TMI Blog2024 (1) TMI 985X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellants to comply with the terms of the Settlement Order. HELD THAT:- The conclusion that the cause of the action of the Appellants to challenge the legality of the Impugned Revocation Order issued by SEBI at Mumbai has no nexus with the receipt of the said order at Delhi; as this is not the material or integral fact to the said cause of action. The Impugned Revocation Order was admittedly received by the Appellants in multiple jurisdictions and this fact if held to be determinative would enable Appellants to pick and choose jurisdictions which is the mischief that the Full Bench of Kerala High Court has opined should not be permitted and we agree with the same. Therefore, the receipt of the Impugned Revocation Order at Delhi cannot alone be held determinative of the jurisdiction of this Court. Effect of the Impugned Revocation Order felt at Mumbai - grievance of the Appellants in the writ petitions is that the issuance of the Impugned Revocation Order of SEBI has resulted in re-initiation of the proceedings and hearing at Mumbai pursuant to the SCN dated 28.10.2020; thereby exposing the Appellants to regulatory proceedings - It is the facts pleaded in the grounds, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties is Mumbai. The Appellants since the year 2020 have been appearing in Mumbai before SEBI. This Court is of the view that the learned Single Judge has rightly concluded that applying the principles of forum conveniens, it would not be appropriate to entertain the writ petitions and the Appellants may approach the appropriate High Court. Summoning of the record of the SEBI would be necessary for examining the rival contentions of the parties in the writ petition. - HON'BLE THE ACTING CHIEF JUSTICE HON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA For the Appellants Through: Mr. Jayant Mehta, Sr. Advocate with Mr. Manu Nair, Mr. Ameya Gokhale, Mr. Vaibhav Singh, Ms. Radhika, Mr. Neelabu Shreesh, Ms. Riya Basu, Ms. Simran Malhotra and Mr. Manas Kotak, Advocates, Mr. Sandeep Sethi, Mr. Amit Sibal, Sr. Advocate, For the Respondents Through: Mr. J.J. Bhatt, Sr. Advocate with Mr. Abhishek Baid, Mr. Mohit Kumar Bafna, Mr. Praneet Das, Mr. Anuj Jain, Mr. Ashok Kumar, Mr. Arnav Mishra, Advocates for R-1 46. JUDGMENT(ORAL) MANMEET PRITAM SINGH ARORA, J: 1. The present appeals have been filed under Clause X of the Letters Patent Act, 1865, as app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a panel of Whole Time Members ( WTMs ) SEBI passed a common Settlement Order dated 12.09.2022 with respect to BNL and the other Respondent No.2 to 8 of in LPA No. 48/2024 ( Settlement Order ). It is stated that certain monetary and non-monetary terms were imposed on the Appellants in the Settlement Order, and steps have been taken by the Appellants to implement the said Settlement Order. 3.3. The said Settlement Order was challenged by two (2) groups of shareholders of BNL before the High Court of Judicature at Bombay. The said shareholders are referred to as Ashok Shah Group and Pina Shah Group in the pleadings. The said shareholders filed two (2) separate writ petitions, i.e., W.P. no. 447 of 2023 and W.P. no. 530 of 2023 inter alia challenging the Settlement Order. In the said petitions restraint orders were issued against BNL which affected the timely compliance of the terms of the Settlement Order. The High Court of Judicature at Bombay issued directions to SEBI to furnish documents sought by the petitioners before it with respect to the internal notings and communication of SEBI as well as the investigation report. It is during the pendency of said writ petitions a revoca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Impugned Revocation Order was received by the Appellants at their respective addresses in New Delhi, are facts that constitute material, essential and integral facts which have proximity with the lis involved in the writ petition. He states that the effect of the Impugned Revocation Order is felt by the Appellants in New Delhi as they carry on business from their registered offices located in New Delhi. 5.2. He states that the situs of the Appellants shares is at the registered office of Respondent No. 2, BNL which is also located at New Delhi. He states that the said shares are the subject matter of the SCN and the proceedings initiated thereunder by SEBI pursuant to the Impugned Revocation Order. 5.3. He states that even prior to the issuance of the Settlement Order issued by SEBI, proceedings were initiated by some public shareholders in W.P.(C) No. 10756/2019. He states that the said writ petition is still pending before this High Court and no objection of territorial jurisdiction or forum non-conveniens has been raised by the SEBI in the said writ proceedings. He states that, in fact, the Settlement Order was issued by SEBI after seeking prior permission from this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onveniens for the present lis lies with the High Court of Judicature at Bombay. 