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TMI Blog2020 (7) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... hree show cause notices were issued on November 20, 2019 and the fourth show cause notice was issued on November 27, 2019. The appellant after receiving the show cause notice, instead of submitting her reply filed an application dated December 9, 2019 and again on December 13, 2019 requesting for supply of certain documents, namely, investigation report, annexures to the investigation report and statement of witnesses that were examined by the Investigating Officer. The appellant also made a request for inspection of the aforesaid documents. 3. The AO granted inspection of the documents which were inspected on January 9, 2020 and, according to the appellant, the inspection of the documents was only confined to the show cause notice and documents relied upon in the show cause notice. According to the appellant the investigation report and the documents collected during the investigation was not supplied nor inspection was granted to those documents. Accordingly, a letter dated January 13, 2020 was issued by the advocate of the appellant to respondent praying that full inspection of other documents obtained during the investigation should be allowed to the appellant and copies be su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich are not relied upon. Only the relevant documents which are relied upon in the show cause notice which is only required to be supplied in the accordance with fair play and principles of natural justice. It was further contended that a frivolous plea is being taken by the appellant in order to delay the proceedings. It was contended that the appellant should file her reply to the show cause notice without prejudice to her rights and contentions that she was not provided full, free and unhindered inspection of the relevant records and documents. It was contended that the present appeal is an abuse of process of law and the applications are being filed only to delay the proceedings and therefore the appeal should be dismissed with costs. In support of his submissions the learned senior counsel for the respondent has placed reliance upon a recent decision of the Bombay High Court in Writ Petition No. 3581 of 2019 decided on January 6, 2020 in the matter of Dr. Prannoy Roy & another v. Securities and Exchange Board of India & another. 9. Having heard the learned counsel for the parties, we find that Securities and Exchange Board of India Act, 1992 ('SEBI Act') and the Secur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any document which in the opinion of the adjudicating officer, may be useful for or relevant to the subject-matter of the inquiry and if, on such inquiry, he is satisfied that the person has failed to comply with the provisions of any of the sections specified in sub-section (1), he may impose such penalty as he thinks fit in accordance with the provisions of any of those sections. (3) The Board may call for and examine the record of any proceedings under this section and if it considers that the order passed by the adjudicating officer is erroneous to the extent it is not in the interests of the securities market, it may, after making or causing to be made such inquiry as it deems necessary, pass an order enhancing the quantum of penalty, if the circumstances of the case so justify: Provided that no such order shall be passed unless the person concerned has been given an opportunity of being heard in the matter: Provided further that nothing contained in this sub-section shall be applicable after an expiry of a period of three months from the date of the order passed by the adjudicating officer or disposal of the appeal under section 15T, whichever is earlier." 12. From t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or evidence as he may consider relevant to the inquiry and if necessary the hearing may be adjourned to a future date and in taking such evidence the adjudicating officer shall not be bound to observe the provisions of the Evidence Act, 1872 (11 of 1872): Provided that the notice referred to in sub-rule (3), and the personal hearing referred to in sub-rules (3), (4) and (5) may, at the request of the person concerned, be waived. (5A) The Board may appoint a presenting officer in an inquiry under this rule. (6) While holding an inquiry under this rule the adjudicating officer shall have the power to summon and enforce the attendance of any person acquainted with the facts and circumstances of the case to give evidence or to produce any document which, in the opinion of the adjudicating officer, may be useful for or relevant to, the subject-matter of the inquiry. (7) If any person fails, neglects or refuses to appear as required by sub-rule (3) before the adjudicating officer, the adjudicating officer may proceed with the inquiry in the absence of such person after recording the reasons for doing so." 15. A perusal of the provisions of the Act and the Rules as extracted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to a party, there is prima-facie unfairness irrespective of whether the material in question arose before, during or after the hearing. The Supreme Court further held that the law is fairly well settled, namely that if prejudicial allegations are to be made against a person, he must be given particulars of that before hearing so that he could prepare his defence. 17. The Supreme Court in Natwar Singh case (supra) was considering Rule 4(1) of the Foreign Exchange Management (Adjudication Proceedings and Appeal) Rules, 2000 ('FEMA Rules' for short) which is more or less pari materia of the present Rules of 1995. While considering Rule 4, the Supreme Court held:- "31. The concept of fairness may require the adjudicating authority to furnish copies of those documents upon which reliance has been placed by him to issue show-cause notice requiring the noticee to explain as to why an inquiry under section 16 of the Act should not be initiated. To this extent, the principles of natural justice and concept of fairness are required to be read into Rule 4(1) of the Rules. Fair procedure and the principles of natural justice are in-built into the Rules. A notice is always entitle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Such discovery of documents is not required at the preliminary stage in reply to the show cause notice as to why an inquiry should not be initiated. 21. The learned counsel has also placed reliance upon a decision of this Tribunal in Ms. Smitaben N. Shah vs Securities and Exchange Board of India in Appeal No. 37 of 2010 decided on July 30, 2010 wherein the Tribunal observed that the documents asked for which are relevant would help the delinquent to prepare his/her defence and thus such documents are required to be furnished. Such observation was made in the context that the details in the charts relied upon in the show cause notice was culled out in the trade and order logs and therefore the Tribunal observed that it was necessary that the trade and order logs should be provided to the appellant. The said decision is totally distinguishable in its own facts and is not applicable in the instant case. 22. Reliance was also made of a decision of the Supreme Court in Union of India and Others v. E. Bashyan [1988] 2 SCC 196 which has no bearing to the controversy involved in the present context, in as much as, the said decision relates to a disciplinary proceedings wherein the Suprem ..... 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