Karnataka High Court
India Awake For Transparency vs The Chairman on 8 January, 2021
Author: P.S.Dinesh Kumar
Bench: P.S. Dinesh Kumar
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 8TH DAY OF JANUARY, 2021
BEFORE
THE HON'BLE MR. JUSTICE P.S. DINESH KUMAR
WRIT PETITION No.13838 OF 2020 (GM-RES)
BETWEEN :
INDIA AWAKE FOR TRANSPARENCY
REP. BY P. SADANAND AUTHORISED
SIGNATORY SHRISTHI CRESCENDO
24, DESIKA ROAD
MYLAPORE, CHENNAI-600 004 ... PETITIONER
(BY SHRI. R. SUBRAMANIAN ,ADVOCATE)
[THROUGH VIDEO CONFERENCE]
AND :
1. THE CHAIRMAN
SECURITIES AND EXCHANGE BOARD
OF INDIA, PLOT NO C4-A, G BLOCK
BANDRA-KURLA COMPLEX, BANDRA
EAST MUMBAI-400 051
2. AZIM PREMJI TRUST
REP BY ITS TRUSTEE (P)
AZIM PREMJI TRUSTEE COMPANY LTD
REP BY ITS DIRECTOR
MR AZIM H PREMJI
SURVEY NO.574, DODDAKANNELI VILLAGE
SARJAPUR ROAD
BENGALURU-560 035
3. M/S HASHAM INVESTMENT AND
TRADING COMPANY PVT LTD
REP BY MR. AZIM H PREMJI
DIRECTOR
NO.134, NEXT TO WIPRO
CORPORATE OFFICE
DODDAKANNELI VILLAGE
2
SARJAPUR ROAD
BENGALURU-560 035
4. M/S WIPRO LTD
REP BY ITS EXECUTIVE CHAIRMAN
MR. RISHAD A. PREMJI
DODDAKANNELI VILLAGE
SARJAPUR ROAD
BENGALURU-560 035 ... RESPONDENTS
(BY SHRI. S. GANESH, SENIOR ADVOCATE FOR
SHRI. SANDEEP HUILGOL, ADVOCATE FOR R3)
THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO DIRECT THE R-1 TO FORTHWITH TAKE
UP INVESTIGATION INCLUDING UNDER SECTION 11 C OF THE SEBI ACT IN
RESPECT OF THE OFFENCES OF VIOLATION OF THE PROVISION OF THE
SECURITIES AND EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION
OF SHARES AND TAKEOVERS) REGULARIZATION 1997 AND SECURITIES AND
EXCHANGE BOARD OF INDIA (SUBSTANTIAL ACQUISITION OF SHARES AND
TAKEOVERS) REGULATIONS 2011 BY THE 2ND AND 4TH RESPONDENTS ISN
THE 3 TRANSACTIONS SET OUT THE INFORMATION DTD.21.1.2020 AND
24.10.2020 FURNISHED BY THE PETITIONER UNDER ANNEXURE-Q AND R
WITH THIS PETITION ETC.
THIS WRIT PETITION, HAVING BEEN HEARD AND RESERVED FOR
ORDERS ON 15.12.2020, COMING ON FOR PRONOUNCEMENT OF ORDERS
THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:-
ORDER
Heard Shri R. Subramanian, learned advocate for the petitioner and Shri S. Ganesh, learned Senior Advocate for respondent No.3.
2. Shri Ganesh has raised a preliminary objection with regard to maintainability of this writ petition. In substance, he submitted that petitioner has filed a public interest litigation registered as W.P.No.3635/2020 with a prayer inter alia for a 3 writ of mandamus and to direct respondents no.1 to 10 therein to constitute a multi disciplinary investigation team to investigate and prosecute the offences alleged to have been committed by Mr.A.H.Prem ji (respondent No.11 therein) and his associates, set out in its representations dated January 30, 2020 and February 3, 2020 submitted to respondents No.1 to 6 therein. He submitted that respondent No.8 in the PIL is the Chairman, Security and Exchange Board of India ("SEBI" for short). This writ petition is filed against four respondents of which, the Chairmen, SEBI is the first respondent. Adverting to the prayers in this writ petition, Shri Ganesh submitted that prayer clauses
(a) and (b) are for directions against SEBI to take up the investigation for violation of provisions under SEBI Act by respondents No.2 to 4 in three transactions set out in the information dated January 21, 2020 and October 24, 2020 and to prosecute.
