The Securities and Exchange Board of India (SEBI) ordered the freezing of Dr. Pradeep Mehta's demat account, citing his status as a former promoter of Shrenuj & Company Limited, which had been compulsorily delisted. Dr. Mehta challenged this action as illegal, arguing that it violated his constitutional rights under Articles 14, 21, and 300A. Despite his claims, SEBI and the NSE justified their actions based on regulations governing promoters, especially in cases of delisting. Legal proceedings have seen Dr. Mehta arguing that SEBI’s and the exchanges' actions were beyond their legal powers, with the matter eventually being directed towards higher judicial remedies.

1. Background of the Case

• Dr. Pradeep Mehta's Position: Dr. Mehta, a former promoter of Shrenuj & Company Limited, had his demat account frozen as per SEBI’s directive following the compulsory delisting of the company.
• Regulatory Actions: SEBI and the NSE implemented the freezing in accordance with regulations concerning delisted companies and their promoters.

2. Legal Arguments Presented

• Dr. Mehta’s Challenge: Dr. Mehta argued that the freezing of his account was illegal and violated his constitutional rights, including the right to equality (Article 14), the right to life and personal liberty (Article 21), and the right to property (Article 300A).
• SEBI and NSE’s Justification: The regulatory bodies argued that their actions were justified under their existing legal framework, particularly in light of the compulsory delisting of the company.

3. Judicial Proceedings

• Tribunal and Exchange Responses: The case saw several legal discussions, where the tribunals and exchanges maintained that the actions taken were within their legal rights. They indicated that if Dr. Mehta sought further relief, he would need to pursue higher judicial avenues.
• Ultra Vires Argument: Dr. Mehta contended that SEBI’s and the exchanges' actions were ultra vires, but this argument did not lead to an immediate overturning of the freeze.

4. Current Status and Implications

• Awaiting Higher Judicial Review: The matter has been referred for further judicial review, leaving the final judgment pending. The case highlights the tension between regulatory powers and individual investor rights, particularly concerning former promoters of delisted companies.