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2010 (9) TMI 1249

ere in this case at the stage of the enquiry proceedings is the fact that the respondent, the Securities and Exchange Board of India (hereinafter referred to as the Board) does not seem to have taken note of the observations made by us in Dilip Section Pendse v. Securities and Exchange Board of India Appeal No. 90 of 2007 decided on November 20, 2008. In that case the statement of one Talaulicar was sought to be relied upon against the appellant therein to hold him guilty of insider trading and he was not allowed to cross examine Talaulicar. While allowing the appeal we made the following observations: We have been noticing the same kind of unwillingness on the part of the respondent Board in similar circumstances to permit cross examination of parties by the opposite side during enquiries conducted by it. We consider it necessary to remind the respondent Board once again that in a situation where one person's statement is being relied upon as against the other, permitting cross examination of that person by the opposite side is the best way of arriving at the truth which is the only aim of an enquiry, whether the enquiry is by a whole time member or by an enquiry officer or by .....

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s made in the show cause notice and an enquiry officer has been appointed who is conducting the enquiry. Since reliance is being placed on the statements of the aforesaid individuals the veracity of which is being challenged by the appellant, he moved an application on May 31, 2010 with a request that without prejudice to his rights and contentions in the matter, he may be allowed to cross examine the aforesaid six individuals. This request of the appellant was merely noted and the enquiry officer fixed July 29, 2010 as the date of hearing in the enquiry. The appellant then moved another application dated July 15, 2010 pointing out to the enquiry officer that he would begin with the cross examination of the witnesses whose statements had been recorded, referred to and relied upon in the show cause notice. He wanted these persons to be present on the date of hearing so that he could cross examine them. The enquiry officer informed the appellant by his letter dated July, 20, 2010 that the hearing would continue as scheduled on July 29, 2010 but "no cross-examination of witnesses would be held". It was then that the appellant filed the present appeal impugning the decision o .....

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testimony by which the accusation is supported. He must be given a fair chance to hear the evidence in support of the charge and to put such relevant questions by way of cross-examination as he desires. Then he must be given a chance to rebut the evidence led against him. This is the barest requirement of an enquiry of this character and this requirement must be substantially fulfilled before the result of the enquiry can be accepted. A departure from this requirement in effect throws the burden upon the person charged to repel the charge without first making it out against him. In Bareilly Electricity Supply Co. Ltd. v. The Workmen AIR 1972 SC 330, this is what the learned judges held: The application of the principle of natural justice does not imply that what is not evidence can be acted upon. On the other hand what it means is that no material can be relied upon to establish a contested fact which are not spoken to by persons who are competent to speak about them and are subjected to cross-examination by the party against whom they are sought to be used. In Kishinchand Chellaram v. Commissioner of Income-tax AIR 1980 SC 2117, Hon'ble Mr. Justice P.N. Bhagwati (as his Lords .....

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ross-examination applies generally to proceedings in which witnesses are examined or documents are adduced in evidence in order to prove a point. Cross-examination then becomes a powerful weapon for showing the untruthfulness of that evidence. Similar view has been taken by the Supreme Court in New India Assurance Co. Ltd. v. Nusli Neville Wadia and Anr. AIR 2008 Supreme Court 876. 5. Before concluding on this aspect, we may mention that the enquiry officer has not only ignored the observations made by this Tribunal repeatedly and the settled law on the subject but also has ignored the guidelines issued by the Board itself for conducting cross examination of witnesses. These guidelines provide for cross examination of a witness on whose statement reliance is sought to be placed which happens to be the case before us. 6. We may now notice an objection raised by the learned senior counsel appearing for the Board. He contended that the present appeal was not maintainable and that the impugned communication dated July 22, 2010 was not "an order" within the meaning of Section 15T of the Act. We do not agree with him. The relevant part of Section 15T reads as under: T. [(1) Sav .....

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