Dismissed

Grasim Order

SAT18 Feb 2003

Case brief

AI extract

What is this about?

SAT dismissed applications by Investors Grievances Forum and Ghatkopar Investors Welfare Association seeking to intervene in an appeal filed against SEBI's decision to investigate share acquisition. The Tribunal held the applicants were not necessary or proper parties as SEBI was already investigating the complaints.

What did the court decide?

Applications seeking permission to intervene and be heard were dismissed.

What the court decided

AI extract

Outcome

Applications seeking permission to intervene and be heard were dismissed.

Issue for consideration

Whether investors' associations are necessary or proper parties to be joined as interveners in an appeal against SEBI's investigation order. +2 more

A compact analysis

This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.

Grasim Order — Securities and Capital Markets | SAT (2003)

Dismissed

Grasim Order

SAT18 Feb 2003

Download

Case brief

AI extract

What is this about?

What did the court decide?

Applications seeking permission to intervene and be heard were dismissed.

What the court decided

AI extract

Outcome

Applications seeking permission to intervene and be heard were dismissed.

Issue for consideration

Whether investors' associations are necessary or proper parties to be joined as interveners in an appeal against SEBI's investigation order. +2 more

A compact analysis

¶40

concerned to be heard before taking certain decisions affecting the interest of the investors. In this context he referred to sub regulation (6) of regulation 4 relating to grant of exemption based on the recommendation of the Takeover Panel. He said that the said regulation requires SEBI to afford ‘reasonable opportunity to the concerned parties” and decide the application seeking grant of exemption, that the concerned party referred to in the said regulation is the shareholder and in that view of the matter an association representing the shareholders can not be said to have no locus standi to pursue a matter involving the interests of investors in securities. Shri Somasekhar Sundaresan submitted that the IGF as an investors Association, is entitled even to file an appeal against an order passed by Respondent SEBI if as a result of the said order investors interests are adversely affected. He submitted that it may be true that the Tribunal is not bound to follow the provisions of the Code of Civil Procedure but certainly it has to follow the principles underlying the provisions therein, and the Tribunal has been following those principles in the appeal proceedings before it. Shri Somasekhar Sundaresan referred to section 15U of the Act and submitted that as per the said section the Securities Appellate Tribunal though not bound by the procedure laid down by the Code of Civil Procedure 1908, shall be guided by the principles of natural justice and has powers to regulate its own procedure, that the principles of natural justice requires that person who is likely to be adversely affected by an order be heard. He submitted that as section 15T and section 20A exclude the jurisdiction of Civil Courts to address the grievances of investors in securities against the orders passed by Respondent SEBI, the only forum available to the aggrieved investors and the representative investor associations to seek reddressal of grievances arising out of the orders passed by Respondent SEBI is the Securities Appellate Tribunal. He further submitted that under regulation 15Z as recently amended, an appeal on facts does nolonger lie and as such it is clear that the Securities Appellate Tribunal is the final fact finding body, and therefore, if anybody wants to bring in facts in an appeal proceedings that is possible only at the appellate stage before the Tribunal and that since IGF wants to bring in relevant facts and assist the Tribunal, it would be possible only in the appeal proceedings and as such it may be permitted to intervene and be afforded an opportunity of being heard.

¶41

Shri Somasekhar Sunderesan submitted that Respondent SEBI has initiated investigation into the acquisition of shares by the Appellants as requested by the Applicant and in that context IGF is a beneficiary of Respondent SEBI’s decision to investigate and that since the said order is under challenge in the present appeal, the Applicant should be provided an opportunity to defend the said beneficial order. He submitted that IGF has been continuously pursuing the impugned acquisition related matters for quite some time and that it has a lot to contribute to the fair and speedy disposal of the appeal. Shri Somasekhar Sundaresan further submitted that IGF is closely involved in investor protection and it had intervened in several matters before High Courts in matters having a bearing on investor protection and High Courts have recognised the eligibility of IGF to intervene and therefore, there is no reason as to why it is ineligible to intervene in the present appeal. He submitted that in fact IGF is not only interested in protecting the interests of the shareholders of the target company but is also interested in protecting the interests of the shareholders of the 1^st Appellant. Shri Somasekhar Sundaresan referred to Order 1 Rule 8A and Rule 10A of the Civil Procedure Code. In support of his contention that IGF is entitled to be an intervener in the present appeal he referred to the Hon’ble Supreme Court’s observation in Savitri Devi V District Judge (AIR 1999 SC 976) that “The Court is empowered to join a peprson whose presence is necessary for the prescribed purpose and can not under the rule direct the addition of a person whose presence is not necessary for that purpose. If the intervener has a cause of action against the plaintiff relating to the subject matter of the existing action the court has power to join the intervener so as to give effect to the primary object of the order which is to avoid munltiplicity of actions.” Learned Counsel submitted that since the Applicant being the complainant it is entitled to file an appeal under section 15T, against the order and, therefore following the logic in the Savitri Devi’s case, it should be entitled to join as an intevener in the present appeal and allowing it to do so could avoid multiplicity of actions as observed by the Hon’ble Supreme Court.

