Ashok Dayabhai Shah & Ors. v. Securities and Exchange Board of India & Ors.

1 Mr C A Sundaram, senior counsel, states that all material which is directed to be disclosed by the High Court shall be used only for the purpose of the proceedings pending before the High Court and shall not be disseminated to any third party.

2 Since the impugned orders of the High Court are purely of an interlocutory nature, we are not inclined to entertain the Special Leave Petitions under Article 136 of the Constitution.

3 However, the parties would be at liberty to pursue their remedies in accordance with law on all counts after the final judgment of the High Court.

11. Later on even SEBI filed its Special Leave Petition challenging the said orders passed by this Court in Special Leave to Appeal (C) Nos.25783-25784/2023 (Securities and Exchange Board of India vs. Ashok Dayabhai Shah & Ors.) which also came to be rejected by the Supreme Court by an order dated 28 November, 2023 which reads thus:- “ ORDER

1 An earlier Special Leave Petition by one of the promoters, SLP(C) Diary No. 45529 of 2023 [Bharat Nidhi Limited vs Ashok Dayabhai Shah and Others] has been dismissed by this Court on 6 November 2023.

2 Mr Tushar Mehta, Solicitor General submits that the order of settlement which gave rise to the institution of the proceedings under Article 226 of the Constitution before the High Court has been revoked by SEBI. Hence, it has been submitted that the petition before the High Court is rendered infructuous.

3 Mr C A Sundaram, senior counsel appearing on behalf of the respondent, on the other hand, submits that the petition as such has not been rendered infructuous since, in particular, prayer clauses (c) and (d) of the petition would survive for determination.

4 This Court is apprised of the fact that the proceedings are listed tomorrow (29 November 2023) before the High Court of Judicature at Bombay. Hence, it is not necessary for this Court to entertain the Special Leave Petition at this stage, particularly bearing in mind what has been observed in paragraphs 2 and 3 of the earlier order dated 6 November 2023, which read as follows: “2 Since the impugned orders of the High Court are purely of an interlocutory nature, we are not inclined to entertain the Special Leave Petitions under Article 136 of the Constitution.

3 However, the parties would be at liberty to pursue their remedies in accordance with law on all counts after the final judgment of the High Court.”

5 Should it become necessary for SEBI to raise the issue of interpretation of Regulation 29 at a future date, that issue is kept open to be agitated.

12. After the above orders were passed by the Supreme Court, the proceedings were taken up for hearing on 01 December, 2023 when on behalf of the SEBI, an affidavit dated 20 November, 2023 of Mr. Sachin Ashok Sonawane, Deputy General Manager was filed, to place on record an order dated 10 November, 2023 passed by the SEBI as addressed to respondent nos.[2] to 9, recording that the settlement order dated 12 September 2023 and subject matter of challenge in prayer clauses (a) and (b) of the writ petition, stands revoked and withdrawn in terms of Regulation 28 of the SEBI (Settlement Proceedings) Regulations, 2018, for failure of respondent No.2 to comply with the Settlement Order. The relevant extract of said order reads thus:- “Enforcement Department – 2 Securities and Exchange Settlement Division Board of India Tel.: 022-2644 9302 E-mail: lkmao@sebi.gov.in SEBI/HO/EFD2/EFD2-SD/P/OW/45453 November 10, 2023 Settle ment Appli cation No. Name of the Applicant Address 6348/ Bharat Nidhi Limited First Floor, Express Building 9-10, Bahadur Shah Zafar Marg, New 6353/ Mr. Vineet Jain 15, Motilal Nehru Marg, New Delhi – 110011 6332/ Ashoka Marketing First Floor, Express Building 9-10, Bahadur Shah Zafar Marg, New 6338/ Arth Udyog Limited 16A, Lajpat Nagar-IV, New 6342/ Matrix Merchandise 101 Pratap Nagar, Mayur Vihar, Phase-1, New Delhi 6344/ Mahavir Finance 101 Pratap Nagar, Mayur Vihar, Phase-1, New Delhi 6341/ TM Investment Limited Gulab Bhawan, MBD House, 6, Bahadur Shah Zafar Marg, New Delhi 6345/ Sanmati Properties Gulab Bhawan, MBD House, 6, Bahadur Shah Zafar Marg, New Delhi Ref: Settlement Order No. SO/EFD-2/SD/421/SEPTEMBER/2022 dated September 12, 2022 in the matter of Bharat Nidhi Limited in respect of Settlement Application nos. 6348, 6353, 6332, 6338, 6342, 6344, 6341 and 6345 of 2021 Sir,

1. This is to inform you that the Settlement Order dated September 12, 2022 under reference, stands revoked and withdrawn in terms of Regulation 28 of the SEBI (Settlement Proceedings) Regulations, 2018, for failure to comply with the Settlement Order.

2. You may also note that upon revocation, no amount paid under the SEBI (Settlement Proceedings) Regulations, 2018 shall be refunded and the Board shall restore or initiate the proceedings, with respect to which the Settlement Order was passed. Regards, Sd/- Kajio Mao Deputy General Manager” (emphasis supplied)

13. On the aforesaid orders being passed by the SEBI revoking the settlement order, respondent Nos.[2] to 9 as also the SEBI, contended that the substantive prayers in the petition being prayers (a) and (b) had become infructuous and therefore, the writ petition ought to be disposed of. Such contention on behalf of the respondents was however opposed on behalf of the petitioners. The petitioners contended that prayer clauses

(c) and (d) of the petition (supra), would nonetheless survive for adjudication. It was contended that the stand on behalf of the respondents that the petition is rendered infructuous, was not correct. The petitioners also urged that the approach of the respondents was ex facie collusive considering the sequence of events which had transpired from the inception.

