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2022 Supreme(Online)(KER) 41225
HIGH COURT OF KERALA
THEKKINETHU MATHAI SAMUELKUTTY – Appellant
Versus
SECURITIES AND EXCHANGE BOARD OF INDIA – Respondent
WP(C)/30442/2022
C.UNNIKRISHNAN (KOLLAM), ANANDA PADMANABHAN, MAHESH CHANDRAN, UTHARA A.S, VIJAYKRISHNAN S. MENON
SEBI must consider complaints regarding fraudulent share issuance and act on them promptly, despite ongoing investigations.
Headnote:
Fraud - Writ Petition - Securities and Exchange Board of India Act, 1992 - Sections related to share transfer and obligations of SEBI in specific circumstances.
Fact of the Case:
Petitioners, NRIs, allege they were defrauded by companies promising shares that were never legitimately issued. They approached the 1st respondent for redress.
Finding of the Court:
The court recognized that while the petitioners' complaints are serious, the 1st respondent is currently investigating the relevant companies, and a timely response from SEBI should be ensured.
Issues: Whether the 1st respondent is obliged to act on the petitioners' complaint without a specific timeline, considering ongoing investigations.
Ratio Decidendi: The court ruled that SEBI has a duty to address complaints expeditiously while acknowledging existing legal proceedings related to the case.
Final Decision: The writ petition is disposed directing SEBI to act on the complaint expeditiously.
JUDGMENT
Dated this the 4th day of November, 2022 The petitioners are NRIs residing in UAE for several years. Petitioners' grievance is that, during the year 2013 they were duped in parting with huge amounts on the promise made by the party respondents that they will be issued with shares of respondents 3 to 5 companies. Although certain shares were issued to the petitioners, much later it came to light that the shares belonged to certain other persons have been fraudulently issued to them. The petitioners therefore approached the 1st respondent voicing their grievances.
2. This writ petition is filed seeking a direction to the 1st respondent to take time bound action on the petitioners'
complaint.
3. I heard learned Counsel for the petitioners and the learned Standing Counsel for the 1st respondent.
4. The 1st respondent has filed a counter affidavit, wherein it is stated that transfer of shares in unlisted companies to NRIs, with or without the involvement of a foreign entity, per se, does not attract any of the provisions of the Securities and Exchange Board of India Act, 1992 and/or Regulations made thereunder. However, the fund raising by BRD Finance Limited and BRD Motors Limited are under examination to determine if there has been any deemed public issue requiring SEBI's intervention. It is also stated that a holistic view on the complaints made by the petitioners can only be taken after conclusion of the said examination and suitable action, as it deemed fit and necessary, would be taken thereafter.
5. Learned Counsel for the 1st respondent also submitted that litigations are pending before various forums including this Court with respect to the alleged fraud committed by BRD Finance Limited and BRD Motors Limited. In such circumstances, it is not for this Court to fix specific time limit within which the petitioners' complaint can be decided.
6. Learned Counsel for the petitioners submitted that the petitioners, who are NRIs, are duped and misappropriated their hard earned money and that SEBI is bound to consider the complaint and take appropriate action at the earliest.
Having heard the learned Counsel on either side, the writ petition is disposed of directing the 1st respondent to consider the grievances highlighted by the petitioners in their complaint and take appropriate action thereon as expeditiously as possible.
