Munmun Kaur
Publishede On: February 22, 2022 at 16:38 IST
Recently, the Supreme Court of India ordered the Security Exchange Board of India (SEBI) to disclose details of its investigation report to the company or its directors prior to taking punitive steps, including barring them from dealing in the stock market.
The direction was given while reversing an Order of the Bombay High Court wherein the Court rejected a Plea for disclosure of SEBI investigation report which formed the basis of an Interim Order barring ex-MD and CEO from dealing in the stock market.
A Bench of Justices DY Chandrachud and Sanjiv Khanna hearing the matter observed that no person can be proceeded against without he/she knowing the details of the cause behind it.
However, if the investigation report which is the basis for punitive action under SEBI (Prohibition of Fraudulent and Unfair Trade Practises) Regulations, contains sensitive market information related to third parties, such portions could be redacted and then handed over to the person being proceeded against.
The Bench further observed that SEBI cannot plead the investigation report to be an internal document thus denying its access to the person or company. If the material is relevant to and has nexus to the stage at which satisfaction is reached by the authority, such material would be deemed to be important for the purpose of Adjudication.
Justice Chandrachud said, “The principles of fairness and transparency of adjudicatory proceedings are the cornerstones of the principle of open justice..”