¶65

I do not find any merit in the Appelleants’ submission that in the absence of specific power provided in the Act or in the SAT (Procedure ) Rules, this Tribunal can not join a party in the appeal proceedings. In my view rule 21 gives sufficient authority to the Tribunal to decide as to whether a particular person aggrieved by an order of Respondent SEBI be allowed to present its case in an appeal, as the rule empowers the Tribunal to make such orders or give such directions as may be necessary or expedient to prevent abuse of its process or to secure the ends of justice. Therefore, if the Tribunal is of the view that a particular person need be joined in an appeal proceedings before it “to secure the ends of justice” it is empowered to order to join that particular person as party to the proceedings and hear that person. Therefore, want of power is not a constraint in this regard. But the question is the need for allowing a person to butt in the proceedings. In this context the principles laid down by Hon’ble Supreme Court in Kundanmal’s case provides the guidance. In the said case the Hon’ble Supreme Court in a special leave petition was considering the question as to whether the Respondent ‘X’ is a necessary or proper party to be joined as defendant under Order 1 Rule 10 of the Code of Civil Procedure in the suit instituted by the Appellant Y against Respondent Z in the following set of facts. Under the Dealership Agreement of 1974 Y was in possession of the Service Station erected on the land held by Respondent X,(Hindustan Petroleum Corporation Limited) on lease. The Service Station consisted of a petrol pump on the ground floor and a structure with an open terrace for the parking of vehicles. Respondent Z, (Municipal Corporation of Greater Bombay) issued a notice under section 351 of the Municipal Corporation Act to the Appellant Y for demolition of two chattels on the terrace on the ground that those were unauthorised construction. The said Appellant Y instituted a suit before the City Civil Court, Bombay, challenging the validity of the notice and for injunction restraining the Municipal Corporation

¶71

is stated to be in progress. The Applicants have not made any allegation against Respondent SEBI in this regard. No omissions and commissions by SEBI bringing grief to the Applicants have been alleged. As of now the Applicants can not be said to be aggrieved on account of any action/inaction by Respondent SEBI vis-à-vis their complaints. Investigation is yet to be completed and the findings are yet to be known. Therefore, it is also not a ground to claim that as a result of the investigation and the findings thereof, the Applicants are aggrieved. In this context it is to be noted that the Act provides opportunity to any person aggrieved by an order of Respondent SEBI to file an appeal before the Tribunal. But the pre requisite for availing the said relief is the existence of an order and the grievance caused by the order. In the instant case there is no adverse order against the Applicants. The existing order against which the present appeal has been filed by the Appellants is in fact an order “favouring” the Applicants and in that context the Applicants’ argument that since they are entitled to file an appeal they are entitled to be joined as a party in the pending appeal to avoid multiplicity of the proceedings, is untenable. The Applicants’ argument that if the Applications are not allowed “substantial prejudice will be caused to the investors” remains unsubstantiated. The investigation by itself is not the ‘end of the chapter’. If an investor feels aggrieved by the decision taken by Respondent SEBI after the investigation, and it is established that he is an aggrieved person by the said order, appeal remedy provided under section 15T should be available to him. Just for asking, a person cannot be joined as an intervener. There should be justification. A person seeking intervention in an appeal proceeding has to convince the Tribunal that he is a proper/necessary party and that his presence is necessary to effectuallly decide the issues raised in the appeal, and the Tribunal, on satisfying that joining the party is necessary to effectually and finally decide the appeal, may order to join the person as a party to the proceedings.

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Grasim Order

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What is this about?

What did the court decide?

What the court decided

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Issues for consideration

Cases cited

Parties & counsel

Case details

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