14. This Court considering the rival contentions, passed an order dated 01 December, 2023 whereby the writ petition came to be disposed of, however maintaining the interim directions dated 23 October, 2023 by which the SEBI was directed to furnish documents to the petitioners. The relevant extract of the said order needs to be noted which reads thus:- “22. We may note that prayer clauses (a) and (b) of the petitions are in regard to the challenge to the settlement orders, which according to the petitioners were patently illegal being beyond the authority and power of the SEBI to accept any settlement. Prayer clause (c) of the petition is to the effect that an order be passed, against the SEBI to take necessary and appropriate steps to ensure that full and true disclosure as required under the applicable Securities Laws is made in respect of the actual promoters holding in respondent No.2 – BNL, and for further directions to the SEBI to ensure all consequential compliances with Securities Laws, including but not restricted, to compliance with MPS norms by respondent Nos. 2 to 9.

23. In the context of such prayer, we may observe that on perusal of the show cause notice, a copy of which is produced for perusal of the Court on behalf of the SEBI, we find that non-compliance interalia of the Rules and Regulations of SEBI are subject matter of the show cause notice, and any plea in opposition as may be urged by BNL and respondent Nos.[3] to 9 (the majority shareholders), would fall for consideration in the adjudication of the show cause notice. This would, however, not mean that the petitioners in their capacity as shareholders, would be dis-entitled or would cease to have any locus to have information / documents in regard to such affairs of BNL and to seek compliance of the Rules and Regulations and the norms of the SEBI by respondent No.2 and those controlling BNL.

24. In our opinion, considering the fact that the settlement order itself has been revoked, the SEBI now needs to resort to a lawful course of action, to adjudicate the show cause notice, so as to reach to a conclusion, whether respondent Nos.[2] to 9 have violated the provisions of the Act, Rules and Regulations, as alleged in the show cause notice and the complaints of the petitioners. We are thus of the opinion that in the facts and circumstances of the case, it would be appropriate that the SEBI expeditiously takes forward the show cause notice and comes to an appropriate conclusion, in accordance with law, in regard to the allegations as made in regard to respondent Nos.[2] to 9 in the show cause notice.

25. However, there is some substance in what has been urged on behalf of the petitioners as noted by us above on the question of petitioners entitlement to the documents as per our orders dated 23 October, 2023. It is quite intriguing to note the approach of the SEBI, as clearly seen from the events which had transpired, and from the obstinate stand taken by the SEBI in not furnishing the documents to the petitioners in relation to respondent Nos.[2] to 9. There has been persistent non-compliance of such orders passed by the Court, despite the Special Leave Petition of the SEBI being rejected, is too far to be imagined nay totally unacceptable. SEBI is a public body, it is required to act in public interest, it needs to comply with the orders passed by this Court, more particularly, when the orders have attained finality in the facts and circumstances of the present case, cannot be countenanced that SEBI would resort to such actions only when and / or, as may be, commanded by respondent Nos.[2] to 9. Such approach of the SEBI, in our opinion, would cause a dent to the confidence, the investors would repose in the SEBI, which needs to function solely to further the object and purpose, for which it is created by the Act of the Parliament. We are constrained to make such observations being quite astonished by the stand taken by SEBI from time to time, in relation to the present proceedings. Even assuming that the petitioners are not correct on their contentions on the different stands being taken by the SEBI, however, the SEBI needs to be consistent and firm in whatever it proposes to do in such eventuality, and above all, such actions must inspire confidence of the investors as also of the Court. In fact, in the varied stands taken by the SEBI, we are reminded of the celebrated observations of Mr. Justice Y. V. Chandrachud in S. B. Patwardhan & Ors. vs. State of Maharashtra & Ors.[1] when His Lordship in the facts of the said case observed that the State was acting according to the moods of the passing moment. The said observations needs to be noted, which reads thus:- “Evidently, the State governments did not know their own mind and being unable to take up a firm and consistent stand, they defended the various Writ petitions filed against them by their employees according to the mood of the passing moment. That must be deprecated.”

26. The present case appears to be not different from what has been observed by us in relation to the actions of the SEBI, further discussion on this aspect would fortify our observations.

27. We may observe that when the final hearing of the present proceedings was to commence on 5 September 2023, SEBI had taken a position that the impugned settlement orders can be reconsidered as there was a change in the Whole Time Members (WTM) of SEBI, and accordingly, the proceedings can be put to an end. We had accordingly passed the following order:-

1. We had placed this matter for final hearing today at 2.30 p.m.

2. Mr. Seervai, learned Senior Counsel for the Petitioners, has commenced his arguments. At the midst of the hearing Mr. Bhatt, learned Senior Counsel for the Respondent No.1-SEBI, has stated before us that there was a change in the Whole Time Members (WTM) of the SEBI. He states that SEBI would now be in a position to take a decision as to whether the settlement order in question (Exhibit- “A”) has stood revoked. Mr. Bhatt would contend that if the settlement order stands revoked, in such event, further adjudication of the present petition would not be called for.

3. We are of the opinion that it would be appropriate to know the stand of the SEBI. Depending as what the SEBI informs the Court on the adjourned date of hearing, further course of action on the proceedings can be decided.

4. Accordingly, stand over to 13th September 2023 at 2.30 p.m. However, on the adjourned date of hearing, that is, on 13 September 2023, the Court was informed by SEBI that the settlement orders cannot be revoked. The order dated 13 September 2023 reads thus: “1. Today the matter is placed before us on the backdrop of our order dated 5th September 2023. From what has been heard from the learned Counsel for the parties, it appears that the issues as raised in the petition cannot be resolved. The parties agree that the proceedings would be required to be now heard and decided.

2. We, accordingly, place the proceedings for hearing on 4th October 2023 at 2.30 p.m. to be followed on 5th October 2023 and 9th October 2023.”

