TMI Blog2011 (3) TMI 1476X X X X Extracts X X X X X X X X Extracts X X X X ..... under article 226 of Constitution to review order of Board judicially and writ petition was to be dismissed - W.P. NO. 45 OF 2011 - - - Dated:- 23-3-2011 - JAYANTA KUMAR BISWAS, J. P.C. Sen, Anindya Kumar Mitra, Samaraditya Pal, Sudipto Sarkar, Pratap Chatterjee, Surojit Nath Mitra, Raja Basu Choudhary, Mrs. Mousumi Bhattacharya, Arup Nath Bhattacharya, Ms. Sutapa Sanyal and Amritalall Chatterjee for the Petitioner. Hirak Kumar Mitra, Prasanta Kumar Datta, Susanta Dutta, Rupak Ghose and R. Auddy for the Respondent. JUDGMENT 1. The Court : The petitioners in this article 226 petition dated 14-1-2011 are questioning an order of the Securities and Exchange Board of India ( the Board ) dated 3-1-2011 (at p. 80). 2. The whole-time member of the Board passing the order under the Securities and Exchange Board of India Act, 1992 ( the Act ) directed the first petitioner ( the company ) as follows : "15. In view of the same, I, in exercise of the powers conferred upon me under section 11B of the SEBI Act, 1992 and regulation 65 of CIS Regulations, hereby direct the company : ( a )not to collect any money from investors or to launch any scheme; ( b )n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is vague and does not disclose the source as to who had allegedly brought to your notice that we are mobilizing deposits from public within the meaning of CIS scheme under the SEBI Act. Without any prejudice to aforesaid, we proceed to deal with the allegations made in your letter under reference. Neither of our group companies are carrying on any business within the meaning of Collective Investment Schemes nor have sponsored or launched any Collective Investment Schemes. The documents mentioned at serial Nos. 1 to 3 of your letter under reference are enclosed for your perusal and inspection. All the audited balance sheets of the companies have been duly filed with the Registrar of the Companies, West Bengal. The question of furnishing documents, in particular, at serial Nos. 4 and 5 do not apply in respect of any of our group companies inasmuch as none of our group companies are carrying on any business under the Collective Investment Schemes. Your said notice is mala fide and not informed by reason and as such you are requested to withdraw the said notice." 7. By a letter dated 3-3-2010 (at p. 56) the Board asked the company to supply the following information and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves lot of manual job because previously most of the records were maintained manually numbering lot of books and registers. Since we have to collect and compile details as back as from the year 2005 onwards from different units, we would appreciate if you would be kind enough to allow us an extension of at least three months time by when we expect to complete the process and provide you with the information to your satisfaction. However, we would like to inform you that we may furnish the desired details in phased manner due to difficulties mentioned here-in-above. For your kind information, immediately on receipt of your letter, we have already initiated necessary steps which you may please note. We trust you would kindly consider our genuine request and grant us extension as desired above." (p. 78) 11. Under the circumstances, after examining the information and documents supplied by the company, the whole-time member of the Board passed the order recording the following findings : "12. Thus, the company is raising funds in the name of sale of plots of land. It first receives earnest money in instalments from a purchaser, pools and fund so mobilized and uses it to develop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the principles of natural justice, non-exhaustion of the alternative remedy of appeal under section 15T of the Act is not a bar to move the Writ Court. 15. He has relied on the statement of objects and reasons dated 16-12-1999 appended to the Companies (Second Amendment) Bill, 1999; the provisions of section 55A of the Companies Act, 1956; Regulation 36 of the Securities and Exchange Board of India (Collective Investment Schemes) Regulations, 1999 ( the regulations ); and several provisions of the Act. 16. He has cited the decisions in Israil v. Samset Rahman AIR 1914 Cal. 362; Kiran Singh v. Chaman Paswan AIR 1954 SC 340; Baburam Prakash Chandra Maheshwari v. Antarim Zila Parishad, Muzaffar Nagar AIR 1969 SC 556; K.I. Shephard v. Union of India [1987] 4 SCC 431; Kleinwort Benson Ltd. v. Barbrak Ltd. [1987] 1 AC 597; Hindustan Petroleum Corpn. Ltd. v. H.L. Trehan [1989] 1 SCC 765; Morgan Stanley Mutual Fund v. Kartick Das [1994] 4 SCC 225 2 ; Whirlpool Corpn. v. Registrar of Trade Marks [1998] 8 SCC 1; State of Maharashtra v. Jalgaon Municipal Council AIR 2003 SC 1659; Kalpana Bhandari v. SEBI [2005] 125 Comp. Cas. 804 2 (Bom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act the petition should be entertained. 22. If the remedy available under section 15T of the Act was the only remedy, then this petition just cannot be entertained. I, however, do not find anything anywhere that can lead to a conclusion that for a person aggrieved by an order of the Board the remedy of appeal under section 15T is the only available remedy in the sense that the remedy under article 226 of the Constitution is not available to him under any circumstances. I, therefore, do not find any reason to hold that the section 15T remedy was the petitioners only remedy. 23. In my opinion, the answer to the question whether in view of the remedy of appeal available under section 15T of the Act this petition should be entertained should be searched not on the basis of the propo- sition that availability of an "alternative remedy" is not a bar to seek the remedy under article 226, but on the basis of the proposition that availability of "other remedy" is not a bar to seek the remedy under article 226, for every "other remedy" cannot necessarily be an alternative to the article 226 remedy; an alternative remedy is only a species of the genus other remedies. And the answer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable statutory remedy is no bar to seek the article 226 remedy; and when after exhaustion of the other or further remedy the article 226 remedy is not available, the High Court, when approached, should not entertain an article 226 petition unless it is absolutely necessary to exercise the power in the interest of justice or for preventing a miscarriage of justice. 27. Now insofar as this case is concerned section 15T of the Act provides that any person aggrieved by an order of the Board under the Act or the rules or regulations made thereunder may prefer an appeal to a Securities Appellate Tribunal having jurisdiction in the matter; that the Tribunal may pass such orders thereon as it thinks fit, confirming, modifying or setting aside the order appealed against; and that it shall deal with the appeal as expeditiously as possible and endeavour to dispose of it finally within six months from the date of receipt thereof. 28. An extraordinary feature in this case is that section 15Z of the Act provides that any person aggrieved by any decision or order of a Tribunal may appeal to the Supreme Court on any question of law arising out of such order. It is a remedy of statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nciples of natural justice. On the contrary, it is quite competent to do that. 32. In my opinion, in view of the charted specific statutory course, up to the highest Court of the country, that the proceedings initiated by the Board, the lowest in the three-tier machinery, are supposed to travel, it cannot be said that the remedy of appeal under section 15T is an alternative to the article 226 remedy. And, as to the section 15Z remedy, under no circumstances, it can be considered an alternative to the article 226 remedy. Hence, in my opinion, even if it is alleged that the decision or order of the Board is without jurisdiction or is vitiated by violation of the principles of natural justice, a petition under article 226 should not be entertained for exercising the power of judicial review, unless there are exceptional reasons, e.g., absence of a functioning Tribunal. 33. In my opinion, while the power under article 226 can be exercised for ( a ) judicially reviewing a decision or order of the Board in absence of a functioning Tribunal, and ( b ) for examining the validity of the decision or order when its validity is challenged questioning the vires of the statute or the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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