1. The instant petition seeks for the declaration of the orders passed by the Whole Time Members of the Securities and Exchange Board of India (hereinafter „SEBI‟) dated 29.05.2018 and 14.12.2018 as not applicable to the petitioner bank and that those orders do not prevent the petitioner bank from proceeding further under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter „ SARFAESI Act, 2002 ‟) to sell the mortgaged property being TPV-G-GV-07, The Palm Springs, Village Wazirabad, Sector 54, Gurgaon 122002 (hereinafter „mortgaged property‟).

2. The petitioner bank also prays for directions to respondent nos.1 and 2 not to take any further actions pursuant to the impugned e-mails dated 29.01.2021 and 18.03.2021 and not to thwart the petitioner bank in any manner with respect to selling of the mortgaged property. Alternatively, directions have also been sought to declare that the petitioner bank has the first charge over the mortgaged property with the further direction to allow it to auction the mortgaged property in accordance with the provisions of the SARFAESI Act, 2002 .

3. The facts of the case show that the petitioner bank is a private company incorporated under the Companies Act, 1956 and a Banking Company as defined under Section 5 of the Banking Regulation Act, 1949.

4. Respondent no.1 is the Deputy General Manager of the Northern Regional Office of respondent no.2-SEBI which is the regulatory body of the Securities and Commodities market in India, established in accordance with the Securities and Exchange Board of India Act, 1992 (hereinafter „ SEBI Act, 1992 ‟).

5. Respondent nos.3 and 4 i.e., Mr. Deepak Goel and Mrs. Ruchika Goel, respectively, are the borrowers of the petitioner bank and had availed a home loan facility from the petitioner bank amounting to Rs.6,03,99,231/- vide facility agreement dated 22.09.2017, mortgaging the property in question. The home loan in question was disbursed by the petitioner bank to respondent nos.3 and 4 from its Green Park Branch, New Delhi.

6. On 22.09.2017 a Deed of Guarantee was executed by respondent nos.3 and 4 and they had created security interest in respect of the property in favour of the petitioner bank, while depositing with the petitioner bank the original title document of the said mortgaged property including the Sale Deed dated 22.04.2013. The petitioner bank had duly registered the said mortgaged property with the Central Registry of Securitisation Assets Reconstruction and Security Interest of India (hereinafter „CERSAI‟) on 17.10.2017.

7. It appears that in the year 2017, SEBI started an investigation against F6 Commodities Private Limited of which respondent nos.3 and 4 were directors. The investigation was initiated after receiving e- mails dated 27.07.2017 and 03.08.2017 from the National Stock Exchange.

8. On 29.05.2018 an ex-parte interim order was passed by the Whole Time Member of SEBI in the exercise of power under Section 19 read with Sections 11(1) , 11(4) , 11B and 11D of the SEBI Act, 1992, read with Regulation 35 of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008 (hereinafter „Regulations, 2008‟) whereby, the following directions were issued:

g. Registrar and transfer Agents are also directed to ensure that the securities (including mutual fund units) in physical form, held jointly or severally, by the aforesaid entitles and persons are not transferred/redeemed except for the purpose mentioned in sub-para

(e) after confirmation from the concerned stock exchange in this regard.

h. The banks are directed to ensure that no debits are made in the bank accounts held jointly or severally by F6 Finserve Private Limited, F6 Commodities Private Limited, Mr. Pankaj Goel, and Mr. Meenu Goel, except for the purpose of payment of money to the clients/investors under the written confirmation of the concerned Signature Not Verified stock exchange(s). Digitally Signed By:PRATIMA Signing Date:24.07.2023 13:01:47 -6- i. The above directions are without prejudice to the right of SEBI to take any other action that may be initiated in respect of aforesaid entities/persons."

9. Essentially, the effect of the directions in the order dated 29.05.2018 was to restrain the noticees including respondent nos.3 and 4 from accessing the securities market and prohibiting them from buying/selling or otherwise dealing in securities either directly or indirectly or being associated with the securities market, whatsoever, till further directions.

10. It is also to be noted that the noticees were directed not to dispose of or alienate any assets whether moveable or immovable, or any interest or investment or change in any of such assets excluding money lying in bank accounts except with the prior permission of SEBI.

11. It is seen that based on further inspection etc., a confirmatory order dated 14.12.2018 was passed by a Whole Time Member of respondent no.2 under Section 11(4) , 11B and 11D of the SEBI Act, 1992, read with Regulation 35 of the Regulations, 2008 confirming the ex-parte interim order dated 29.05.2018 against the 10 persons including respondent nos.3 and 4 until further orders.

12. In the meantime, the petitioner bank noted that respondent nos.3 and 4 defaulted in repayment of the loan availed by them from the petitioner bank and accordingly, the account in question was classified by the petitioner bank as a Non-Performing Asset on 30.09.2019.

13. The petitioner bank thereafter, issued a demand notice dated 22.11.2019 under Section 13(2) of the SARFAESI Act, 2002 calling upon respondent nos.3 and 4 and the guarantor to repay the Signature Not Verified Digitally Signed By:PRATIMA Signing Date:24.07.2023 13:01:47 -7- outstanding amount. Respondent nos.3 and 4 failed to repay the outstanding amount which was Rs. 6,08,72,618/- as of 22.11.2019.

14. Therefore, the petitioner bank took over the symbolic possession of the mortgaged property on 16.03.2020 under Section 13(4) of the SARFAESI Act, 2002. The petitioner bank thereafter filed an application before the concerned District Magistrate under Section 14 of the SARFAESI Act, 2002 for taking over the physical possession which came to be allowed on 15.09.2020. Accordingly, the physical possession of the mortgaged property was taken and a possession notice dated 14.10.2020 was issued, informing respondent no.3 and 4 and the general public that the petitioner bank had taken physical possession of the mortgaged property in the exercise of powers conferred under Section 13(4) of the SARFAESI Act, 2002.

15. A pre-sale notice dated 14.10.2020 was also issued by the petitioner bank, requesting respondent nos.3 and 4 to clear the outstanding dues, failing which the petitioner bank would be constrained to sell the mortgaged property to realise the outstanding dues. The petitioner bank thereafter, on 16.10.2020 issued a notice published in two local newspapers cautioning the public not to deal with the subject property and that dealing with the same would be subject to the charge of the petitioner bank. On 19.12.2020, the petitioner bank published the notice for auction sale of the mortgaged property at a reserved price of Rs. 8,67,20,000/-. On the same day i.e., 19.12.2020 the petitioner bank sent a sale notice to respondent nos.3 and 4 and the guarantor along with a vacation notice to vacate the moveable articles in/on the property within 15 days.

16. It is thereafter, on 29.01.2021 one of the impugned e-mails was Signature Not Verified received by the petitioner bank from respondent no.1, informing Digitally Signed the By:PRATIMA Signing Date:24.07.2023 13:01:47 -8- petitioner bank that vide orders dated 29.05.2018 and 14.12.2018 passed by the Whole Time Member of SEBI (hereinafter „said Orders‟), respondent nos.3 and 4 were restrained from disposing of or alienating any assets without prior permission of respondent no.2. The petitioner bank was accordingly directed to ensure compliance of the said Orders passed by the Whole Time Member of SEBI on behalf of SEBI against 10 entities which included respondent nos.3 and 4.

17. On 04.02.2021, the petitioner bank replied to the e-mail dated 29.01.2021 stating inter alia that the petitioner bank, being a secured creditor, had issued a notice for public auction on 19.12.2020 and since the borrowers had created a mortgage with respect to the said property in favour of the petitioner bank, therefore, the communication dated 29.01.2021 will not detain the petitioner bank from proceeding further.