28. Now ultimately SEBI has revoked the settlement orders, by its order dated 10 November 2023.

29. To our mind, it appears to be not meaningless, that the SEBI from 23 October 2023 has not complied our order directing that the documents be furnished to the petitioners. As pointed out on behalf of the petitioners, SEBI has resorted to all possible efforts, not to comply with the order dated 23 October, 2023. Even after the Special Leave Petitions of BNL and Vineet Jain - respondent no.9 were dismissed by the Supreme Court, the documents were not furnished to the petitioners. SEBI thereafter assailed the orders dated 23 October 2023 before the Supreme Court resulting in dismissal of its Special Leave Petition. Now the SEBI is before the Court taking a stand that the documents need not be furnished and the petitions be disposed of as they are rendered infructuous. We wonder, as what can weigh with the SEBI, in not complying our order dated 23 October, 2023 and not furnishing the documents to the petitioners, except to benefit respondent Nos.[2] to 9. Even such plea that the SEBI would have a legal right or an entitlement, not to furnish documents to the petitioners as ordered by us, was the core issue under our orders, being urged by the SEBI before the Supreme Court, apart from the plea of interpretation of Regulation 29 of the 2018 Regulation.

30. Be that as it may, considering all these circumstances, we are of the clear opinion that the entitlement of the petitioners to our order dated 23 October 2023, would certainly subsist and the petitioners need to be provided such documents by the SEBI. Moreover, not providing such documents, merely on the ground of the subsequent development that the settlement orders now stands revoked, would completely be an untenable proposition and contrary to our orders dated 23 October 2023, as confirmed by the Supreme Court. Although respondent Nos.[2] to 9 in their business interest may overlook the solemnity of the orders passed by this Court, however, SEBI in its public character cannot take the same approach. In these circumstances, the order dated 23 October 2023 cannot be rendered nugatory. The SEBI is required to holistically consider such orders and not merely in the context of the settlement proceedings, as such order considers the substantive rights of the petitioners, who are shareholders of respondent No.2 – BNL, having equal rights to that of respondent nos. 3 to 9. SEBI cannot have different yardstick between shareholders. We therefore, direct that our order dated 23 October 2023, which has attained finality, needs to be forthwith complied by SEBI.

31. However, on the issue whether the Court should adjudicate prayer (c) and (d) of the petitions, taking an overall view of the matter, and that, now the show cause notice is required to be taken forward, we are of the opinion that in so far as such reliefs are concerned, the same needs to be kept open to be agitated by the petitioners at the appropriate time in appropriate proceedings in the context of the decision which may be taken by the SEBI on the show cause notice. We accordingly, propose to dispose of these petitions by the following order:- ORDER

(I) The petitioners are entitled to the benefits of the order dated 23 October 2023 as confirmed by the Supreme Court, by rejection of the Special Leave Petitions of respondent Nos.[2] and 9 and thereafter, by rejection of the Special Leave Petition filed by the SEBI.

(II) The order dated 23 October 2023 passed by this Court, be forthwith complied by SEBI.

(III) All the contentions of the petitioners and of the respondents on issues in regard to prayer clauses (c) and (d) are expressly kept open to be agitated at appropriate time in appropriate proceedings.

(IV) The petitions stand disposed of in the above terms. No costs.

32. At this stage, Mr. Bhatt, learned senior counsel appearing for the SEBI has prayed for stay of the order to the extent that it directs compliance of our order dated 23 October 2023 for the documents to be forthwith furnished by the SEBI to the petitioners. In the facts and circumstance of the case and more particularly for the reasons as set out in our order, we reject such prayer.”

15. Things did not end at this. The aforesaid orders passed by this Court, were assailed by the SEBI before the Supreme Court in the proceedings of Special Leave to Appeal (C) No(s). 26890-26891/2023. By an order dated 11 December, 2023, the Supreme Court dismissed the SEBI’s Special Leave Petition by the following order:- “ ORDER

1. When the interim order of the Division Bench of the High Court of Judicature at Bombay was questioned before this Court under Article 136 of the Constitution, the Special Leave Petition which was filed initially by the promoter was dismissed. The order of the High Court required SEBI to make a disclosure of documents. Subsequently, a companion Special Leave Petition filed by SEBI was also dismissed. However, this was without prejudice to the proceedings which were pending before the High Court. The High Court has, in the course of its impugned order, reiterated its interim order of directing a disclosure to be made.

2. The Solicitor General submitted that Regulation 29(1) of the Securities and Exchange Board of India (Settlement Proceedings) Regulations 2018 stipulates that all information submitted and discussions held in pursuance of the settlement proceedings under the Regulations shall be deemed to have been received or made in a fiduciary capacity and may not be released to the public, if the same prejudices the Board and/or the applicants.

3. There is no material before the Court to indicate that the disclosure would cause prejudice. It is common ground that the settlement itself has been revoked ini which case the provisions of Regulation 29 are not attracted. In any event, we are of the view that the order of the High Court requiring disclosure of documents would not fall for interference in these proceedings. In the future, if any case arises before the Court bearing on a demonstrable prejudice to the Board or to the applicant within the meaning of Regulation 29, that issue would be adjudicated upon on its own merits.

4. The period of compliance is extended by a period of two weeks from today.

5. Subject to the aforesaid, the Special Leave Petitions are dismissed.

6. Pending application, if any, stands disposed of.”

16. However, something else also transpired at respondent nos.[2] to 9’s end, namely respondent nos.[2] to 9 deciding to file writ petitions before the Delhi High Court. Three writ petitions were filed between respondent nos. 2 to 9 assailing the orders dated 10 November 2023 passed by SEBI, revoking the settlement orders dated 12 September, 2022 (supra). SEBI opposed the said petitions on the ground that the Delhi High Court lacked territorial jurisdiction to entertain and adjudicate the said writ petitions, as the entire cause of action has taken place within the jurisdiction of this Court. A learned Single Judge of the Delhi High Court disposed of the said writ petitions by a judgment and order dated 18 December, 2023 (Bharat Nidhi Ltd. vs. Securities and Exchange Board of India, Writ Petition (Civil) No.15556 of 2023 and other petitions). The Delhi High Court held that integral, essential and material part of cause of action has arisen within the territorial jurisdiction of this Court, and accordingly the petitions were not entertained and were dismissed with liberty to the petitioners to approach the jurisdictional High Court keeping open all the contentions.