3. Shri Ganesh further submitted that the prayers made in both the PIL as also this writ petition are one and the same so far as investigation by SEBI is concerned. Petitioner has 4 unconditionally withdrawn the PIL. Therefore, this writ petition is not maintainable on the ground of res judicata.
4. In reply, Shri Subramanian, for the petitioner submitted that the prayers are different in the PIL and this writ petition. This writ petition is filed seeking investigation in respect of three transactions which the petitioner has brought to the notice of the Chairman, SEBI in its two representations submitted on January 21, 2020 and October 24, 2020. He further submitted that the violations attract penal provisions and petitioner has locus to maintain this writ petition independently. He mainly relied upon paragraph No.14 of Sheonandan Paswan Vs. State of Bihar and others1 and prayed that the matter be heard on merits.
5. I have carefully considered rival contentions and perused the records.
6. In the PIL, SEBI is arrayed as respondent No.8. In paragraph No.18 of the PIL, it is stated that Rs.9260.17 Crores were gifted by three companies to Azim Premji Trust. The very same averment is made in paragraph No.13 of this writ petition. 1 1987 1 SCC 288 5
7. In paragraph No.19 of PIL, it is stated that three companies gave away 29,55,27,000 shares of WIPRO Ltd. worth Rs.12799.27 Crores to Azim Premji Trust. The very same averment is made in paragraph No.18 of this writ petition. The petitioner has further averred in paragraph No.19 in this writ petition that the transaction of acquisition in 2013 were not exempted from the 2011 SEBI Regulations. Thus, the principle grievance of petitioner is violation of SEBI Regulations in the aforesaid transactions.
8. In the PIL, the petitioner has prayed for a direction against first respondent, Ministry of Law and Justice to recover from Mr.A.H.Premji and his associates all assets removed from the companies namely, Vidya Investment and Trading Co. Private Ltd., Regal Investment and Trading Co. Private Ltd. and Napean Trading and Investment Co. Private Ltd. In prayer clause (b) of the PIL, the petitioner has sought for a direction against first to tenth respondents therein to constitute a Multi disciplinary investigation team to investigate and prosecute Mr.A.H.Premji.
6
9. In its representation dated January 21, 2020 (Annexure-Q), petitioner has set out four transactions numbered as A to D and alleged violation of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 and SAST, 2011.
10. Transaction No.D is with regard to acquisition by Hasham Investment and Trading Co. Pvt. Ltd. during financial year 2013-14 of control over stakes held by Regal Investment, Napean Trading and Vidya Investment.
11. In its representation dated October 24, 2020 (Annexure-R), it is stated that petitioner has set out violations of various transactions from 2010 to 2015 in earlier representation dated January 21, 2020. It is further stated that petitioner has moved the Special Court under Section 156(3) of Cr.P.C. for PMLA offences. A reference to the PIL has also been made and a copy of the order passed in the PIL has been annexed to the said representations. Petitioner has requested the Chairman, SEBI, to register cases for offences under SEBI Act.
7
12. Shri Ganesh made available copies of representations dated January 30, 2020 and February 3, 2020 which were annexed to the PIL.
