HARINARAYAN G BAJAJ Vs. SECURITIES APPELLATE TRIBUNAL

JUDGEMENT

(1.) BOTH the appeals are directed against the common order dated 5th September, 2002 passed by the Securities Appellate Tribunal, Mumbai. The appeals are filed under Section 15z of the Securities and Exchange Board of India Act, 1992, hereinafter referred to as the SEBI Act. When the appeals came up for admission, we pointed out that the order under appeal is only an order made on procedural matters and right of the parties are not affected by those orders and consequently the appeals may not be maintainable. Elaborate arguments were advanced by the learned Counsel for the appellants and respondents on the maintainability of appeals. The contention of the learned Counsel for the appellant is that Section 15z creates a wide and broad appellate jurisdiction and every kind of judicial order could be challenged in appeal. The learned Counsel for the respondents on the other hand contended that the order is merely a procedural order and it does not affect the rights of the parties and, therefore, appeal would not be under Section 15z. The question before us is, therefore, whether these appeals are maintainable.

(2.) THE facts giving rise to these appeals arc that the appellants are investors in shares and securities and they trade through broken at Bombay Stock Exchange (BSE) and National Stock Exchange (NSE ). The appellants were served with two show cause notices by the respondents. These show cause notices are dated 11th July, 2001 and 27th July, 2001. Notice dated 11th July, 2001 alleged that the appellants had indulged in buying and selling of abnormal volumes of ARBL scrips with a view to creating artificial market in the scrip and in the context asked to show cause as to why criminal prosecution in terms of Section 24 (1) of the SEBI Act read with Regulation 4 of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 1995, hereinafter referred to as 1995 Regulations, should not be launched against them. The second notice dated 27th July, 2001 alleged that the trading by the appellants in the scrips of ARBL resulted in creation of false market for ARBL shares and artificially raising the price of the said scrip and in the context asked them to show cause as to why directions restraining them from further dealing in the securities and other direction as deemed fit in the facts and circumstances of the case should not be passed against them under Regulation 11 read with Regulation 12 (d) of the 1995 Regulations. The appellants responded to the show-cause notice in their letters dated 19th July, 2001 and 10th August, 2001 respectively requesting the respondents to furnish details as sought by them in their letter dated 11th April, 2001 and also to provide copies of answer the said show-cause notices. The appellants did not get any response from the respondents. The appellants, therefore, filed writ Petition No. 2737 of 2001 which came to be disposed of vide order dated 19th December, 2001 inter alia recording the statement of the Counsel appearing for the SEBI that the SEBI will hear and dispose of the applications within a period of one week after hearing rejected the applications filed by the appellants vide two separate orders dated 2nd January, 2002 and asked them to submit their replies to the show cause notices. The appellants claiming to be aggrieved by the said order 2nd January, 2002 filed appeals before the Securities Appellate Tribunal praying that the impugned order dated 2nd January, 2002 be quashed and set aside and respondents be directed to furnish the details as sought by the appellants. By the impugned order the Tribunal dismissed both the appeals holding that the appellants are not in any way debarred from raising any objection before the respondents in the proceedings if they feel that the material relevant to the charges has been held back from the and in case they are aggrieved by the outcome of the proceedings initiated by the respondents, they arc entitled to appeal against such decision before the concerned forum.

(3.) SEBI Act as can be seen from the Statement of Object and Reasons and the Preamble is enacted to provide for establishment of the Board to protract the interest of the investors in securities and to promote development of and to regulate the securities market and for matters connected therewith or incidental thereto. We find that the Act confers powers on the SEBI Board to carry investigations/inquiry and to take action or issue direction as provided in the Act. Section 15t provides that any person aggrieved by the order made by the SEBI Board or Adjudicating Officer may prefer an appeal to the Securities Appellate Tribunal having jurisdiction in the matter. Section 15z provides an appeal to the High Court against the decision or order of the Securities Appellate Tribunal. Section 15z reads as follows :