17. It is on the above backdrop, the present interim application has been filed praying that the writ petition be restored and heard on merits, along with other prayers, which we have noted hereinabove.

18. Mr. Seervai, learned senior counsel for the petitioners has made extensive submissions in support of the prayers of the petitioners as made in the present application, in urging, the need for the writ petition to be restored and heard on merits. We note Mr. Seervai’s submission hereunder.

19. Mr. Seervai would submit that on the day this Court disposed of the writ petition on 1 December 2023, respondent Nos.[2] to 9 did not inform this Court that they had taken steps to challenge SEBI’s order dated 10 November 2023 revoking the settlement, by filing of Writ Petitions, being Writ Petition (C) No.1556 of 2023 (Bharat Nidhi Ltd. Vs. SEBI), Writ Petition No.15557 of 2023 ( Ashoka Marketing Ltd. & Earth Udyog Ltd. Vs. SEBI & Ors) and Writ Petition No.1558 of 2023 (Matrix Merchandise Ltd. & Ors. Vs. SEBI & Ors.) which in fact were already filed in the early hours of 1 December 2023 and before orders could be pronounced by this Court on the present proceedings, which were also listed for pronouncement of orders on 1 December 2023.

20. It is Mr. Seervai’s submission that in fact what is seen from paragraph 18 of the orders passed by this Court is that, by suppressing such fact that respondent Nos.[2] to 9 had challenged the order dated 10 November 2023 passed by SEBI revoking settlement, respondent nos. 2 to 9 made the Court to believe that respondent Nos.[2] to 9 would participate in the adjudication of the show cause notice, and on such impression and/or the stand taken by them, they secured disposal of the writ petition by Court’s order dated 1 December 2023.

21. In such context, it is also Mr. Seervai’s submission that in fact on 29 November 2023 the writ petitions of respondent nos.[2] to 9, to be lodged before the Delhi High Court, were affirmed. It is submitted that filing of the writ petition by respondent Nos.[2] to 9 before the Delhi High Court, was an attempt to impede the adjudication of the show cause notice issued by SEBI to respondent no.2, as also on the other hand, being deceptive before this Court, creating an impression that respondent Nos.[2] to 9 were agreeable in the adjudication of the show cause notice issued by the SEBI, as the settlement order had stood revoked.

22. It is submitted by Mr. Seervai that not only such suppression was made by respondent Nos.[2] to 9 before this Court but further a fresh public notice dated 9 December 2023 came to be issued by BNL inviting offers to buyback 30958 equity shares of the company aggregating upto 1.067% of the paid-up equity share capital of the company(BNL), constituting nearly 25% of the paid-up share capital and free reserves of the company at a price of Rs.11,229/- per share, being the exit price. It is Mr. Seervai’s contention that the buyback offer initially was made in pursuance of the postal ballot notice dated 22 September 2022 which was on the basis of the impugned settlement order. It is his submission that in view of the revocation of the settlement order, there was no legitimate basis or any necessity for such buyback offer to be made. It is submitted that such buyback offer was ultra vires the provisions of the Companies Act,2013 as also the Settlement Regulations.

23. Mr. Seervai has next submitted that respondent Nos.[2] to 9 have fraudulently procured disposal of the writ petition. It is in fact a fraud practised by respondent Nos.[2] to 9 on the Court, which is abundantly clear from several facts, and most glaringly of the Court being kept in dark that respondent Nos.[2] to 9 having approached the Delhi High Court being aggrieved by the orders dated 10 November 2023 passed by the SEBI revoking the settlement. It is submitted that, in fact, the Delhi High Court has commented on such conduct of respondent Nos.[2] to 9 when the Delhi High Court in paragraphs 116 and 117 of its judgment, observed as under:- “116. Further, a perusal of paragraph no.18 of the order dated 01.12.2023 in the petitions being W.P. Nos.447 of 2023 and 530 of 2023 before Hon’ble High Court of Judicature at Bombay, recording the submissions of the respondents therein, would indicate that an impression has been created in the mind of the court that the petitioners herein desired for the expeditious disposal of the SCN. However, the facts of the present cases exhibit that, at the same time, the petitioners herein were also in the process of challenging the Settlement Order as the affidavits for the present petitions were sworn during the interregnum period of passing of the orders i.e. 29.11.2023 and 01.12.2023.

117. In all fairness, the petitioners herein ought to have disclosed the said fact before the Hon’ble High Court of Bombay regarding reserving the right to challenge the settlement order. Undoubtedly, they can challenge the same without prior intimation to the Hon’ble High Court of Bombay, but the recourse must have been taken before an appropriate forum/court. The burden of a fair demeanour on the part of litigants considerably amplifies when they approach the courts under the extraordinary jurisdiction. Therefore, at times, it is the constitutional courts upon which falls the burden to prevent the abuse of jurisdiction and eliminate any susceptibility of forum shopping.”

24. Mr. Seervai’s submission is also to the effect that if the petitioners and the Court were to be informed on 1 December 2023 that respondent Nos.[2] to 9 had challenged the revocation of the settlement order passed by SEBI before the Delhi High Court, in such event, it was certainly open to the petitioners as also to this Court to take a different view of the matter rather than disposing of the petition. Hence, such conduct on the part of the respondents of suppression and forum shopping (by approaching the Delhi High Court) is a fraud on the Court. In supporting such contentions, Mr. Seervai has placed reliance on the decision of the Supreme Court in S. P. Chengalvaraya Naidu Vs. Jagannath[2], and State of Madhya Pradesh Vs. Narmada Bachao Andolan[3].

25. Mr. Seervai would thus submit, that this is a fit case wherein this Court, considering its authority and jurisdiction under Article 226, read with the provisions of Section 151 of the Code of Civil Procedure, ought to pass an order to restore the petition for adjudication on merits, so as to prevent injustice being caused to the petitioners. In support of such contention, Mr. Seervai has placed reliance on Padam Sen and Another vs. The State of U.P.4.