18. Paragraph nos.6 to 8 of the reply dated 04.02.2021 read as under:

19. On 18.03.2021, respondent no.1 replied to the petitioner bank‟s e-mail dated 04.02.2021 and inter alia stated that the orders dated 29.05.2018 and 14.12.2018 partake the character of orders „in rem‟ and bind all constituents dealing with the broker or his assets/liabilities till the completion of investigation/forensic audit and thereafter, the petitioner bank has filed the instant writ petition. However, during the pendency of the instant writ petition, the final order dated 09.06.2022 has been passed by SEBI under Section 11(4) , 11B and 11D of the SEBI Act, 1992.

20. Mr. Sanjiv Sen, learned senior counsel appearing on behalf of the petitioner, assisted by Mr. Sumit Goel, Ms. Sreeparna Basak, Ms. Anjali Singh and Mr. Jayant Bajaj, submitted that the right of a secured creditor to realise secured debt has priority over all other debts. After placing specific reliance on the non-obstante clause of Section 26E of the SARFAESI Act, 2002 read with Section 31B of the Recovery of Debts and Bankruptcy Act, 1993 (hereinafter „RDB Act, 1993‟), it was argued by the learned senior counsel that Section 26E would prevail over Section 28A of SEBI Act, 1992.

21. The learned senior counsel further submitted that by virtue of Sections 35 and 37 of the SARFAESI Act, 2002 the provisions of SARFAESI Act, 2002 would override the inconsistent provisions contained in SEBI Act, 1992 .

22. After taking this court through Chapter IV-A of the SARFAESI Act, 2002 , which has been inserted w.e.f. 24.01.2020, it is submitted by the learned senior counsel, that priority has been given to secured creditor over all other dues including Government dues in terms of Section 26E of the SARFAESI Act, 2002, and for this prioritisation to take place, a mandatory registration of security interest is required.

23. It is further argued that in light of the insertion of Section 31B in the RDB Act, 1993, the priority of secured creditors has also been inserted w.e.f. from 01.09.2016, and that would mean that the legislature‟s intent was to assign the priority to the secured creditor despite there being provisions under the SEBI Act, 1992 .

24. It is also submitted that the orders passed under Section 11(1) , 11(4) , 11B and 11D of the SEBI Act, 1992 are not in rem and the impugned directions of SEBI are contrary to the basic intent of the SARFAESI Act, 2002 .

25. Learned senior counsel appearing on behalf of the petitioner has taken this court through various provisions of the SARFAESI Act, 2002 , the SEBI Act, 1992 and the RDB Act, 1993. He has also placed reliance on various decisions in the cases of Bank of Baroda v. State of Gujarat and Ors.1 , Kalupur Commercial Co-operative Bank Ltd v. State of Gujarat2 , The Assistant Commissioner (CT), Anna Salai-III Assessment Circle v. The Indian Overseas Bank and Ors.3 , Bank of Baroda v. Commissioner of Sales Tax , Indore and Ors.4, Bhanu Ram and Ors. v. HBN Daries and Allied Ltd.5, Principal 1 MANU/GJ/188512019.

2019 SCC Online Guj 1892.

3 Signature Not Verified MANU/TN/3743/2016.

4 Digitally Signed MANU/MP/0331/2018. By:PRATIMA 5 MANU/ND/7107/2019. Signing Date:24.07.2023 13:01:47

Commissioner of Income Tax v. Monnet Ispat and Energy Ltd.6, State of M.P. & Anr. v. State Bank of Indore & Ors.7 , Solidaire India Ltd. v. Fairgrowth Financial Services Ltd.8 , Sahara India Real Estate Corporation Limited & Ors. v. Securities and Exchange Board of India9 , Franklin Templeton Trustee Services Private Limited & Ors. v. Amruta Garg & Ors.10 , Shewpunjanrai Indrasanrai Ltd. v. The Collector of Customs and Ors.11 , Punjab National Bank v. Union of India and Others12 , Bank of Baroda v. The Deputy Director13 , Maharaja Pratap Udai Nath Shahi Deo v. Sara Lal Durga Prasad Nath Shahi Deo & Ors.14 , Pegasus Assets Reconstruction Private Limited v. M/s Haryana Concast Limited and Anr.15, Authorized Officer, State Bank of Travancore & Anr. v. Mathew K.C.16 , Union of India v. SICOM Ltd. & Anr.17 , Jalgaon Janta Sahakari Bank Ltd. & Anr. v. Joint Commissioner18 , Deputy Director Directorate of Enforcement Delhi v. Axis Bank & Ors19 , Authorized Officer, Indian Bank v. D. Visalakshi & Anr20 and Kotak Mahindra Bank Limited v. Girnar Corrugators Pvt. Ltd. & Ors21 .

26. Learned senior counsel Mr. Arunabh Choudhury assisted by Mr. Ashish Agarwal, Ms. Astha Kaushal and Mr. Aniruddha Mahadevan appearing on behalf of respondent nos.1 and 2 while relying on his counter affidavit stated that the three orders viz. interim 6 (2018) 18 SCC 786.

(2002) 10 SCC 441.

(2001) 1 SCC 1.

(2013) 1 SCC 1.

MANU/SC/0430/2021.

AIR 1958 SC 845.

2022 SCC OnLine 227.

FPA-PMLA-2115/MUM/2017.

MANU/BH/021111948.

(2016) 4 SCC 47.

(2018) 3 SCC 85.

(2009) 2 SCC 121.

W.P.(C) 2935 of 2018.

19 Signature Not Verified 2019 SCC OnLine Del 7854.

20 Digitally Signed (2019) 20 SCC 47. By:PRATIMA 21 2023 SCC OnLime SC 15. Signing Date:24.07.2023 13:01:47

order, confirmatory order and the final order have attained finality. These orders have not been challenged. He stated that the interim order and confirmatory order, are placed on record by the petitioner, however, the final order dated 09.06.2022 has not been placed on record by the petitioner. Respondent nos.1 and 2 have placed on record a copy of the final order dated 09.06.2022 as Annexure-R1.

27. He, therefore, contended that the three orders are not only operating against the noticees but are operating against any person who is claiming through the noticees and in the instant case, through respondent nos.3 and 4 in particular. According to learned senior counsel, the effect of the three orders is an injunction operating qua the properties owned by the noticees.

28. According to him, directions have been issued under the special jurisdiction conferred under the provisions of the SEBI Act, 1992 for protecting the interests of the investors in the securities market and not for any personal claims of SEBI.

29. He also submitted that the provisions of the SEBI Act, 1992 would prevail over the provisions of the SARFAESI Act, 2002 and the provisions of the RDB Act, 1993. According to him, it is only the provisions in any other Act, inconsistent to the provisions under the SARFAESI Act, 2002 , that will have no application. However, in the instant case, according to him, there is no inconsistency between the provisions of the SARFAESI Act, 2002 and the SEBI Act, 1992 and both Acts can operate in their respective sphere in order to achieve the special purpose for which they have been enacted.

30. While elaborating his submission, he has indicated the legislative intent of the SEBI Act, 1992 which is pre-eminently a Signature Not Verified Digitally Signed By:PRATIMA Signing Date:24.07.2023 13:01:47

social welfare legislation seeking protection of interests of a common man who are small investors.

31. He submitted that the provisions under Section 37 of the SARFAESI Act, 2002 clearly provide the space for the provisions of the SEBI Act, 1992 to operate as it specifically provides that the provisions of the SARFAESI Act, 2002 or the rules made thereunder, are in addition to, and not in derogation of, the Companies Act, 1956 (1 of 1956), the Securities Contracts (Regulation) Act, 1956 (42 of 1956), the SEBI Act, 1992 (15 of 1992), the RDB Act, 1993 (51 of 1993) or any other law for the time being in force.