7. Mr. Sandeep Sethi, learned senior counsel appearing for the Appellant in LPA No. 48/2024 states that he represents the Company i.e., BNL. He states that with a view to comply with the non-monetary terms of the Settlement Order a meeting of the Board of Directors was held wherein, it was discussed to buy-back shares in terms of Companies Act, 2013. He states accordingly the Appellant, BNL issued a postal ballot notice on 26.09.2022 seeking its shareholders approval to authorize the buy-back and made public announcement in national newspapers on 27.09.2022. He states that the Appellant, BNL submitted a report of compliance to SEBI as regards the steps taken. He states that some of the shareholders filed writ petitions i.e., W.P. no. 447 of 2023 and W.P. no. 530 of 2023 before the High Court of Judicature at Bombay inter-alia challenging the Settlement Order and the Appellant s postal ballot notice. He states that it was in these circumstances that the writ petitions were filed in High Court of Judicature at Bombay. He states the BNL itself did not approach the High Court of Judicature at Bombay and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aints and representations from certain shareholders, alleging violations of the extant regulations, the SCN dated 28.10.2020 was issued to the petitioners by SEBI at Mumbai. The reply to the said SCN was submitted at Mumbai and the application for settlement too, was submitted at Mumbai. Therefore, the primary gravamen of the petitioners in respect of the Settlement Order lies at Mumbai. 108. In paragraph nos. 16 and 17, the petitioner in W.P.(C) 15556/2023 has made the following averments: - 16. As stated above, prior to filing its reply to the SCN, on 27 th December 2020, BNL filed an application for settlement of the alleged violations in terms of the Settlement Regulations ( Settlement Application ). The Settlement Application of BNL was numbered as 6348/2021. Separate and independent settlement applications were also filed by Respondent Nos. 2 to 8 as well for settling the alleged violations by them as contained in the SCN The Settlement Application is not being annexed to the present Petition as the same is a confidential document under Regulation 29 of the Settlement Regulations. The Petitioner undertakes to produce a copy of the Settlement Application if so dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with Regulations of 2018. (iv) Finally, settlement order was passed in exercise of powers conferred under SEBI Act, 1992 and Regulations of 2018. The said order was passed without prejudice to the right of SEBI under Regulations of 2018 to take enforcement actions including continuing proceedings against the BNL and respondent nos. 2 to 8, if SEBI finds certain anomalies mentioned in the settlement order. 111. It is seen that when the settlement order was challenged before the Hon'ble High Court of Judicature at Bombay, the petitioners had appeared in the respective writ petitions and have contested the matter. The Hon'ble High Court of Judicature at Bombay in writ petitions being W.P. nos. 447 of 2023 and 530 of 2023 dealt with the prayer relating to challenge of the Settlement Order and restoration of regulatory proceedings. On different dates, substantial orders were passed in the said writ petitions. Therefore, indisputably, and rightly so, the parties availed the jurisdiction of the Hon'ble High Court of Judicature at Bombay; and BNL along with respondent nos. 2 to 8 surrendered themselves to the said jurisdiction. 112. What is mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws that the party invoking the writ jurisdiction has to disclose that the integral facts pleaded in support of the cause of action do constitute a cause empowering the High Court to decide the dispute and that, at least, a part of the cause of action to move the High Court arose within its jurisdiction. Such pleaded facts must have a nexus with the subject-matter of challenge based on which the prayer can be granted. Those facts which are not relevant or germane for grant of the prayer would not give rise to a cause of action conferring jurisdiction on the court. These are the guiding tests. 18. Here, tax has been levied by the Government of Goa in respect of a business that the petitioning company is carrying on within the territory of Goa. Such tax is payable by the petitioning company not in respect of carrying on of any business in the territory of Sikkim. Hence, merely because the petitioning company has its office in Gangtok, Sikkim, the same by itself does not form an integral part of the cause of action authorising the petitioning company to move the High Court. We hold so in view of the decision of this Court in National Textile Corpn. Ltd. v. Haribox Swalram [N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Order was therefore received by the Appellants in multiple jurisdictions including Mumbai. 14.2. In this regard, it would be appropriate to refer the ratio of the judgment laid down by Full Bench of Kerala High Court in Nakul Deo Singh v. Deputy Commandant 1999 SCC OnLine Ker 366 which has been later affirmed and upheld by another Full Bench of the said High Court in The Registrar, Indian Maritime University v. K.G. Viswanathan 2014 SCC OnLine Ker 21221 wherein it was held that receipt of the impugned order or communication only gives the aggrieved party right to initiate action based on cause of action which has arisen due to the issuance of the impugned order. The Full Bench also highlighted the mischief in accepting the invocation of writ jurisdiction on the basis of mere receipt of communication if the authority issuing it was located outside the jurisdiction. The relevant portion of the judgment of Full Bench of Kerala in Nakul Deo Singh (supra) reads as under: 29. It appears to us that the decisions in Swaika Properties case and the decision of the Supreme Court and that of the High Court subsequent thereto clearly establish that the receipt of communic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt of the Impugned Revocation Order at Delhi cannot alone be held determinative of the jurisdiction of this Court. Effect of the Impugned Revocation Order felt at Mumbai 15. The grievance of the Appellants in the writ petitions is that the issuance of the Impugned Revocation Order of SEBI has resulted in re-initiation of the proceedings and hearing at Mumbai pursuant to the SCN dated 28.10.2020; thereby exposing the Appellants to regulatory proceedings. Thus, the effect of the Impugned Revocation Order felt by the Appellants is the revival of the SCN proceedings initiated by SEBI inter-alia for the violations of certain provisions of the Substantial Acquisition of Shares and Takeover, Regulations 2011 (SAST Regulations), Prohibition of Insider Trading, Regulations 2015 (PIT Regulations) and the Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market, Regulations 2003 (PFUTP Regulations) in respect of non-disclosure of its promoters and failure to comply with minimum public shareholding norms. The said SCN proceedings before SBI are admittedly pending at Mumbai and were initiated in the year 2020. Therefore, the effect of the Impugned Revocation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eaded by the Appellants for invoking the jurisdiction of this Court are integral and material fact for challenging the Impugned Revocation Order. The said facts are not sufficient for compelling this Court to hear the matter on merits. For the same reason, the contention of the situs of shares of BNL is not an integral fact. Pendency of W.P. 10756/2019 before this Court 17. The Appellants have relied upon the pendency of W.P.(C) No. 10756/2019 before this Court to invoke the territorial jurisdiction. The said writ petition has been filed by some public shareholders with regards to violation of SEBI regulations by associate companies of Bennett Coleman Co. Ltd (BCCL); one of the associate company being Respondent No. 2 i.e., BNL. The petitioning shareholders therein are aggrieved by the acts and omissions of respondents therein i.e., BCCL including BNL. In the said petition the petitioning shareholders are aggrieved by the inaction of SEBI in failing to proceed against BNL as well as other companies of BCCL despite a complaint being filed on 18.07.2019. The pendency of the said writ petition admittedly does not form part of the cause of action for challenging the Impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants and SEBI from 28.10.2020 (when the SCN was first issued) until 01.12.2023 (when High Court of Judicature at Bombay disposed of the petitions), as is evident all arose at Mumbai. 19. In fact, consequent to the revocation of the Settlement Order, SEBI immediately vide notice dated 28.11.2023 scheduled a hearing for further proceedings in pursuance to the SCN on 05.12.2023 and called upon the Appellants to attend the hearing at Mumbai. The Appellants were thus, relegated to the status as it earlier stood on 28.10.2020. 19.1. In the writ petitions filed before this High Court, the Appellants have sought a stay of the proceedings before SEBI in pursuance to the SCN scheduled for 05.12.2023 at Mumbai. It is the revival of the SCN proceedings by SEBI which the Appellants are aggrieved of. Therefore, the effect of the Impugned Revocation Order is felt by the Appellants at Mumbai. 20. In the facts of this case, admittedly the High Court of Judicature at Bombay has the jurisdiction as the decision of SEBI to revoke the Settlement Order took place at Mumbai and all events prior thereto with respect to issuing the SCN and passing of the Settlement Order also occurred at Mumbai. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um conveniens in its ambit and sweep encapsulates the concept that a cause of action arising within the jurisdiction of the Court would not itself constitute to be the determining factor compelling the Court to entertain the matter. While exercising jurisdiction under Articles 226 and 227 of the Constitution of India, the Court cannot be totally oblivious of the concept of forum conveniens . The Full Bench in New India Assurance Co. Ltd. (supra) has not kept in view the concept of forum conveniens and has expressed the view that if the appellate authority who has passed the order is situated in Delhi, then the Delhi High Court should be treated as the forum conveniens. We are unable to subscribe to the said view. (Emphasis Supplied) 21.1. In view of the facts noted hereinabove, this Court is of the view that the learned Single Judge has rightly concluded that applying the principles of forum conveniens, it would not be appropriate to entertain the writ petitions and the Appellants may approach the appropriate High Court. 22. With respect to the submissions of the learned senior counsel appearing in LPA 48/2024 that distinguishing factor of the said writ petitioner is t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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