26. On the other hand, Mr. Dhond, learned senior counsel for respondent no.2 in opposing the application, has made the following submissions:

27. At the outset, it is submitted that the petitioners do not have any cause of action whatsoever to seek restoration of the petition. It is submitted that the present application itself is premature, for the reason, that it is not the case that the order dated 10 November, 2023 passed by the SEBI revoking settlement, has been set aside, so that the original cause of action for the petitioners to pursue their case against the settlement order revives requiring adjudication of the writ petition.

28. It is next submitted that even in so far as the reliefs as prayed for in prayer clauses (c) and (d) are concerned, such reliefs cannot be granted in as much as in pursuance of the public notice dated 09 December, 2023 in regard to the action resorted by the BNL on the buyback of the shares, the entire process of buyback stands concluded, as also payment was made to shareholders, who intended an exit. In this regard, our attention has been drawn to paragraph 5 of the short reply affidavit as filed on behalf of respondent no.2.

29. It is next submitted that in any event no prejudice whatsoever is caused to the petitioners in as much as, in its order dated 01 December, 2023 passed by this Court, disposing of the petition, all contentions of the petitioners in regard to prayer clauses (c) and (d) are expressly kept open, to be agitated in appropriate proceedings and at the appropriate time subject to the decision being taken by the SEBI on the show cause notice. It is, therefore, submitted that as on date, there can be nothing which could be called upon by the petitioners, to be adjudicated in the present

30. In so far as the petitioners’ contention that there is a fraud as played by respondent no.2 to 9 on the Court is concerned, according to Mr. Dhond, the same is totally untenable. It is submitted that the petition before the Delhi High Court was affirmed on 29 November 2023. In view of ensuing holidays namely on 25, 26 and 27 November 2023, the petition was filed in the early hours of 01 December, 2023. It is submitted that at the point of time when a decision was taken by respondent Nos. 2 to 9 to assail the decision of the SEBI dated 10 November, 2023 to revoke the settlement order, the petitioners were not aware as to what would be the outcome of the present petition, which was heard on 29 November, 2023 and closed for orders to be pronounced on 01 December, 2023. It is thus submitted that there was no question of any fraud in as much as respondent no.2 and the said private respondents always had the legal right to question the decision of the SEBI to revoke the settlement order dated 12 September 2022.

31. In so far as respondent no.2 and other private respondents approaching the Delhi High Court is concerned, it is submitted that these are parties who belong to Delhi. It is submitted that all prior proceedings are filed by them before the Delhi High Court. In such context, drawing our attention to paragraphs 4 and 5 of the settlement order, it is submitted that the substantive proceedings are pending before the Delhi High Court on the valuation of the shares. It is, hence, submitted that the allegation of the petitioners against the private respondents of any forum shopping by instituting writ petitions before the Delhi High Court challenging the revocation of the settlement, is totally untenable. It is submitted that, in fact, it is the petitioners who are involved in forum shopping, in as much as the first petitioner’s son had earlier filed proceedings before the Delhi High Court and thereafter the petitioners have filed the present proceedings before this Court. Mr. Dhond has submitted that Pina Shah, who was the petitioner in the companion petition (Writ Petition No. 447 of 2023), had approached the Delhi High Court by filing Intervention Application in Writ Petition (C) No. 10756 of 2019, which clearly indicates that the Court of appropriate jurisdiction was the Delhi High Court, in respect of the proceedings as initiated by respondent Nos.[2] to 9, and it is the petitioners, who are filing alternate proceedings and are guilty of the forum shopping. It is hence Mr. Dhond’s submission that the allegations of the petitioners of any fraud being played on the Court or of any forum shopping are totally untenable and are required to be rejected. In concluding his submissions, Mr. Dhond has submitted that the respondent Nos.[2] to 9 being aggrieved by the order dated 18 December 2023 passed by the learned Single Judge of the Delhi High Court dismissing their writ petitions for want of territorial jurisdiction, these respondents are in the process of filing a writ appeal before the Delhi High Court.

32. Mr. Dwarkadas, learned senior counsel for respondent no.9 has supported the contentions as urged by Mr. Dhond. It is his submission that no prejudice would be caused to the petitioners in view of the clear observations of this Court in paragraph 31 of the order dated 01 December, 2023 disposing of the aforesaid writ petition, also as clearly seen from paragraph III of the operative part of the said order. Mr. Dwarkadas would submit that in so far as the prayer clauses (c) and (d) of the writ petition are concerned, nothing survives for adjudication in such prayers, in as much as in regard to a buy-back of the shares, there was a clear notice to the shareholders in terms of the public notice dated 09 December, 2023, which was independent to the settlement orders, which had stood revoked and as set out in the penultimate paragraph of the said public notice. It is submitted that the shareholders were put to a clear notice that the settlement orders have been revoked by the SEBI on 10 November, 2023 and in terms of what Section 68 of the Companies Act 2013 read with Rule 17 (10)(d) of the Companies (Share Capital and Debentures) Rules, 2014, such buy-back offer was made and it was taken forward, which now stands concluded in view of the shareholders having tendered shares and payment having received by them. It is, therefore, his submission that all contentions in regard to the buy-back which accrue to the petitioners, being expressly kept open by this Court, the petitioners can agitate such contentions before the appropriate forum in independent

33. Mr. Dwarkadas would support Mr. Dhond’s contention that there was no fraud whatsoever played by respondent Nos.[2] to 9 on this Court. He has drawn our attention to the meaning of the concept of “deceit” by referring to the extract of Salmond on law of Torts to submit that this is a case wherein there is no material of any intention of these respondents to have an unfair advantage over the petitioners in the situation as it exists. It is, therefore, his contention that the interim application ought not to be entertained. It ought to be dismissed, much less any interim reliefs be not granted to the petitioners.

