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2024 (3) TMI 836 - HC - GSTValidity of show cause notice (SCN) - Supply of Relied Upon Documents (RUD) - Supply of inter-departmental communications or records/file notings or data/information - Challenge to SCN on the grounds that such notice was issued under the provisions, which were unconstitutional according to the petitioners - HELD THAT:- The petitioners did file the application before the Adjudicating Authorities for information and documents and it is not as if such information and documents were not furnished to the petitioners. All the documents or information may not have been supplied, but that was mainly because the petitioners avoided the specifics and even refused to explain the relevancy. All this has to be considered in the light of a clear and categorical submission/statement that the impugned show cause notices are to be disposed of based upon the RUDs and the non-RUDs already furnished to the petitioners. In T. Takano [2022 (2) TMI 907 - SUPREME COURT] relied upon by the petitioners, the Hon'ble Supreme Court has held that it could not be oblivious to the wide range of sensitive information that the investigation report submitted under Regulation 9 of the SEBI Regulations may cover, ranging from information on financial transactions and on other entities in the securities market, which might affect third-party rights. The Court held that the report may contain market sensitive information which may impinge upon the interest of investors and the stability of the securities marker. Therefore, the Court held that the requirement of compliance with the principles of natural justice cannot therefore be read to encompass the right to a roving disclosure on matters unconnected or regards the dealings of third parties. The investigating authority may acquire information of a sensitive nature bearing upon the orderly functioning of the securities market. The right of the noticee to disclosure must be balanced with a need to preserve any other third-party rights that may be affected. In T. Takano, the Hon'ble Supreme Court relied upon Natwar Singh [2010 (10) TMI 156 - SUPREME COURT], wherein it was observed that there are exceptions to the general rule of disclosing evidentiary material. The Court held that such exceptions can be invoked if the disclosure of material causes harm to others, is injurious to public health or breaches confidentiality. The Court held that while identifying the purpose of disclosure one of the crucial objectives of the right to disclosure is securing the transparency of instructions. The claims of third-party rights vis-a-vis the right to disclosure cannot be pitted as an issue of public interest and fair adjudication. T. Takano provides that a quasi-judicial authority has a duty to disclose the material that has been relied upon at the stage of adjudication. A mere ipse dixit of the authority that it has not relied on certain material would not exempt it from its liability to disclose such material if it is relevant to and has a nexus to the action taken by the authority. Thus, the actual test is whether the material that is required to be disclosed is relevant for the purpose of adjudication. If so, then the principles of natural justice require its due disclosure. On conclusion of investigation proceedings, the investigation team indeed prepared investigation report, and further it is on acceptance of the same by the competent authority that the show cause notices were issued, then subject to exceptions being made out by the respondents, copy of such investigation report should be furnished to the petitioners. If such an investigation report contains sensitive information regarding the identity of the sources or regarding third parties and unrelated transactions, respondents can always furnish such investigation reports to the petitioners by redacting such portions and such information. Thus, no directions are called for in the context of inter-departmental communications or records/file notings or data/information shared with ISI. Records show that respondents have furnished all the documents relied upon in the show cause notices and even allowed the petitioners' inspection based upon which they retrieved the Non-Relied Upon Documents. The show cause notice is detailed and refers to the material/documents based upon which it is issued. All this, coupled with the statement/submission that the show cause notices would be disposed of by reference to the documents furnished to the petitioners, suggests sufficient transparency and fairness. The petitioners must join the adjudication process and not delay the same. This clarification is necessary because Ms Desai, at the stage of admitting these petitions, has made a statement that final orders will not be made without the leave of this Court. All these civil applications are disposed of.
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