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The Securities and Exchange Board of India is required to act in the public interest, the Bombay High Court said on Friday castigating the regulatory body for not complying with an order passed by the court in October.
A division bench of Justices G S Kulkarni and Jitendra Jain said such an approach by the SEBI would cause a dent in the confidence reposed in the public body by investors.
The HC had in October directed the SEBI to provide certain probe documents to the minority shareholders of a company. The company and the SEBI challenged this order in the Supreme Court, which dismissed the appeals in November.
The petitioners are minority shareholders of Bharat Nidhi Limited and had made various complaints to SEBI accusing the company of violation of securities laws.
The SEBI had then initiated investigations into the same, issued a show cause notice to the company and later passed a settlement order, which has now been revoked.
The petitioners' case is that neither the investigation report nor any relevant documents were supplied to them.
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The petitioners alleged that the investigation being done by the SEBI was a farce.
The SEBI on Friday told HC that since the settlement order has been revoked, nothing survives in the present petitions.
The bench, however, said there has been persistent non-compliance of the order passed by the court and said this was too far to be imagined and totally unacceptable.
SEBI is a public body, it is required to act in public interest, it needs to comply with the orders passed by this Court, HC said.
The court said it was constrained to make such remarks as it was quite astonished by the stand taken by the SEBI in the present case.
Such approach of the SEBI, in our opinion, would cause a dent to the confidence the investors would repose in the SEBI, which needs to function solely to further the object and purpose, for which it is created by the Parliament, the bench said.
The court added that to its mind, SEBI has resorted to all possible efforts to not comply with its order and this does not appear to be meaningless.
However, it is quite intriguing to note the approach of the SEBI, as clearly seen from the events which had transpired, and from the obstinate stand taken by the SEBI in not furnishing the documents to the petitioners, HC said.
The bench said now that the settlement order has been revoked, the SEBI would adjudicate the show cause notice issued to the company expeditiously.
The bench said the petitioners need to be provided with the documents and directed the SEBI to forthwith comply with its order.
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