34. Lastly Mr. Dwarkadas would submit that the Court ought not to overlook that there is no prejudice whatsoever which is caused to the petitioners, inasmuch as, as on date, there is no change in circumstance, which had existed on the day this Court disposed of a writ petition, namely, that the revocation of the settlement order has continued to operate till date. It is further submitted that in any event, in so far as the reliefs which are sought by the petitioners in terms of prayer clauses (c) and (d) are concerned, this Court in the clear terms as set out in paragraph 31 of its order dated 01 December, 2023, as also in the operative part of the order has kept open all contentions of the petitioners to be agitated in the appropriate proceedings. It is, thus, his submission that today in view of there being no change in circumstance as they existed on 01 December, 2023, merely on presumptuous contention of fraud as urged on behalf of the petitioners, the writ petition ought not to be restored.

35. Mr. Seervai, in his rejoinder arguments, has contested the arguments of Mr. Dhond and Mr. Dwarkadas. He would submit that respondent Nos.[2] to 9 were in fact forum shopping when they filed the proceedings before the Delhi High Court, would be the correct factual position. It is his submission that the SEBI had opposed the said writ petitions before the Delhi High Court. In this regard, the Delhi High Court pronouncing its order on respondent Nos.[2] to 9’s writ petition on 18 December 2023 has made serious observations reflecting on the conduct of respondent Nos.[2] to 9. In so far as Mr. Dhond’s submissions on Ms. Pina Shah approaching the Delhi High Court in her intervention application, Mr. Seervai would submit that she continued to pursue her petition (Writ Petition No. 447 of 2023) before this Court, as only an intervention application was filed by her before the Delhi High Court. Thus, the contention of Mr. Dhond of any forum shopping by the petitioners is untenable. It is Mr. Seervai’s submission that it was false for respondent Nos.[2] to 9 to contend that the cause of action for the petitioners to move the Delhi High Court was SEBI fixing 5 December 2023, as a date for hearing of the show cause notice. It is submitted that, in fact, respondent Nos.[2] to 9 were aggrieved by revocation of the settlement order and therefore, the cause of action to them had accrued on 10 November 2023 when SEBI had passed the order revoking the settlement. It is thus Mr. Seervai’s contention that the dishonesty of respondent Nos.[2] to 9 is clear from the fact that already a position was taken by them on 10 November 2023 that respondent Nos.[2] to 9 would approach the Delhi High Court and the same was not informed to this Court on 29 November 2023, when the arguments on the petition were heard and thereafter on 1 December 2023, when the orders were passed. It is, hence, submitted that the prayer as made in the application be granted. Analysis

36. We have extensively heard the learned senior counsel for the parties. We have also perused the record.

37. At the outset, we may observe that the substantive prayers made by the applicants (original petitioners) in this application is to the effect that the aforesaid writ petition be restored to the file of this Court, to be heard finally. The second prayer is to restrain BNL from taking any steps in pursuance of the Postal Ballot notice dated 22 September, 2022 and the follow up announcement dated 9 December, 2023 by which the BNL floated buyback offer. The third prayer is consequential that BNL be directed to disclose by way of an affidavit all actions and steps taken in pursuance of the Postal Ballot Notice dated 22 September, 2022 and 9 December, 2023.

38. We may observe that insofar as the issue of Postal Ballot notice dated 22 September, 2022 is concerned, the same was subject matter of prayer clause (d) in the Writ Petition. The Postal Ballot Notice dated 22 September, 2022 was a fallout and consequence of the Settlement Order dated 12 September, 2022, which itself has stood revoked by SEBI on 10 November, 2023. In the said postal ballot notice, one of the agenda was approval of buyback of equity shares. It is for such reason that while disposing of the writ petition by our order dated 1 December 2023, insofar as prayer clause (d) is concerned, we had observed in paragraph 31 of our order that the said prayer needs to be kept open to be agitated by the petitioners at the appropriate time in appropriate proceedings and in the context of the decision which may be taken by SEBI on the show cause notice, which had stood revived in view of SEBI revoking the Settlement Order by its decision dated 10 November, 2023. Also in the operative part (III) of our orders we had issued a categorical direction in that regard that all contentions of the petitioners and the respondents on such prayer clause were expressly kept open to be agitated in appropriate proceedings at the appropriate time. Such observations of the Court in paragraph 31 and the operative order in the context as discussed are required to be re-noted, which reads thus: “31 However, on the issue whether the Court should adjudicate prayer (c) and (d) of the petitions, taking an overall view of the matter, and that, now the show cause notice is required to be taken forward, we are of the opinion that in so far as such reliefs are concerned, the same needs to be kept open to be agitated by the petitioners at the appropriate time in appropriate proceedings in the context of the decision which may be taken by the SEBI on the show cause notice. We accordingly, propose to dispose of these petitions by the following order:- ORDER

(I) The petitioners are entitled to the benefits of the order dated 23 October 2023 as confirmed by the Supreme Court, by rejection of the Special Leave Petitions of respondent Nos.[2] and 9 and thereafter, by rejection of the Special Leave Petition filed by the SEBI.

(II) The order dated 23 October 2023 passed by this Court, be forthwith complied by SEBI.

(III) All the contentions of the petitioners and of the respondents on issues in regard to prayer clauses (c) and (d) are expressly kept open to be agitated at appropriate time in appropriate proceedings.

(IV) The petitions stand disposed of in the above terms.

39. Thus, by virtue of such orders passed by us, at the stage the proceedings stand as on date, in our opinion, there is no cause of action for the petitioners to assert adjudication on any issue on the postal ballot notice dated 22 September 2022.

