LI Network
Published on: December 02, 2023 at 12:05 IST
The Bombay High Court criticized the Securities and Exchange Board of India (SEBI) for its non-compliance with a court directive issued on October 23 regarding proceedings concerning Bharat Nidhi Ltd (BNL), a firm linked to Times Group owner Vineet Jain.
In the case of Ashok Dayabhai Shah & Ors. v. SEBI and Ors, the court emphasized SEBI’s obligation as a public body to act in the public interest and uphold court orders to prevent eroding trust in the market regulator.
Highlighting the role of SEBI as a public institution mandated to act in the interest of the public, the court emphasized that non-compliance with court orders could undermine confidence in SEBI’s regulatory role in the market.
This scrutiny arose from a writ petition filed by minority shareholders of BNL, who alleged securities law violations related to Minimum Public Sharing Norms. SEBI’s investigation based on this complaint led to a show-cause notice issued to BNL and its management.
However, before concluding this matter, the recipients of the notice sought settlement invoking SEBI regulations, which led to a resolution of the issue.
Challenging this settlement, the petitioners approached the High Court. They requested SEBI to provide investigation documents, which, despite a High Court order on October 23 and subsequent Supreme Court affirmation, SEBI allegedly did not furnish.
Although SEBI informed the High Court about revoking the settlement order and expressed intentions to continue the proceedings against BNL and its management, the Court disagreed with SEBI’s contention. It emphasized that the petitioners’ rights to information about BNL’s affairs were crucial, irrespective of the settlement revocation.
The Court stressed that while businesses might prioritize their interests, SEBI, as a public institution, must comply with court orders.
It concluded that SEBI was obligated to adhere to the High Court’s October 23 order. The matter continues with the Court expecting compliance from SEBI.