted that the Applicants were not parties to the proceedings before SEBI. Naturally, therefore, the Applicants have no vested right to interfere with respect to a regulator's decision to settle the complaint and / or revoke the same. 68. Mr. Dhond has drawn a parallel with the limited role of SEBI under Section 24-A of the SEBI Act. Section 24-A of the SEBI Act gives the SAT or the relevant Court the power to compound certain offences. He has placed reliance upon Prakash Gupta Vs. SEBI (2021) 17 SCC 451 at Paragraph 2, 90, 93, wherein the Supreme Court has held that SEBI's consent is not required for ....
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.... Impugned Order dated 17th November, 2025 which has revoked the Settlement Order by specifically giving reasons. Either these reasons in the Revocation Order / Impugned Order are right or these reasons are wrong. Therefore, the only enquiry is compliance or non-compliance of the Settlement Order for which the Applicants are not necessary. 73. Mr. Dhond has submitted that during the course of arguments, it was the contention of the Applicants that the information in the present proceeding will assist the Applicants in pursuing their appeals before the SAT. The fallacy of this reason is evident in the reason itself. Joinder of persons in the Writ Petition is not to be done because the joinder will generate some information which can even be used for collateral proceedings. In any event, the proceedings before this Court are relating to the Settlement Order and its revocation, whereas the SAT proceedings are proceedings relating to a separate issue of alleged violations of the exit circular, and hence are distinct and cannot be conflated. 74. Mr. Dhond has submitted that the Applicants have suppressed the fact that an earlier attempt to interlink these distinct proceedings was r....
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.... of Petitioners including the Applicants' rights. 78. The Applicants have been parties in earlier round of proceedings before this Court and the Supreme Court relating to the Settlement Order since 2022. It is pertinent to note that the Applicants had challenged the legality of the Settlement Order through Writ Petitions filed in this Court and during the course of proceedings in Writ Petition No. 530 of 2023, the Applicants had brought to the notice of this Court the alleged failure on the part of the BNL to comply with the terms of the Settlement Order including making exit offer to all Shareholders for a period of three months promptly after receiving the Settlement Order at stipulated price. The compliance with these terms was to be reported within 15 days of the Settlement Order i.e. by 27th September, 2022. BNL proposed these terms in correspondence with SEBI over 9 months before the Settlement Order was finalized and issued. It is pertinent to note that BNL's exit offer could only be availed of by 1.067% of its Shareholders. The Applicants have submitted that this is a relevant consideration that ought to be placed before this Court whilst exercising its discretionary jur....
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....Order to be agitated at the appropriate time in appropriate proceeding, the Applicants would nevertheless be bound by the determination in these proceedings on the issue of whether the Petitioners had complied with the terms of the Settlement Order. Further, we cannot overlook the fact of the Applicants also raising the issue of non compliance of the settlement terms in their Writ Petitions. Hence, upholding or quashing of Revocation Order would have a direct bearing on the Applicants' interest. 83. The Petitioners have contended that only SEBI needs to defend its Revocation Order. SEBI acting as a regulator would take care of interest of the Shareholders in a representative capacity. This contention in our view is misconceived, particularly considering that the Applicants as minority shareholders would be vitally affected by the outcome of these proceedings. The Judgments relied upon by the Applicants viz. Fertilizers and Chemicals Tranvancore Ltd. (Supra) and Prabodh Verma (Supra) have considered similar contentions as raised by the Petitioners herein. The Supreme Court has recognized that persons affected on whose behalf the proceedings have been instituted by the Authority o....