32. He, therefore, stated that the provisions of the four Acts mentioned in Section 37 of the SARFAESI Act, 2002 are specifically saved and therefore, the argument advanced by learned counsel appearing on behalf of petitioner is not acceptable.

33. It is further contended by the learned senior counsel for respondent nos.1 and 2 that the SEBI Act, 1992 would become redundant if, in exercise of the powers conferred by the statute, SEBI could not be presumed to have powers to direct banks from preventing the alienation of property. No regulation and investigation could take place if such powers are not imputed to SEBI. The power to direct banks to prevent alienation of money from the bank accounts or in other words, prevent the debits from the bank accounts, is incidental and necessary for the regulatory framework to operate in the manner in which the legislature so envisioned it. It is, therefore, clear that SEBI has a power to issue directions to banks in general, and to the petitioner bank in particular.

34. Precisely, learned counsel tried to establish that theSignature Parliament‟s Not Verified Digitally Signed intent is clear under Section 37 of the SARFAESI Act, 2002 to mean By:PRATIMA Signing Date:24.07.2023 13:01:47

that the provisions of the SEBI Act, 1992 will not be covered by the non-obstante clause contained in Section 35 or that in Chapter IV-A of the SARFAESI Act, 2002 i.e. Section 26D and Section 26E thereof.

35. He has placed reliance in relation thereto on various decisions in the cases of Mathew Varghese v. M. Amritha Kumar and Ors.22 , KSL & Industries Ltd. v. Arihant Threads Ltd.23 , Madras Petrochem Ltd. v. Board for Industrial & Financial Reconstruction &Ors.24, Pioneer Urban Land & Infrastructure Ltd. v. Union of India25 , Securities and Exchange Board of India v. Ajay Agrawal26 , Vidya Drolia v. Durga Trading Corporation27 , Jay Engineering Works Ltd. v. Industry Facilitation Council28 , P.C. Joshi v. State of UP29 , Ramdev Food Products Pvt. Ltd. v. Arvindbhai Rambhai Patel & Ors.30 , A.G. Varadarajulu v. State of Tamil Nadu31 , Central Bank of India v. State of Kerala32 , Imperia Structures Ltd. v. Anil Patni33 , State of Punjab v. Gurdev Singh34 , KSL & Industries Ltd. v. Arihant Threads Ltd.35 , Industrial Finance Corporation of India v. Allied International Products Ltd. and Others36 and Davies and Another v. Powell Duffryn Associated Colliries Limited37.

36. Learned senior counsel appearing on behalf of respondent nos.1 and 2 in addition to his submissions on the merits of the case has also 22 2014 (5) SCC 610.

(2015) 1 SCC 166.

(2016) 4 SCC 1.

(2019) 8 SCC 416.

(2010) 3 SCC 765.

(2021) 2 SCC 1.

(2006) 8 SCC 677.

1961 (2) SCR 63.

(2006) 8 SCC 726.

(1998) 4 SCC 231.

(2009) 4 SCC 94.

(2020) 10 SCC 783.

(1991) 4 SCC 1.

35 Signature Not Verified (2008) 9 SCC 763.

raised a preliminary objection with respect to the maintainability of the instant writ petition on the ground of the availability of efficacious alternative remedy under Section 15T of the SEBI Act, 1992. He submitted that the said Orders which are sought to be declared as not applicable to the petitioner bank, are appealable under Section 15T of the SEBI Act, 1992 before the Securities Appellate Tribunal (hereinafter „SAT‟) and according to him, any order passed by the SAT is appealable under Section 15Z of the SEBI Act, 1992 before the Hon‟ble Supreme Court.

37. To support his submissions, he has placed reliance on various decisions in the cases of Thansingh Nathmal & Ors. v. Superintendent of Taxes , Dhubri & Ors.38, Raj Kumar Shivhare v. Asstt. Director, Directorate of Enforcement & Anr.39, Nivedita Sharma v. Cellular Operators Assn of India40, State of Maharashtra &Ors. v. Greatship (India) Ltd.41 , State of Punjab &Ors. v. Gurdev Singh,42 Kuber Floritech Ltd. v. Securities & Exchange Board of India43 and Balvir Singh v. Securities & Exchange Board of India44 .

38. Learned senior counsel appearing on behalf of the petitioner in response to the submissions with respect to the maintainability of the instant writ petition submitted that the petitioner bank is not aggrieved by the said Orders as they do not apply to the petitioner bank. He also submitted that the petitioner is aggrieved by the impugned e- mails/communications dated 29.01.2021 (P-43) and 18.03.2021 (P-

44), by which SEBI directed the petitioner bank to comply with the orders dated 29.05.2018 and 14.12.2018 and not to proceed against the 38 AIR 1964 SC 1419.

(2010) 4 SCC 772 40 (2011) 14 SCC 337 41 2022 SCC Online SC 1262, para. 13-18.

42 Signature Not Verified (1991) 4 SCC 1.

Writ Petition (c) No. 11426/2022, Order dated 02.09.2022, Delhi High Court. Digitally By:PRATIMA Signed 44 Writ Petition (c) No. 13322/2022, Order dated 15.09.2022, Delhi High Court. Signing Date:24.07.2023 13:01:47

mortgaged property under Section 13 of the SARFAESI Act, 2002 without prior permission of the SEBI.

39. According to him, the impugned e-mails are without jurisdiction and the petitioner is no way concerned with the investors and is not a party to the same. The petitioner is only concerned with the realization of their debt while liquidating the mortgaged property. He unequivocally stated that the mortgaged property did not have any encumbrance when it was mortgaged to the bank and an appeal under Section 15T of the SEBI Act, 1992 would not be an effective and efficacious remedy.

40. He has also placed reliance on various decisions in the cases of National Securities Depository Ltd. v. SEBI45 , HB Stockholdings Limited v. Securities and Exchange Board of India46, Radha Krishan Industries , State of H.P.47, Jashbhai Motibhai v. Roshan Kumar , Haji Bashir Ahmed & Ors.48, Ramprasad Somani v. Chairman , SEBI49, Kuntesh Gupta v. Hindu Kanya Mahavidyalaya50, Whirlpool Corpn. v. Registrar of Trade Marks51 , Ram & Shyam Co. v. State of Haryana52 , State of H.P. v. Gujarat Ambuja Cement Ltd.53 and CIT v. Chhabil Dass Agarwal.54

41. Since respondent nos.1 and 2 have raised an objection with respect to the maintainability of the instant writ petition, therefore, the same is required to be considered as a preliminary issue.

(2017) 5 SCC 517.

2012 SCC OnLine SAT 71.

(2021) 6 SCC 771.

(1976) 1 SCC 671.

2002 SCC OnLine SAT 34.

(1987) 4 SCC 525.

(1998) 8 SCC 1, p. 9.

52 Signature Not Verified (1985) 3 SCC 267.

53 Digitally Signed (2005) 6 SCC 499. By:PRATIMA 54 (2014) 1 SCC 603. Signing Date:24.07.2023 13:01:47

42. In the present case, in order to decide upon the issue of maintainability of the present petition, there are certain ancillary and incidental issues that need to be decided. These relate to the powers vested with SEBI under the SEBI Act, 1992 , the ambit and scope of the said Orders, and the nature of the impugned emails.

43. The first issue that the court must then decide is whether SEBI has the requisite legal power vested in it to direct the petitioner bank.

