RIGHT OF ACCUSED TO RECEIVE RELEVANT DOCUMENTS FROM SEBI – SUPREME COURT LAYS DOWN IMPORTANT PRINCIPLES

The Supreme Court has, by a recent decision of 18th January, 2022 (T. Takano vs. SEBI (2022) 135 taxmann.com 252), gave a decision that has an important bearing on the information that SEBI is required to provide to persons accused of wrongdoing in securities markets. It has effectively held that, barring very specific exceptions, SEBI must provide the full investigation report to the person against whom proceedings for debarment, disgorgement, etc., are initiated. There can be only limited exceptions to this general rule, and even in respect of these exceptions, SEBI is required to provide reasons. Where information is not provided, the accused is entitled to demonstrate that the withholding of such information is not valid as they do not meet the criteria laid down by SEBI. In terms of upholding principles of natural justice, transparency and fairness, this decision can be said to be a landmark. Instead of limited disclosure being the rule and full disclosure being the exception, non-disclosure would now be the exception, and comprehensive disclosure would be the general rule. Moreover, the Court has made certain nuanced points on what information SEBI can be said to have relied on or even influenced by. A mere and bald denial that SEBI has not relied on certain documents as a ground for refusal to provide them is also not enough.

A classic bone of contention between SEBI and persons against whom it initiates penal proceedings is whether a