SEBI Rightly Rejected Petitioner’s Settlement Application as SCN Proceedings Were Stalled for Undue Benefit
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- Last Updated on 18 November, 2024
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Case Details: ABANS Enterprises Ltd. v. Securities and Exchange Board of India - [2024] 168 taxmann.com 279 (Bombay)
Judiciary and Counsel Details
- Jitendra Jain & M.S. Sonak, JJ.
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Gaurav Joshi, Janak Dwarkadas, Sr. Advs., Ravichandra Hegde, Paras Parekh, Saurabh Pakale, Ms Mitravinda Chunduru, Samyak Pati, Ashok Pandey for the Petitioner.
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Hormaz C. Daruwalla, Sr. Adv., Suraj Choudhary, Ms Hubab Sayyed, Nishin Shrikhande, & Ms Komal Shah for the Respondent.
Facts of the Case
The petitioner was a publicly listed company trading in shares, currencies, and derivatives, with the second petitioner as its promoter holding a 74.56% stake. The Securities and Exchange Board of India (SEBI) issued a Show Cause Notice (SCN) to the petitioners and seven others, alleging violations, including manipulative trading practices and non-disclosure of acquisitions under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations (SAST).
The petitioners sought to enter into the settlement proceedings. However the petitioner raised procedural objections, filing applications to resolve these before advancing SCN proceedings.
The Petitioners refused to provide required disclosures under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations (SAST), citing potential prejudice to their defence.
The SEBI rejected the settlement application, finding the petitioners’ actions aimed at delaying SCN proceedings. The petitioners challenged the SEBI’s rejection and certain Settlement Regulations, claiming they were ultra vires and unconstitutional.
High Court Held
The Court upheld the SEBI’s rejection of the settlement application. The Court concluded that the settlement application was not made in good faith but rather as a strategy to stall SCN adjudication. The petitioners could not insist on terms they deemed fit or reject counter-proposals from SEBI. The Court found that the settlement application was filed to exploit Regulation 8, which pauses the SCN’s final order.
List of Cases Referred to
- Binny Limited v. SEBI 2023 SCC OnLine Bom 2881 (para 28)
- Shipa Stockbroker Pvt. Ltd. and Anr. v. SEBI 2012 SCC OnLine Bom 58 (para 31)
- Vivek Narayan Sharma (Demonetisation Case-5 J.) v. Union of India 2023 3 SCC 1 (para 53)
- Democratic Reforms (Electoral Bond Scheme) v. Union of India 2024 (5) SCC 1 (para 56)
- Franklin Templeton Trustee Services (P) Ltd. v. Amruta Garg And Ors. 2021 9 SCC 606 (para 60)
- Pioneer Urban Land and Infrastructure v. Union Of India 2019 8 SCC 416 (para 63)
- Swiss Ribbons Pvt. Ltd. v. Union Of India 2019 4 SCC 17 (para 64).
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