44. Undisputedly in this case, the said Orders have been passed by SEBI, however, the petitioner bank has chosen not to assail those orders, but instead challenges the impugned communications. Respondent nos.1 and 2‟s preliminary objection to the same is responded to by the petitioner bank by arguing that SEBI does not have the jurisdiction to direct the petitioner bank, that is, a bank unregistered with SEBI. Assuming arguendo that SEBI does have jurisdiction, the petitioner bank contends that the said Orders do not prevent them from auctioning the mortgaged property, it is, therefore, the impugned emails that infringe their rights and not the said Orders.

45. In Sahara India Real Estate Corporation Limited (supra), the Hon‟ble Supreme Court expounded upon the nature of powers conferred upon SEBI. It made the following observations, which were later reiterated in subsequent decisions of the Apex Court. In paragraph no.108, it has been observed as under:

[Emphasis Signature supplied]Not Verified Digitally Signed By:PRATIMA Signing Date:24.07.2023 13:01:47

46. Hon‟ble the Chief Justice of India J.S. Khehar, in their separate concurring opinion made material observations having bearing on the present matter. They are liberally reproduced as under:

Penalties can also be imposed in case of violation of the provisions of the Act or the rules or the regulations. However, the SEBI has no jurisdiction to prohibit issue of securities or preventing siphoning of funds or assets stripping by any company. While the SEBI can call for information from intermediaries, it cannot call for information from any bank and other authority or board or corporation established or constituted by or under any Central, State or Provincial Act . The SEBI cannot retain books of accounts, documents, etc., in its custody. Under the existing provisions contained in the Securities and Exchange Board of India Act, 1992 , the SEBI cannot issue commissions for the examination of witnesses or documents. Further, the SEBI has pointed out that existing penalties are too low and do not serve as effective deterrents. At present, Under Section 209A of the Companies Act, 1956, the SEBI can conduct inspection of listed companies only for violations of the provisions contained in sections referred to in Section 55A of that Act but it cannot conduct inspection of any listed public company for violation of the SEBI Act or rules or regulations made thereunder.

3. In addition, growing importance of the securities markets in the economy has placed new demands upon the SEBI in terms of organization structure and institutional capacity. A need was therefore felt to remove these shortcomings by strengthening the mechanisms available to the SEBI for investigation and enforcement so that it is better equipped to investigate and enforce against market malpractices.

4. In view of the above, the Securities and Exchange Board of India Digitally Signed (Amendment) Ordinance, 2002 (6 of 2002) was promulgated on the By:PRATIMA Signing Date:24.07.2023 13:01:47

29th October, 2002 to amend the Securities and Exchange Board of India Act, 1992 .

5. It is now proposed to replace the Ordinance by a Bill, with, inter alia, the following features

(a) increasing the number of members of the SEBI from six (including Chairman) to nine (including Chairman);

(b) conferring power upon the Board, for,

(i) calling for information and record from any bank or other authority or Board or corporation established or constituted by or under any Central, State or Provincial Act in respect of any transaction in securities which are under investigation or inquiry by the Board;

(ii) passing an order for reasons to be recorded in writing, in the interest of investors or securities market, either pending investigation or enquiry or on completion of such investigation or inquiry for taking any of the following measures, namely, to- (A) suspend the trading of any security in a recognized stock exchange;

(B) restrain persons from accessing the securities market and prohibit any person associated with securities market to buy, sell or deal in securities;

(C) suspend any office-bearer of any stock exchange or self- regulatory organization from holding such position; (D) impound and retain the proceeds or securities in respect of any transaction which is under investigation; (E) attach, after passing of an order on an application made for approval by the Judicial Magistrate of the first-class having jurisdiction, for a period not exceeding one month, one or more bank account or accounts of any intermediary or any person associated with the securities market in any manner involved in violation of any of the provisions of this Act, or the rules or the regulations made thereunder;

(F) direct any intermediary or any person associated with the securities market in any manner not to dispose of or alienate an asset forming part of any transaction which is under investigation;

(iii) regulating or prohibiting for the protection of investors, issue of prospectus, offer document or advertisement soliciting money for issue of securities;

(iv) directing any person to investigate the affairs of intermediary Signature Not Verified or person associated with the securities market and to search Digitally and Signed By:PRATIMA seize books, registers, other documents and records considered Signing Date:24.07.2023 13:01:47

necessary for the purposes of the investigation, with the prior approval of a Magistrate of the first class.

(v) passing an order requiring any person who has violated or is likely to violate, any provision of the SEBI Act or any rules or regulations made thereunder to cease and desist for committing any causing such violation;

(c) prohibiting manipulative and deceptive devices, insider trading, fraudulent and manipulative trade practices, market manipulation and substantial acquisition of securities and control;

(d) crediting sums realized by way of penalties to the Consolidated Fund of India;

[Emphasis supplied]

47. In Sunil Krishnan Khaitan (supra), the Hon‟ble Supreme Court in paragraph no.81, made the following observation:

[Emphasis supplied]

48. After the decision of the Hon‟ble Supreme Court in Sahara India Real Estate Corporation Limited (supra), the SEBI Act ,Not Signature 1992 Verified Digitally Signed By:PRATIMA was again amended through the Securities Laws (Amendment) Act, Signing Date:24.07.2023 13:01:47

2014. The material sections of the amending Act are reproduced as under:

49. As on date, Section 11 of the SEBI Act, 1992, which provides for the functions of SEBI, reads as under:

(2) Without prejudice to the generality of the foregoing provisions, the measures referred to therein may provide for--

(a) regulating the business in stock exchanges and any other securities markets;

(b) registering and regulating the working of stock brokers, sub- brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with securities markets in any manner;

(ba) registering and regulating the working of the depositories, participants, custodians of securities, foreign institutional investors, credit rating agencies and such other intermediaries as the Board may, by notification, specify in this behalf;

(c) registering and regulating the working of venture capital funds and collective investment schemes], including mutual funds;

(d) promoting and regulating self-regulatory organisations;

(e) prohibiting fraudulent and unfair trade practices relating to securities markets;

(f) promoting investors' education and training of intermediaries of securities markets;

(g) prohibiting insider trading in securities;

(h) regulating substantial acquisition of shares and take-over of companies;

(i) calling for information from, undertaking inspection, conducting Digitally Signed inquiries and audits of the stock exchanges, mutual funds, other By:PRATIMA Signing Date:24.07.2023 13:01:47

persons associated with the securities market intermediaries and self-regulatory organisations in the securities market; (ia) calling for information and records from any person including any bank or any other authority or board or corporation established or constituted by or under any Central or State Act which, in the opinion of the Board, shall be relevant to any investigation or inquiry by the Board in respect of any transaction in securities;

(ib) calling for information from, or furnishing information to, other authorities, whether in India or outside India, having functions similar to those of the Board, in the matters relating to the prevention or detection of violations in respect of securities laws, subject to the provisions of other laws for the time being in force in this regard:

50. The SEBI Act, 1992 through Section 11B(1)(iii)(a) accords power to SEBI to direct any person or class of persons referred to in Section 12 of the SEBI Act, 1992 or persons associated with the securities market. The section is reproduced as under:

[Emphasis supplied]

51. Similarly, Regulation 35 of the Regulations, 2008 accords powers to SEBI to issue directions in order to secure the interest of investors. It reads as under:

52. An intermediary is then defined under Regulation 2(1)(g) of the Regulations, 2008 in the following words:

[Emphasis supplied]

53. Section 12 of the SEBI Act, 1992 provides for Registration of stock brokers, sub-brokers, share transfer agents, etc., it reads as under:

54. Securities and Exchange Board of India (Bankers to an Issue) Regulations, 1994 in Regulation 2(aa) defines „banker to an issue‟ and in Regulation 2(e) defines a „scheduled bank‟, which read as under:

55. The Second Schedule of the Reserve Bank of India Act, 1934 then provides for ICICI Bank Ltd. i.e., the petitioner bank.

