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In the case before the Calcutta High Court, the petitioners filed a writ petition under Article 226 challenging the constitutional validity of Sections 11, 11B, and 19 of the Securities and Exchange Board of India (SEBI) Act, 1992, as well as an order issued by SEBI on December 28, 2011. The petitioners argued that the High Court was the appropriate forum for such constitutional challenges, as the Tribunal could not assess the validity of the Act's provisions. They also contended that the SEBI order was issued without jurisdiction and demonstrated a "non-application of mind."
The Additional Solicitor General, representing SEBI and the Union of India, argued that the High Court should decide the constitutional validity issues and defended the SEBI order, suggesting that the petitioners should seek remedies through the Tribunal. Justice Jayanta Kumar Biswas decided to admit the writ petition but refused to stay the SEBI order, reasoning that a stay would cause more harm to those benefiting from the order than any potential harm to the petitioners. The Court ordered that SEBI should not issue further orders in the pending proceedings during the writ petition's pendency. The respondents were directed to file their opposition within four weeks, with a reply due one week thereafter, and the petitioners were granted liberty to apply for an interim order concerning a specific direction in the SEBI order.
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