KAVI ARORA versus SECURITIES & EXCHANGE BOARD OF INDIA

KAVI ARORA versus SECURITIES & EXCHANGE BOARD OF INDIA

The High Court correctly refused to interfere at the show-cause stage: SEBI is not required to furnish the Rule 3 opinion in its entirety and need not disclose documents used only to form the Rule 3 opinion unless those documents are relied upon in the inquiry; SEBI had represented it would not rely on documents not supplied to the petitioner and this Court's interim order permitting SEBI to proceed on that basis will govern the inquiry.

Parties
Petitioner: Kavi Arora; Respondent: Securities & Exchange Board of India
Jurisdiction
India
Judgment Date
14 September 2022
Procedural Posture
Special Leave Petition (civil) No. 15149 of 2021 / Appeal to Supreme Court Against Judgment and Order Dated 15.09.2021 of the Bombay High Court (slp Dismissed)
Outcome
Special Leave Petition dismissed
Legal Topics
SEBI Adjudication Rules, Show Cause Notice, Disclosure of Documents, Natural Justice, Rule 3 Opinion Formation, Rule 4 Inquiry Procedure
Securities Regulation Administrative Law Procedural Law SEBI Adjudication Rules Show Cause Notice Disclosure of Documents Natural Justice Rule 3 Opinion Formation +1 more

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Parties

Kavi Arora

Petitioner

Securities & Exchange Board of India

Respondent

Procedural Posture

Special Leave Petition (civil) No. 15149 of 2021 / Appeal to Supreme Court Against Judgment and Order Dated 15.09.2021 of the Bombay High Court (slp Dismissed)

Legal Issues

  1. 1 Whether SEBI is required to furnish the opinion formed under Rule 3 of the SEBI Adjudication Rules to the noticee in its entirety
  2. 2 Whether SEBI must disclose all documents relied upon at the stage of forming the Rule 3 opinion or at the stage of issuing the Show Cause Notice/inquiry
  3. 3 Whether there was procedural irregularity in proceeding to final hearing without supplying documents or forming requisite opinion under Rule 4

Ratio Decidendi

The High Court correctly refused to interfere at the show-cause stage: SEBI is not required to furnish the Rule 3 opinion in its entirety and need not disclose documents used only to form the Rule 3 opinion unless those documents are relied upon in the inquiry; SEBI had represented it would not rely on documents not supplied to the petitioner and this Court's interim order permitting SEBI to proceed on that basis will govern the inquiry.

Court Disposition

Special Leave Petition dismissed

Orders

  • Special Leave Petition dismissed
  • Interim order dated 27 September 2021 permitting SEBI to hold the inquiry without relying upon any documents not supplied to the Petitioner shall govern the inquiry