56. The question that then arises before this court is--whether the persons or class of persons referred to in Section 12 can be made subject to the powers under Section 11B prior to the registration as provided for under Section 12 of the SEBI Act, 1992. In other words, do the persons or classes of persons referred to in Section 12 necessarily have to be registered with SEBI in order to be subject to its Signature Not Verified powers under Section 11B . Digitally Signed By:PRATIMA Signing Date:24.07.2023 13:01:47

57. The precise wording of the provision under Section 11B(1)(iii)(a) may be scrutinised. It states "any person or class of persons referred to in Section 12 " as opposed to "any person or class of persons registered under Section 12 ". The expressions "registered with the board" or "registered as an intermediary" are liberally used by the legislature under Chapter VIA of the SEBI Act, 1992 as also may be seen under Section 11AA of the SEBI Act, 1992.

58. On the other side, Regulations, 2008 under Regulation 2(1)(g) define "intermediary", and reference the persons under Section 12 in a manner similar to the manner in which it is referred under Section 11B(1)(iii)(a) . It reads as under:

[Emphasis supplied]

59. It can thus be seen that the SEBI Act, 1992 and the Regulations framed under it, employ references to the entities listed under Section 12 in two ways, first is by referring to them post the registration, and the second is a reference to the persons or class of persons in simpliciter i.e., without the qualification of registration under Section 12 of the SEBI Act, 1992.

60. It is also of importance to consider that the exhaustive list provided under Section 12 is not repeated in any part of the SEBI Act, 1992 . It thus gives credence to the point that if a provision under the Signature Not Verified SEBI Act, 1992, intends to refer to the persons or class of Signed Digitally By:PRATIMA persons Signing Date:24.07.2023 13:01:47

enumerated under Section 12 with the qualification of registration, words to that effect, must be provided for, in the provision making the reference to the Section.

61. There is thus only one plain meaning that can be given to Section 11B(1)(iii)(a) , it being, that persons or class of persons referred to in Section 12 , are referred irrespective of the registration under Section 12 . In other words, in order for Section 11B(1)(iii)(a) to be attracted, one may only need to fall in the person or class of persons referred to in Section 12 irrespective of their registration with SEBI.

62. It may be true that this construction, casts the web of powers that SEBI enjoys, to a larger degree than the other narrower construction would have. But merely on the basis of the consequences, this court cannot limit the plain meaning of a text.

63. In this regard, GP Singh‟s Principles of Statutory Interpretation 15th Ed., pp. 38-39 notes as under:

64. On similar footing, Craies on Legislation, 9th Ed., describes construction according to plain meaning as the cardinal rule. On page 611, paragraph no.17.1.1 the rule is described in the following words:

[Emphasis supplied]

65. On consequences of clear language, page 613, paragraph no.17.1.4 of Craies on Legislation (supra) the following is stated:

Emperor v Benoarilal Sarma , AIR 1945 PC 48, p 53.

Kanailal Sur v Paramnidhi Sadhu Khan, AIR 1957 SC 907, p 910 : (1958) SCR 360. 60 Signature Not Verified 4 Co. Isnt. 330.

61 Digitally Signed Capper v. Baldwin [1965] 2 QB 53, 61 per Lord Parker CJ. By:PRATIMA 62 (1832) 2 D. & Cl. (HL) 480, 489. Signing Date:24.07.2023 13:01:47

66. Indeed it is the case, that this traditional rule has now become subject to the qualification that absurd results must be avoided, but the present case does not fall under the exceptions to the said rule. We are thus left with the plain meaning of the provision.

67. This court is therefore of the opinion that Section 11B(1)(iii)(a) of the SEBI Act, 1992 allows for directions to be given to persons or class of persons referred to in Section 12 of the SEBI Act, 1992 irrespective of the persons or class of persons being registered with SEBI.

68. Broad powers are given to SEBI under Section 11B of the SEBI Act, 1992 and Regulation 35(e) of the Regulations, 2008. While Regulation 35(e) does not explicitly provide against whom directions can be passed under this Regulation. It can undeniably be passed against entities mentioned under Regulation 35 itself, including intermediaries and persons associated with the securities market.

69. Section 11B of the SEBI Act, 1992, explicitly provides that directions can be issued to any person or classes of persons referred to in Section 12 or persons associated with the securities market.

Digitally Signed By:PRATIMA 63 (1850) 20 LJCP 33, 35. Signing Date:24.07.2023 13:01:47

70. Indeed the power to direct a bank is necessary for the proper functioning of SEBI. Such powers are incidental to ensuring that the purpose of the investigation or enquiry conducted by SEBI actually fructifies. But for this power, an individual may, without more, dissipate its assets.

71. The person or entity who acquires or collects assets through questionable means, may, as soon as they are informed of investigations or enquiries being initiated against them, liquidate and transfer their assets in a form and place where they are beyond the reach of SEBI. It would be unwise to construct the provisions of the SEBI Act, 1992 and the Regulations framed thereunder, in a manner that the aforesaid effect is reached.

72. However, it is worthwhile to note that the powers so conferred upon SEBI under the SEBI Act, 1992 need to be exercised in a manner such that they do not come in conflict with, or curtail the effect of, other laws. Meaning thereby, that the exercise of power by SEBI, which is conferred upon it by the SEBI Act, 1992 remain a legal and legitimate exercise of power only, and insofar as, it does not breach the mandate of other laws.

73. In the facts of the instant case, SEBI does have the power to direct the petitioner bank, however, that power must be exercised with due caution. It must not be exercised so as to curtail the effect of other laws.

74. From the above analysis, it can be concluded that SEBI is possessed with powers under the SEBI Act, 1992 to direct the petitioner bank in specific, and banks in general, regardless of them being registered with SEBI. Signature Not Verified Digitally Signed By:PRATIMA Signing Date:24.07.2023 13:01:47

75. Having decided on competency, it must now be examined whether the said Orders prevent the petitioner bank from alienating the mortgaged property of respondent no.3 and 4.

76. In order to better appreciate the tenor of the said Orders, their material parts are reproduced as under. The relevant portion of the Order dated 29.05.2018 passed by the Whole Time Member of SEBI reads as under:

77. The material part of the confirmatory order dated 14.12.2018 passed by Whole Time Member of SEBI, reads as under:

78. It may be seen that there are three species of directions that are issued by SEBI in its order dated 29.05.2018, which were later confirmed by the order dated 14.12.2018. The first are directions that are issued to specific persons and entities. In this are included the directions found in paragraph nos.27(a)-(d). The second species relate Signature to directions issued to persons and entities connected with Not the Verified Digitally Signed By:PRATIMA securities market them being depositories, registrars and transferSigning Date:24.07.2023 13:01:47

agents. This includes the directions in paragraph nos.27(f) and (g). Third category relate to directions issued to persons and entities that are neither necessarily part of the investigation, nor compulsorily connected with the securities market. This includes directions in paragraph nos.27(e) and (h) and 30.

79. Ex facie it may be seen that the petitioner bank is not a registrar to an issue or a share transfer agent, however it may be briefly examined whether the petitioner bank is a 'depository', and therefore falls under the second species of directions. The word 'depository' has not been defined under the SEBI Act, 1992 , however, Section 2(2) of the SEBI Act, 1992 provides that words and expressions that remain undefined under the SEBI Act, 1992 shall borrow their meanings from the Securities Contracts (Regulations) Act, 1956 or the Depositories Act, 1996 . Section 2(2) of the SEBI Act, 1992 is reproduced as under:

80. The definition of a 'depository' is not to be found in the Securities Contracts (Regulation) Act, 1956 , however, the Depositories Act, 1996 in Section 2(e) defines the same. It reads as under:

81. It is the case of the petitioner bank that it is not registered with the SEBI, therefore, it does not fall under the second species of Signature Not Verified Digitally Signed By:PRATIMA Signing Date:24.07.2023 13:01:47

directions. It must now be examined whether the petitioner bank could be included under the third category.