40. We now discuss in so far as respondent no. 2 issuing a fresh buyback notice dated 09 December, 2023, under the provisions of Section 68 of the Companies Act, 2013 read with Rule 17(10)(d) of the Companies (Share Capital and Debentures) Rules, 2014, proposing to proceed with the buyback offer and to take steps towards finalisation of the buyback offer within the statutory prescribed timelines. The relevant extract of the said notice is required to be noted, which reads thus: “This follow up Public Announcement (“Fourth PA”) is being issued by Bharat Nidhi Limited (the “Company”), pursuant to the offer to buyback 30,958 (Thirty Thousand Nine Hundred and Fifty Eight) equity shares of the Company aggregating up to 1.067% of the paidup equity share capital of the Company, and constituting nearly 25% of the paid-up share capital and free reserves of the Company, at a price of Rs.11,229/- (Rupees Eleven Thousand Two Hundred and Twenty Nine only) per equity share (“Exit Price”) from the shareholders of the Company, in accordance with the relevant provisions of the Companies Act,2013 and the rules made thereunder (“Buy-back Offer”), announced by the Company to comply with the settlement order issued by the Securities and Exchange Board of India (“SEBI”) bearing No. SO / EFD-2/ SD/421/ September / 2022 dated September 2, 2022 (hereinafter referred to as the “Settlement Order”). The letter of offer containing the detailed procedure for tendering shares in the Buy-back offer was dispatched to the shareholders and the Buy-back offer opened on November 4, 2022 and closed on December 3,2022. …..... ….. This is to inform all parties concerned that on November 10, 2023, SEBI has informed the Company that the Settlement Order has been revoked and withdrawn. The Company has already adopted appropriate proceedings to challenge the revocation of the Settlement Order. Further, by an order dated December 01, 2023, the Hon’ble High Court of Bombay has disposed of the Petitions. Kindly note that the Settlement Order, in compliance of which the Buy-back offer was initiated has been revoked. By virtue of Section 68 of the Companies Act, 2013 read with Rule 17(10)(d) of the Companies (Share Capital and Debentures) Rules, 2014, the Company is prohibited from withdrawing the Buy-back offer once it has been announced to the shareholders. Therefore, in accordance with its statutory obligations under the Companies At, 2013 read with the aforesaid rules, the Company will proceed with the Buyback offer and will take steps towards finalisation of the Buy-back offer within the statutory prescribed timelines.”

41. As pointed out on behalf of respondent no. 2 in its reply affidavit, the process of buyback of shares as undertaken by issuance of the said public notice (dated 9 December, 2023) published in all editions of the ‘Financial Express’ and Delhi edition of ‘Jansata’, of which the petitioners were fully aware, the petitioners had consciously chosen to do nothing till, the filing of this application on 19 December, 2023. It is submitted that in the meanwhile on 15 December, 2023, online payment of Rs.34,76,27,382/- was made to the shareholders who had opted to accept the buyback offer on a proportionate basis. Such payment pertained to 144 shareholders holding 30,958 shares, who had validly tendered their shares, which were lying in an Escrow Account, after respondent no. 2 accepted the bids as received on a proportionate basis under the buyback offer. The relevant averments in the affidavit in that regard are contained in paragraph 8 of the affidavit. From such case as pleaded on behalf of respondent no. 2, it is quite clear that by restoring the Writ Petition and simplicitor adjudicating on a prayer on buyback notice dated 22 September, 2022 and the subsequent public notice dated 09 December, 2023, can be rightly considered to be an issue, which can be agitated by the petitioners in appropriate proceedings, as and when the need so arises. In any event, any grievance of the petitioners on the buy-back of shares under the public notice dated 9 December 2023, as noted above, would be an independent cause of action.

42. Now we examine Mr. Seervai’s contention that there was suppression on the part of respondent nos. 2 to 9, as also there is fraud practiced by them on the Court, by not disclosing the filing of the proceedings before the Delhi High Court challenging the revocation of the Settlement Order and by such suppression not only on 29 November, 2023 but also on 1 December, 2023 in securing disposal of the present petition. In this regard, we may observe that the revocation of the Settlement Order was an independent cause of action which had accrued to respondent nos. 2 to 9. Our order dated 1 December, 2023 cannot be construed to mean that the Court had affected, much less taken away the rights of any of the respondents to institute appropriate proceedings before the appropriate forum in the event respondent nos. 2 to 9 were to be aggrieved by SEBI revoking its Settlement Order by its decision dated 10 November, 2023.

43. However, the question is whether Mr. Seervai’s contention that there was an intentional suppression or fraud practiced on the Court on behalf of respondent nos. 2 to 9 in persuading the Court to pass orders dated 1 December, 2023 so as to dispose of the petition, would deserve acceptance. It is true that respondent nos. 2 to 9 on receipt of SEBI’s order dated 10 November, 2023 revoking the Settlement Order had taken a decision to challenge such orders passed by SEBI and had accordingly affirmed their Writ Petitions on 29 November, 2023 to be filed before the Delhi High Court, which were actually filed in the early hours of 1 December, 2023. Thus, there was an opportunity available to respondent nos. 2 to 9 to inform this Court of such fact, on 29 November, 2023 when the arguments were heard on the petition and thereafter on 1 December, 2023, when the orders were to be pronounced on the writ petition. However, such disclosure was not made to the Court nor to the petitioner. This does not reflect a fair, just or an upright approach on the part of respondent nos. 2 to 9 when the parties were before the High Court. This more particularly, considering the solemnity of any Court proceedings. It also cannot be countenanced that any litigant who is aware about certain facts which are relevant and /or likely to have a bearing on the proceedings before the Court, would keep away and not make an appropriate disclosure of such facts. In this regard we find that there is much substance in Mr. Seervai’s contention on the conduct of respondent nos. 2 to 9.

