In a recent development, the Bombay High Court criticized the Securities and Exchange Board of India (SEBI) for failing to adhere to the court’s directive to provide documents related to proceedings against Bharat Nidhi Ltd (BNL), a company owned by Vineet Jain, MD of Times Group.
Bombay High Court Justices GS Kulkarni and Jitendra Jain emphasized SEBI’s obligation to act in the public interest and expressed concern that SEBI’s non-compliance with court orders could undermine investor confidence.
The remarks were made during the hearing of a writ petition filed by minority shareholders of BNL, who sought documentation pertaining to an investigation into their complaints. The minority shareholders alleged violations by BNL of securities laws, including Minimum Public Sharing Norms (MPS) and insufficient disclosure of promoters’ holdings. They claimed that SEBI’s investigation lacked transparency, treating the matter as privileged and inaccessible, as if held “in camera”.
The petitioners argued that BNL’s listing on the non-functional Calcutta Stock Exchange, instead of a recognized stock exchange, prejudiced their interests as investors, particularly given BNL’s shareholding in Times Group. SEBI had issued a show cause notice to BNL in response to these alleged violations, and the subsequent settlement proceedings were contested by the petitioners.
The Bombay High Court, citing Regulation 29 on confidentiality and recognizing the petitioners’ role as minority shareholders, directed SEBI on October 23, 2023, to furnish the requested documents. Despite challenges by BNL and SEBI in the Supreme Court, the court’s order stood, as their Special Leave Petitions were dismissed.
SEBI later informed the court that the settlement order of September 12, 2022, had been revoked due to non-compliance by the respondents. While SEBI argued that the challenge to the settlement orders became irrelevant, the court maintained that prayers related to promoter holdings and compliance with securities laws persisted.
The court underscored the need for SEBI to exhibit consistency and firmness in its actions, emphasizing the importance of inspiring investor and court confidence.
This legal saga highlights the ongoing challenges and concerns surrounding SEBI’s conduct in regulatory matters, with the court stressing the imperative for transparent and consistent actions and compliance of orders, in the interest of both investors and the authority of the court itself.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