82. A perusal of paragraph no.27(e) of the order dated 29.05.2018 would reveal that a general direction is given that the assets of the entities are to be utilized only for the purpose of payment and/or delivery of securities to the clients/investors under the supervision of the concerned stock exchanges.

83. Similarly, paragraph no.27(h) of the order dated 29.05.2018 gives an explicit instruction to banks to ensure that no debit is made from the bank accounts of respondent nos.3 and 4, save and except cases for the payment of money to clients/investors with a written confirmation of the stock exchange.

84. It is certainly the case that the petitioner bank falls under the category of a "bank", therefore directions contained in paragraph no. 27(e) read with paragraph no.30; and in paragraph no.27(h) do apply to the petitioner bank.

85. However, it is of significance to note the true import of the directions. A careful scrutiny of the directions contained in paragraph nos.27(e) and (h), and paragraph no.30, reveal that they do not prevent the petitioner bank from alienating the assets of respondent no.3 and 4, including the mortgaged property.

86. The direction contained in paragraph no.27(e) puts a restriction upon the assets of the "entities" from being alienated. These "entities" are distinct from "persons", a word which finds mention in the directions contained in paragraph nos.27(b)-(d) and (f)-(g).

87. Notably, this classification between "persons" and "entities"

Digitally Signed stems from the direction contained in paragraph no.27(a).

By:PRATIMA This Signing Date:24.07.2023 13:01:47

paragraph enlists certain companies namely F6 Finserve Pvt. Ltd. and F6 Commodities Pvt. Ltd. as well as certain individuals, including respondent nos.3 and 4. The companies, in subsequent paragraphs have been referred to as "entities" while the individuals are termed as "persons".

88. The mortgaged property undoubtedly belongs to respondent nos.3 and 4, who are individuals or "persons" as opposed to "entities". It is therefore the case that the directions contained in paragraph no.27(e) do not prevent the assets of respondent no.3 and 4, including the mortgaged property, from being alienated.

89. Reading the directions in paragraph no.27(e) with paragraph no.30 also offers no assistance to the respondents. The direction contained in paragraph no.30 merely stipulates that the order dated 29.05.2018 is to be communicated to certain entities and persons in order to ensure compliance with the directions in the preceding paragraphs. Thus, paragraph no.30, does not order anything not already ordered, nor does it direct anything not already directed in the preceding directions.

90. Even if paragraph no.30 is to apply to the petitioner bank, it would only amount to a direction to ensure compliance. The petitioner bank, insofar as its compliance is concerned, is only asked to do or forebear from doing what has been stated in the applicable preceding paragraphs. There is nothing in the directions contained in the preceding paragraphs that prevent the petitioner bank from alienating the assets of respondent nos.3 and 4, including the mortgaged property.

91. Further, in terms of the directions contained Signature in paragraph Not Verified Digitally Signed no.27(h), it can be seen that it orders the relevant banks to prevent By:PRATIMA Signing Date:24.07.2023 13:01:47

debits being made in the accounts of the persons and entities so mentioned in the paragraph. It therefore has no relevance or application to the mortgaged property of respondent nos.3 and 4.

92. The confirmatory order dated 14.12.2018, in addition to confirming the ex parte interim order dated 29.05.2018, in paragraph no.27, directs the NSE Defaulters Committee to open and operate a dedicated demat account where all the securities lying in the demat account of F6 Finserve shall be transferred.

93. It further directs the NSE Defaulters Committee to open and operate a dedicated interest bearing bank account with a Nationalized Bank where all the funds lying in the various bank accounts held in the name of F6 Finserve, Mr. Pankaj Goel and Ms. Meenu Goel shall be transferred.

94. Similarly, MCX‟s Defaulter‟s committee was directed to open and operate a dedicated demat account where all the securities lying in the demat accounts of F6 Commodities shall be transferred, and also open a dedicated interest bearing bank account with a Nationalized Bank, in which all the funds lying in the various bank accounts held in the name of F6 Commodities shall be transferred.

95. It is, therefore, clear that the confirmatory order dated 29.05.2018, also does not contain a direction that prevents the petitioner bank from auctioning the mortgaged property.

96. Lastly, the final order dated 09.06.2022 brought on record by respondent nos.1 and 2 also does not contain a specific direction that prevents the petitioner bank from auctioning the mortgaged property.

97. It is therefore seen, that there is no explicit direction to the Signature Not Verified Digitally Signed effect that the assets mortgaged by respondent nos.3 By:PRATIMA and 4 Signing Date:24.07.2023 13:01:47

individually, cannot be disposed of by the petitioner bank to realise the debt owed to it by respondent nos.3 and 4.

98. From the above analysis, it can be concluded that though the said Orders apply to the petitioner bank, and SEBI possesses the requisite legal power to direct the petitioner bank, the precise and specific wording of the directions is not of such a nature that the petitioner bank is prevented from alienating the assets of respondent no.3 and 4, including the mortgaged property.

99. Having come to this conclusion, it is unnecessary to consider whether the said Orders operate in rem or in personam. A finding on the nature of the said Orders cannot modify or alter the content of the direction. The said Orders do contain directions that are applicable to the petitioner bank, and SEBI has powers vested in it by law, however, the precise wording of the directions contained within them, does not contain an order that prevents the petitioner bank from dealing with the property of respondent nos.3 and 4 which is mortgaged to it, and realising it, in accordance with law.

100. That being the case, this courts finds it unwarranted to decide upon the academic issue whether orders passed under Sections 11(4) , 11B and 11D of the SEBI Act, 1992 and Regulation 35 of the Regulations, 2008 operate in rem or in personam.

101. This court must now consider the issue relating to the impugned e-mails, including the nature of the impugned emails.

102. In National Securities Depository Ltd. (supra) while dealing with the aspect related to the nature of quasi-judicial orders, the Hon‟ble Supreme Court cited with approval Shivji Nathubhai v.

Union of India & Ors.64, in which after setting out Lord Justice Atkin‟s passage in Province of Bombay v. Khushaldas S. Advani65, the Apex Court had held the following three, as requisites, that need to be fulfilled, in order for an administrative act to be characterised as quasi-judicial--(i) there must be legal authority; (ii) this authority must be to determine questions affecting the rights of subjects; and

(iii) there must be a duty to act judicially.

103. Further, in HB Stockholdings Limited (supra), the nature and meaning of an "order" was expounded upon. It was ruled that an order is primarily a decision which has the effect of a command, whether called by such name or not, and is distinguishable from an advice or request, by the nature of the consequence that may flow from the non- implementation of the same. Furthermore, it was held that in order to ascertain whether a communication or decision amounts to an order, its substance and not its form has to be seen. If a particular direction, request or observation is binding and has penal consequences for its violation, the same will have to be treated as an order.

104. The material part of the e-mail dated 29.01.2021 reads as under:

interest or investment or charge in any of such assets excluding money lying in bank accounts except with the prior permission of SEBI..."

5. Vide email dated 29.05.2018 and 14.12.2018 the Copy of the order was also sent to ICICI bank. For reference the copy of the orders is being enclosed herewith. Considering the above directions are in place you are advised to ensure compliance of SEBI orders."

