Bombay HC Dismisses Challenge By NDTV Promoters Prannoy Roy & Radhika Roy Against SEBI Notices

The Bombay High Court on Monday dismissed a writ petition filed by Prannoy Roy and Radhika Roy, promoters of New Delhi Television (NDTV) challenging a show-cause notice issued by Securities and Exchange Board of India (SEBI) for alleged violation of Sections 12 a(d) and 12 a(e) of Securities and Exchange Board of India Act read with Prohibition of Insider Trading Regulations, 1992.

A division bench of Justice SC Dharmadhikari and Justice RI Chagla refused to interfere with SEBI's notice alleging that the petitioners committed violation of insider trading regulations a decade ago. The petitioners had contended that the said notice related to a proposed restructuring of NDTV into news related businesses and investments beyond news businesses in 2008 even though the proposal was not implemented, show cause notice was issued on August 31, 2018.

SEBI issued the notice alleging that the petitioners had traded shares of NDTV while being in possession of "unpublished price sensitive information". Roys challenged the notice in December which came up for hearing on January 2 and Court had said that orders will be passed on Monday.

"Petitioners can participate in the adjudication of SEBI's notice, it will not cause any prejudice to them. SEBI's notice is time barred; we do not wish to interfere with it" Court observed.

Fereshte Sethna, partner at DMD Advocates appeared on behalf of the petitioners and Senior Advocate JJ Bhatt for the market regulator.

Sethna vehemently sought to amend her petition and stated that prejudice was being caused to her clients as the market regulator had even refused to hear their applications on condonation of delay for filing settlement applications in the matter.

Petitioners had sought to inspect all the documents, records and internal files and notings upon which the market regulator had relied before issuing the said show-cause notice.

Observing that no prejudice will be caused if the petitioners face the show cause notice, Justice Dharmadhikari noted-

"You see if a regulatory body keeps committing an error, don't try to stop them. We all know this, if they are wrongly pursuing this then let them, truth will come out."

When, Advocate Sethna persisted, Justice Dharmadhikari retorted-

"You can make these submissions while challenging the final order passed by them" (SEBI's adjudicating authority)