44. The question, however, is whether such conduct of respondent nos. 2 to 9 can be labelled as fraudulent and/or of some deceit in the context of the Court being persuaded to pass the orders dated 1 December, 2023. We are not persuaded to accept such contention of Mr. Seervai that respondent nos. 2 to 9 having not informed the Court of its intention to file proceedings before the Delhi High Court to challenge SEBI’s order revoking the Settlement Order, could be termed or elevated to be any fraud on the Court. This for reasons more than one. First reason would be and as rightly contended by Mr. Dhond and Mr. Dwarkadas that respondent nos. 2 to 9 by such act have not practiced any deceit or per se any falsity in relation to the Court proceedings. They have not achieved any unfair advantage over the petitioners by mere filing of the proceedings before the Delhi High Court and by not informing to this Court of such fact, when it passed orders dated 1 December, 2023 disposing of the writ petition. Also there was no prejudice caused to the petitioners, as this Court in its order dated 1 December, 2023 had clearly observed that the substantive prayers of the petitioners namely on prayer clauses (a) and (b), which pertained to the challenge to the Settlement orders, were rendered infructuous in view of the revocation of Settlement order. Further in regard to prayer clauses (c) and (d), the same were kept open to be agitated by the petitioners at the appropriate time and in appropriate proceedings and in the context of the decision which may be taken by SEBI on the show cause notice, which was required to be decided in view of the Settlement Order dated 12 September, 2022 being revoked by SEBI.

45. It is thus difficult to accept Mr. Seervai’s contention that despite the Court making observations as made in paragraph 31 and operative order III of its order dated 1 December 2023 any prejudice much less any illegality could be said to have been caused to the petitioners and/or an unfair advantage being gained by Respondent Nos.[2] to 9, in the Court passing such order. The fact remains that insofar as the revocation of the settlement order at the hands of the SEBI was concerned, there is no change in the circumstances, as no relief is granted to Respondent Nos.[2] to 9 in the proceedings filed before the Delhi High Court. We thus wonder, that when the situation is of no material change on the settlement order having stood revoked, as to what can be called upon to be adjudicated in the writ petition at such stage?

46. Thus, insofar as such issues as raised in the Writ Petition are concerned, we are of the clear opinion that there being no material change in the circumstances, the Court cannot review and in fact reverse its observations / directions as made in paragraph 31 of the Courts order dated 1 December 2023, in considering the prayer of the petitioners which is merely of restoration of the writ petition.

47. We would also not be persuaded to accept Mr. Seervai’s contentions that the public notice dated 9 December 2023 for buyback of the shares of BNL would amount to a cause of action falling under the Writ Petition requiring adjudication. In our opinion, such contention is not well founded for the reason that such notice dated 9 December 2023 for buyback of the shares was an independent notice and under which actions have already been taken and the shareholders who preferred an exit have already been paid. We are thus afraid as to what can be the adjudication in the Writ Petition on such notice and actions as taken thereunder by the BNL. Even in this regard, it would not be appropriate for the Writ Court to adjudicate such issues on exit option, being a matter purely between the shareholders and the company (BNL) and more particularly when the primary challenge in the writ petition was to the settlement order and the consequences falling from such order, which itself has ceased to exist.

48. One of the most significant aspect in declining reliefs to the petitioners on the present application, would also be on the ground that the petitioners were fully aware of the fall out of the order dated 1 December 2023 passed by this Court, as categorically contained in the observations as made in paragraph 31 in regard to the contentions of the petitioners on prayer clauses (c) and (d) of the petition, being kept open and left to be agitated by the petitioners at appropriate time in appropriate proceedings in the context of the decision which may be taken by the SEBI, on the show cause notice. While making such observations, we also passed an order in terms of paragraph III of the operative order as noted hereinabove. Such observations and directions of this Court were accepted by the petitioners in totality. Having accepted the said order passed by this Court, it was not permissible for the petitioners to take a different position and contend that merely because respondent Nos.[2] to 9 had approached the Delhi High Court by way of Writ Petitions, the present petition would be required to be restored to the file and taken up for adjudication as the Court not being informed of such proceedings at the relevant time amounted to a fraud on the Court. We are afraid to accept such contention. Accepting such contention, would virtually amount to the Court reviewing the said orders passed by this Court, and without any prayer for review. To accept such contentions of the petitioners, we would be required to come to a conclusion that our observations in paragraph 31 and paragraph III of the operative order dated 1 December 2023, do not hold good and would be required to be recalled after the same were accepted by the petitioner, having not assailed. The prayers as noted above as made in the present application is simplicitor of restoration of the writ petition and adjudication of the proceedings and not to review/recall our order dated 1 December 2023 which not only makes substantive observations but also bears substantive orders.

49. In the circumstances as discussed by us above, we would accept the contentions as urged by Mr. Dhond that the present application is premature in as much as the revocation of the resettlement order has not been set aside, so as to bring about a situation that the status quo as on the date the writ petition was filed is restored, so as to confer a cause of action to the petitioners to pursue the present petition.

50. Insofar as the decisions as relied by Mr. Seervai to contend as to what can be regarded as a fraud on the Court, we may observe that the principles as laid down in such decisions are well settled. We do not wish to burden this order by discussing such principles, suffice it to observe that we have already concluded that although the conduct of respondent Nos.[2] to 9 was not of a fair litigant, however albeit such conduct, we would not accept such conduct to be any fraud played on the Court which would vitiate our order dated 1 December 2023.

51. We may observe that undoubtedly in a given situation the Court would have power not only under Article 226 read with Section 151 of Code of Civil Procedure to restore the proceedings considering the overwhelming interest of justice a case may deserve. However, in the facts of the present case as observed above, we are not inclined to restore the petition for further adjudication considering our clear orders dated 1 December 2023. In such context, we are in agreement with Mr. Dhond, in placing reliance on the decision of the Supreme Court in the case of State of Uttar Pradesh vs. Brahm Datt Sharma & Anr. (1987) 2 SCC 179 wherein the Supreme Court has categorically observed that once the writ petition itself was disposed of no miscellaneous application could be filed in a writ petition, to review the proceedings in respect of the subsequent events, and the High Court would not have jurisdiction to entertain such application. It was held that as the proceedings had stood culminated by a final disposal of the writ petition, it was not open to the High Court to reopen the proceeding on the filing of a miscellaneous application, in respect of a matter which provided a fresh cause of action.

52. In the light of the above discussion, we find no merit in the present application, it is accordingly rejected. No costs. (JITENDRA JAIN, J.) (G. S. KULKARNI, J.)