[Emphasis supplied]

105. The material part of the e-mail dated 18.03.2021 reads as follows:

[Emphasis supplied]

106. Applying the ruling of Stockholdings Limited (supra), the present impugned e-mails are to be distinguished from orders. The three conditions as stated in Shivji Nathubhai (supra), which are to be fulfilled, in order for the impugned e-mails to be deemed quasi- judicial orders, are also not fulfilled. The impugned e-mails are neither by an authority that is to determine questions affective the rights of subjects nor was respondent no.1 under a duty to act judicially when Signature Not Verified Digitally Signed By:PRATIMA he had sent the impugned e-mails. Signing Date:24.07.2023 13:01:47

107. The impugned e-mails are thus communicative in nature.

108. The e-mail dated 29.01.2021 informs the petitioner bank of the existence of the said Orders, cites paragraph no.27(d) of the order dated 29.05.2018 and advises the petitioner bank to comply with the same. The e-mail dated 18.03.2021 declares that the said Orders operate in rem, they are applicable to the petitioner bank, the act of the petitioner bank wanting to auction the mortgaged property is "inappropriate", and that the petitioner bank is to comply with the directions in the said Orders.

109. Though not properly framed, the emails, in effect, communicate that the said Orders contain directions, including the direction in paragraph no.27(d) of the order dated 29.05.2018, which is applicable to the petitioner bank as the said Orders operate in rem, and the petitioner bank, is therefore, prevented from auctioning the mortgaged property. This court believes this to be faulty reasoning.

110. As had been explained in the preceding paragraphs, the order dated 29.05.2018, in exclusion to the direction in paragraph no.27(e), contains specific directions to specific entities and persons. The direction in paragraph no.27(e) as well, relates to the assets of the entities and not of the individuals. The assets of respondent nos.3 and 4 therefore fell outside the scope of the direction contained in paragraph no.27(e).

111. A finding that the said Orders operate in rem, cannot change the material terms of the direction. They cannot make the direction applicable to persons to whom it is not applicable. For instance, it cannot be the case, that a direction that requires a person „x‟ to do or to omit from doing a particular act, when found to be in rem,Signature requiresNot the Verified Digitally Signed rest of the world, including persons and entities notBy:PRATIMA specifically Signing Date:24.07.2023 13:01:47

directed as also those completely unconnected with the proceedings, to ensure that „x‟ actually does or forebears from doing that particular act. The reasoning contained in the impugned emails is thus erroneous.

112. Therefore, the said e-mails, expand the scope of the said Orders, and are inconsistent with it.

113. From the abovementioned analysis, it can be concluded that the impugned emails were erroneous and wholly without jurisdiction.

114. This court must now holistically examine the issue of maintainability in light of the above reached conclusions on the ancillary and incidental issues.

115. In Thansingh Nathmal (supra), it was held by the Hon‟ble Supreme Court that despite the wording of Article 226 of the Constitution of India being broad, there must be certain self-imposed limitations on this discretionary relief, and they must be of a nature, that would disallow Article 226 being treated as an alternative remedy. Conversely then, in the presence of an existing legal machinery for the resolution of a dispute or for the granting of relief so prayed in an Article 226 petition, the writ jurisdiction of a High Court should not be exercised.

116. Further in Nivedita Sharma (supra), the Apex Court, while approving Thansingh (supra) held that if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance, a relief under Article 226 of the Constitution shall not lie.

117. In Greatship (India) Ltd. (supra), again the Hon‟ble Supreme Signature Not Verified Digitally Signed Court set aside the order of the High Court on the grounds By:PRATIMA that the Signing Date:24.07.2023 13:01:47

High Court had erred in entertaining a writ petition under Article 226 of the Constitution of India against an assessment order passed by the Assessing Officer under the Maharashtra Value Added Tax Act, 2002 and the Central Sales Tax Act, 1956 , bypassing the statutory remedies.

118. The Hon‟ble Supreme Court in Gurdev Singh (supra), while relying upon Prof. Wade on Administrative Law, 6th Ed., page no. 352, stated as under:

119. In Kuber Floritech Ltd. (supra) and Balvir Singh (supra), this court, on the grounds that an alternate efficacious remedy within the statute is available, dismissed writ petitions wherein orders passed by SEBI were under challenge.

120. In Raj Kumar Shivhare (supra) the Apex Court ruled that the Hon‟ble High Court patently erred in allowing a writ petition in exercise of powers under Article 226 of the Constitution of India even when the petitioner had failed to demonstrate as to why the alternative statutory remedy in the form of an appeal under Section 35 of the Foreign Exchange Management Act, 1999 is not efficacious.

121. Further, Kuntesh Gupta (supra) and Whirlpool Corporation (supra), have been relied on; the said cases exhort that in cases where the impugned order/action is wholly without jurisdiction and in cases where the principles of natural justice have not been followed, the existence of an alternate remedy shall not act as a bar for the invocation of a High Court‟s powers under Article 226. The material part of Whirlpool Corporation (supra) is reproduced as under:

15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this court not to operate as a bar in at least three contingencies, namely, where the Writ Petition has been filed for the enforcement of any of the Fundamental rights or where there has been a violation of the principle of natural justice or where the order or proceedings are wholly without jurisdiction or the vires of an Act is challenged. ...

20. Much water has since flown beneath the bridge, but there has been no corrosive effect on these decisions which though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a Writ Petition under Article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the Writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation."

[Emphasis supplied] Signature Not Verified Digitally Signed By:PRATIMA Signing Date:24.07.2023 13:01:47

122. In a recent pronouncement of the Hon‟ble Supreme Court in the case of Godrej Sara Lee Ltd. v. Excise & Taxation Officer.66 , while elaborating upon the distinction between maintainability and entertainability of a petition, the Hon‟ble Supreme Court clarified that the doctrine of alternate remedy belongs to the sphere of entertainability. There is thus, not an absolute bar that is placed upon the powers of the High Court.

123. The Hon‟ble Supreme Court further gave a finding that in cases where the dispute is purely legal, and does not involve disputed questions of fact but only questions of law, then the same should be decided by the High Court instead of dismissing the writ petition on the grounds of alternate remedy. The material part of the judgement in Godrej Sara Lee Ltd. (supra) is reproduced as under:

goes to the root of the matter and if such objection were found to be of substance, the courts would be rendered incapable of even receiving the lis for adjudication. On the other hand, the question of "entertainability" is entirely within the realm of discretion of the high courts, writ remedy being discretionary. A writ petition despite being maintainable may not be entertained by a high court for very many reasons or relief could even be refused to the petitioner, despite setting up a sound legal point, if grant of the claimed relief would not further public interest. Hence, dismissal of a writ petition by a high court on the ground that the petitioner has not availed the alternative remedy without, however, examining whether an exceptional case has been made out for such entertainment would not be proper.

8. That apart, we may also usefully refer to the decisions of this Court reported in (1977) 2 SCC 724 ( State of Uttar Pradesh v. Indian Hume Pipe Co. Ltd. ) and (2000) 10 SCC 482 ( Union of India v. State of Haryana ). What appears on a plain reading of the former decision is that whether a certain item falls within an entry in a sales tax statute, raises a pure question of law and if investigation into facts is unnecessary, the high court could entertain a writ petition in its discretion even though the alternative remedy was not availed of; and, unless exercise of discretion is shown to be unreasonable or perverse, this Court would not interfere. In the latter decision, this Court found the issue raised by the appellant to be pristinely legal requiring determination by the high court without putting the appellant through the mill of statutory appeals in the hierarchy. What follows from the said decisions is that where the controversy is a purely legal one and it does not involve disputed questions of fact but only questions of law, then it should be decided by the high court instead of dismissing the writ petition on the ground of an alternative remedy being available."