13. Representation dated January 30, 2020 is addressed to the Secretary to the Government of India, Ministry of Finance, Secretary, Ministry of Corporate Affairs, Secretary, Ministry of Law and Justice, Revenue Secretary, Ministry of Finance and the Home Secretary. It is stated therein that despite not having any financial or economic interest in three companies namely Vidya Investment, Regal Investment and Nepean trading, Shri A.H.Premji has taken over the assets over Rs.50,000 Crores to his private entities by colorable transactions between 2010 to 2014 by violating SEBI Takeover Code and sought for immediate action.
14. In its representation dated February 3, 2020 addressed to the Secretary, Ministry of Finance, petitioner has reiterated the contents in representation dated January 30, 2020 verbatim and stated that the earlier representation was not sent to the Department of Economic Offence of Ministry of Finance. 8
15. In the instant writ petition also reference is made to the shareholding pattern of three partnership firms namely, Zash Traders, Prazim Traders and Hasham Traders in which Regal Investment, Napean Trading and Vidya Investment allegedly hold 30% share.
16. Thus, in substance, petitioner's principle grievance is with regard to the transactions which have taken place between 2010 and 2015 in respect of aforementioned firms which according to the petitioner are in violation of provisions of SEBI Act.
17. Shri Subramanian placing reliance on Sheonandan Paswan, has urged that any citizen can lodge a first information report or file a complaint and set criminal law into motion. He contended that the violation of SEBI Act and Regulations attract penal provisions and therefore this petition is maintainable.
18. Shri Ganesh has argued that the prayers in this writ petition are exactly the same as in the PIL and therefore, the principle of res judicata applies. He has relied upon paragraph 9 No.9 of Sarguja Transport Service Vs. State Transport Appellate Tribunal, M.P.Gwalior and others2 in support of this contention.
19. In Sarguja Transport Services, it is held by the Apex Court that the principle underlying in Rule 1 of Order XXIII of Code of Civil Procedure should be extended in the interest of administration of justice to the cases of withdrawal of writ petition also, not on the ground of res judicata but on the ground of 'public policy'. It is further held that while the withdrawal of a writ petition filed in a High Court without permission to file a fresh writ petition may not bar other remedies like a suit or a petition under Article 32 of the Constitution of India since such withdrawal does not amount to res judicata, the remedy under Article 226 of the Constitution of India should be deemed to have been abandoned by the petitioner in respect of the cause of action relied on in the writ petition when he withdraws it without permission.
20. As noted hereinabove, prayer clause (b) in the PIL was for a direction against respondents No.1 to 10 therein which included, the Chairman, SEBI, the 8th respondent, to investigate 2 1987 1 SCC 5 10 and prosecute Mr.A.H.Premji and his associates. A careful perusal of the representations annexed to the PIL and this writ petition show that the grievance of the petitioner is one and the same so far as violation of provisions of SEBI Act and Regulations are concerned. Admittedly, petitioner has withdrawn the PIL unconditionally. Therefore, this writ petition cannot be entertained in view of law laid down in Sarguja Transport Service.
21. The authority in Sheonandan, relied upon by Shri. Subramanian is not applicable to the facts of this case, because in contra distinction, petitioner in this writ petition is not challenging any criminal proceedings pending in any Court. But on the other hand is seeking a mandamus against SEBI to investigate. It is one thing to say that a citizen himself is setting criminal law into motion by filing FIR or complaint before Magistrate and it is other thing that he is seeking direction from a Constitutional Court against a regulatory body to investigate and prosecute any person or entity. There can be no exception to the proposition that any citizen can set criminal law into motion by registering an FIR or filing a compliant before 11 Jurisdictional Magistrate or Special Judge. Petitioner has admittedly exhausted this option before the Jurisdictional Court. He has not assailed proceeding of any criminal court in this petition. Therefore, on facts, authority in Sheonandan Paswan is not applicable. Further, petitioner having withdrawn the PIL unconditionally shall not be entitled to re-agitate the same cause all over again.
22. In view of the above, the preliminary objection raised by Shri S.Ganesh merits consideration and it is accordingly sustained. Resultantly, writ petition stands dismissed.
No costs.
Sd/-
JUDGE AV