Case Note & Summary
The petitioner, New Delhi Television Limited (NDTL), a company engaged in operating news channels, challenged orders dated 23.8.2017 and 31.8.2017 passed by the Securities and Exchange Board of India (SEBI) rejecting its applications for condonation of delay in filing settlement applications. The background involves SEBI initiating adjudication proceedings against NDTL via a show-cause notice dated 12.2.2015 alleging violation of clause 36 of the listing agreement for non-disclosure of a tax demand of Rs.450 crores raised under an assessment order dated 21.2.2014 for AY 2009-2010. NDTL filed a reply on 4.3.2015 contending bonafide belief that the tax demand was not reportable. On 4.6.2015, SEBI passed an order holding NDTL liable and imposing a penalty of Rs.25 lakhs under section 23A of the Securities Contracts (Regulation) Act, 1956. NDTL appealed to the Securities Appellate Tribunal on 23.7.2015, which was pending. Subsequently, NDTL filed two applications for settlement under the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014, but with delay. SEBI rejected the condonation applications on the ground that NDTL failed to show sufficient cause. The High Court examined whether SEBI's refusal was arbitrary or unreasonable. The court noted that the settlement regulations require an application to be filed before the adjudication order or within a specified period thereafter, and that condonation of delay is not a matter of right but depends on sufficient cause. The court found that NDTL did not provide any compelling reasons for the delay and that SEBI's decision was within its discretion. The court dismissed the writ petition, upholding SEBI's orders.
Headnote
A) Securities Law - Condonation of Delay - Settlement Proceedings - SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014 - The petitioner sought condonation of delay in filing settlement applications after adjudication order imposing penalty for violation of clause 36 of listing agreement - SEBI rejected the applications on ground of lack of sufficient cause - Held that the petitioner failed to demonstrate any exceptional circumstances or sufficient cause to condone the inordinate delay, and SEBI's decision was neither arbitrary nor unreasonable (Paras 1-25).
Issue of Consideration
Whether SEBI was justified in rejecting the petitioner's applications for condonation of delay in filing settlement applications under the SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014.
Final Decision
The High Court dismissed the writ petition, upholding SEBI's orders dated 23.8.2017 and 31.8.2017 rejecting the condonation of delay.
Law Points
- Condonation of delay
- Settlement proceedings
- Sufficient cause
- SEBI regulations
- Listing agreement violation
Case Details
WRIT PETITION NO.617 OF 2018
Akil Kureshi, S.J. Kathawalla
Ms.Fereshte Sethna, Mr.Adhiraj Malhotra, Mr.Lokesh Aidasani for Petitioner; Mr.Shiraz Rustomjee, Senior Advocate, Mr.Jai Chhabria, Mr.Mihir Mody, Mr.Nirav Parmar, Mr.Arnav Misra for Respondent SEBI
New Delhi Television Limited
Securities and Exchange Board of India & anr.
Subscribe to unlock Case Details (Citation, Judge, Date & more)
Subscribe Now
Nature of Litigation
Writ petition challenging SEBI's rejection of condonation of delay in filing settlement applications.
Remedy Sought
Petitioner sought quashing of SEBI orders dated 23.8.2017 and 31.8.2017 rejecting condonation of delay.
Filing Reason
SEBI rejected petitioner's applications for condonation of delay in filing settlement applications under SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014.
Previous Decisions
SEBI passed order dated 4.6.2015 imposing penalty of Rs.25 lakhs for violation of clause 36 of listing agreement; petitioner filed appeal before Securities Appellate Tribunal which was pending.
Issues
Whether SEBI's rejection of condonation of delay in filing settlement applications was arbitrary or unreasonable.
Whether the petitioner demonstrated sufficient cause for the delay.
Submissions/Arguments
Petitioner argued that the delay was due to bonafide belief and legal advice, and that SEBI should have condoned the delay in the interest of settlement.
Respondent SEBI contended that the petitioner failed to show sufficient cause and that the settlement regulations require timely filing.
Ratio Decidendi
Condonation of delay in filing settlement applications under SEBI regulations is not a matter of right; the applicant must demonstrate sufficient cause. SEBI's discretion in rejecting condonation was not arbitrary or unreasonable as the petitioner failed to provide compelling reasons for the delay.
Judgment Excerpts
The petitioner has challenged orders dated 23.8.2017 and 31.8.2017 at Annexures Q and R respectively passed by Securities and Exchange Board of India, (‘SEBI’ for short) respondent No.1 herein.
On 4.6.2015, SEBI passed order holding the petitioner liable for violation of clause 36 of the listing agreement and imposed a penalty of Rs.25 lakhs under section 23A of the Securities Contracts (Regulation) Act, 1956.
Procedural History
SEBI issued show-cause notice on 12.2.2015; petitioner replied on 4.3.2015; SEBI passed adjudication order on 4.6.2015 imposing penalty; petitioner appealed to Securities Appellate Tribunal on 23.7.2015; petitioner filed settlement applications with delay; SEBI rejected condonation applications on 23.8.2017 and 31.8.2017; petitioner filed writ petition in 2018.
Acts & Sections
- Securities Contracts (Regulation) Act, 1956: 23A
- SEBI (Settlement of Administrative and Civil Proceedings) Regulations, 2014:
