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2022 (9) TMI 688 - SC - SEBIOffence under SEBI - Petitioner seeking documents relied upon by the Respondent-SEBI - sought orders for supply of a copy of the opinion formed under Rule 3 of the SEBI Adjudication Rules 1995, for constituting an Adjudicating Authority to issue Show Cause Notice dated 17th November 2020 to the Petitioner - allegation of Denial of natural justice as relevant material were not disclosed to the noticee - importance of documents relied upon for formation of opinion under Rule 3 - Petitioner had sought inspection of the opinion under Rule 3 - as submitted Adjudicating Authority has not followed the procedure, and instead fixed the case for final hearing without forming an opinion, as required under Rule 4(3) of the SEBI Adjudication Rules 1995 - HELD THAT:- A reading of Section 4(3) makes it clear that, if after considering the cause, if any shown by the noticee, the Adjudicating Officer is of the opinion that an inquiry should be held, he shall issue a notice fixing a date for appearance of that person either personally or through his lawyer or other authorised representative. The noticee is not required to be heard personally or through lawyer before taking a decision to proceed with an inquiry in respect of the contraventions alleged in the Show Cause Notice. Decision to proceed or not to proceed with the inquiry may be taken on the basis of the reply of the noticee to the Show Cause Notice. Once it is decided to proceed with the inquiry, an opportunity of personal hearing is mandatory. The inquiry has to be conducted in accordance with law, in compliance with the principles of natural justice. Board was of the opinion that there were grounds for adjudication and accordingly appointed Adjudicating Officer. Adjudicating Officer issued Show Cause Notice to the Petitioner to which the Petitioner gave a preliminary reply and thereafter sought documents as observed above. Inspection of some documents was permitted. After considering the reply, the Adjudicating Officer was of the opinion that inquiry should be held. Accordingly, a notice fixing a date for appearance was issued. There was no procedural irregularity, at least till the stage of notice fixing a date of hearing. In Course of argument before the High Court, counsel for the Respondent SEBI made a statement that SEBI would not rely on any document apart from those which had been provided to the Petitioner. It is well settled that the documents which are not relied upon by the Authority need not be supplied as held in Natwar Singh [2010 (10) TMI 156 - SUPREME COURT] - High Court rightly did not interfere with the proceedings at the stage of the Show Cause Notice. The Petitioner has apparently been permitted to inspect the opinion formed under Rule 3 of the SEBI Adjudication Rules. There is apparently no rule which requires SEBI to furnish the opinion under Rule 3 to the noticee in its entirety. The documents relied upon for formation of opinion under Rule 3, are not required to be disclosed to the noticee unless relied upon in the inquiry. In the event, the Petitioner is prejudiced by reason of any adverse order, based on any materials not supplied to the Petitioner, or any prejudice is demonstrated to have been caused to the Petitioner, it would be open to the Petitioner to approach the appropriate forum. This Court has by its interim order permitted Respondent SEBI to hold the inquiry, without relying upon any documents, not supplied to the Petitioner. The interim order will govern the inquiry. No infirmity in the impugned judgment and order of the High Court dismissing the writ petition filed by the Petitioner.
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