[Emphasis supplied] Signature Not Verified Digitally Signed By:PRATIMA Signing Date:24.07.2023 13:01:47

124. From the conspectus of authorities set out above, the position of law that emerges is that normally a High Court may not entertain a writ petition in which the reliefs prayed for, can be claimed from an alternate forum; however, this self-imposed rule is of convenience and a High Court may, in an appropriate circumstance, choose to entertain a writ petition despite there being an alternative remedy available to the petitioner.

125. This court must now consider the judgements relied upon by the learned senior counsel relating to the nature of appeals under the SEBI Act, 1992 .

126. In National Securities Depository Ltd (supra), the Hon‟ble Supreme Court decided upon the issue--whether an administrative circular that is issued by SEBI under Section 11(1) of the SEBI Act, 1992 can be the subject-matter of an appeal under Section 15T . While ruling on the nature of appeals, it was held that Section 15T envisages appeals by persons aggrieved not only by an order of SEBI made under the SEBI Act, 1992 , Rules or Regulations, but by orders made by an adjudicating officer under the Act. Under Section 15I , SEBI can appoint an officer not below the rank of a Division Chief to be an adjudicating officer to hold an inquiry, give a hearing to the person concerned and thereafter impose a penalty, all of which points to only quasi-judicial functions being exercised by such officers.

127. After having considered a catena of pronouncements by the Hon‟ble Supreme Court, it was held that administrative orders such as circulars referable to Section 11(1) of the SEBI Act, 1992 are outside the appellate jurisdiction of the Tribunal. Paragraph no.25 of the judgement is reproduced as under:

128. Further, in HB Stockholdings Limited (supra) on the issue of maintainability of an appeal, it was held that in order to ascertain whether a communication or decision amounts to an order within the meaning of Section 15T , its substance and not its form has to be seen. If a particular direction, request or observation is binding and has penal consequences for its violation, the same will have to be treated as an order.

129. Subsequently, Radha Krishan Industries, State of H.P. (supra), Jashbhai Motibhai (supra), Ramprasad Somani (supra), detail out the exceptions to the rule of alternate remedy and the importance of a legal infringement for having a locus standi.

130. It is pertinent to mention an important finding in Ramprasad Somani (supra), it being that the meaning of the words "person aggrieved" as they appear in Section 15T of the SEBI Act, 1992 are nowhere defined and must be construed in the context in which they appear, and they are to be determined whilst considering whether the rights of a person, who is aggravating his concern, has been infringed.

131. Considering the findings reached by this court in the preceding Signature Not Verified paragraphs, this court is of the opinion that the said Orders areSigned Digitally rightly By:PRATIMA Signing Date:24.07.2023 13:01:47

not challenged by the petitioner bank. The petitioner bank cannot be said to be aggrieved by the said Orders, as they do not prevent the petitioner bank from auctioning the mortgaged property of respondent nos.3 and 4.

132. The argument of the learned counsel for respondent nos.1 and 2--that the doctrine of alternative remedy applies in the present case, is therefore found to be misplaced. The petitioner bank cannot challenge an order which it is not aggrieved by. The entire edifice of the petitioner bank‟s case rests upon the said Orders not preventing them from realising their debts by auctioning the mortgaged property. The petitioner bank, therefore, impugned the e-mails dated 29.01.2021 and 18.03.2921 and not the said Orders.

133. The cases of Nivedita Sharma (supra), Thansingh Nathmal (supra) and State of Maharashtra (supra) are of, therefore, no help to respondents nos.1 and 2, as the said cases have application only in cases where there is, in fact, an alternative remedy that is available to a petitioner. The reliance of respondent nos.1 and 2, on the approval of Prof. Wade‟s words in Gurdev Singh (supra) is correct, they are again reproduced hereunder:

134. In the present circumstances, this court is of the opinion that the petitioner bank is the right person seeking the right remedy in the right proceedings. The judgments delivered by this court in Kuber Floritech Ltd (supra) and Balvir Singh (supra), are simply not applicable in the instant case as what was assailed in the abovementioned judgements were orders, moreover the court had Signature Not Verified Digitally Signed By:PRATIMA Signing Date:24.07.2023 13:01:47

found the concerned orders to be appealable under Section 15T of the SEBI Act, 1992.

135. Further, Raj Kumar Shivhare (supra), is inapplicable as the present case has a different factual matrix than the judgement cited. The petitioner bank has been successful in convincing this court as to why the statutory appeal is not available to them.

136. From the above analysis, it can be concluded that the petitioner bank has not committed an error by choosing not to impugn the said Orders. The petitioner bank assailing the e-mails/communications dated 29.01.2021 and 18.03.2021 and not impugning the said Orders, while the said Orders remain standing, does not prevent this court from finding the present petition to be maintainable.

137. It must also be seen that the e-mail dated 29.05.2018 was sent by respondent no.1, after being agitated by the petitioner bank‟s public notice for the auction of the mortgaged property. The communications, though couching themselves under the garb of the said Orders, in effect direct the petitioner bank to not proceed with the auction of the mortgaged property. The statutory right of the petitioner bank guaranteed by the SARFAESI Act, 2002 , is thus thwarted by the impugned e-mails. There is sufficient obstacle caused to the petitioner bank by their financial interest being compromised. An email from the Deputy General Manager of SEBI i.e., respondent no.1, that unfairly prevents the petitioner bank from exercising its legal rights, is sufficient cause to approach this writ court.

138. This court is, therefore of the considered opinion that since the impugned e-mails/communications were erroneous and wholly without jurisdiction; and the said Orders do not prevent Signature the petitioner Not Verified Digitally Signed By:PRATIMA Signing Date:24.07.2023 13:01:47

bank from auctioning the mortgaged property, the present writ petition is maintainable.

139. This court must now decide the issue, which was argued at length before this court, whether SEBI in exercise of powers conferred under the SEBI Act, 1992 could prevent the petitioner bank from proceeding under the SARFAESI Act, 2002 .

140. In Madras Petrochem Ltd. (supra), the Hon‟ble Supreme Court decided upon the inter-play between the SARFAESI Act, 2002 , RDB Act, 1993 and the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter „SICA Act, 1985‟). The foundational question decided by the Hon‟ble Supreme Court was--whether SICA Act, 1985 prevails over SARFAESI Act, 2002 . The issue arose on the interpretation of Section 37, specifically the expression "any other law for the time being in force" in light of the non-obstante clause under Section 35 .

141. The Hon'ble Supreme Court in paragraph no.13 of the said judgment recognised the differing aspects dealt with by the different statutes involved in the dispute, which is reproduced as under:

142. After emphasising the purpose for which the SARFAESI Act, 2002 came into force, and harmoniously interpreting Section 35 and Section 37 of the SARFAESI Act, 2002, the Apex Court came to the conclusion that the scope of the expression "any other law for the time being in force" in Section 37 needs to be limited so as to exclude the SICA Act, 1985.

143. The case of KSL & Industries Ltd. v. Arihant Threads Ltd.67 arose by way of a reference made by a two-judge Bench of the Hon‟ble Supreme Court wherein Hon‟ble Justice C.K. Thakker and Hon‟ble Justice Atlamas Kabir had had a difference of opinion on the interpretation of Section 35 of the RDB Act, 1993. Hon‟ble Justice S.A. Bobde authoring for the three-judge Bench resolved the conflict between the SICA Act, 1985 and the RDB Act, 1993 by giving a finding in favour of the SICA Act, 1985. Paragraph nos.37-41 of the judgment are reproduced as under:

It states that this overriding effect is in relation to certain laws and that the RDDB Act shall be in addition to and not in abrogation of, such laws. The SICA is undoubtedly one such law.

38. The effect of Sub-section (2) must necessarily be to preserve the powers of the authorities under the SICA and Signature save theNot Verified Digitally Signed By:PRATIMA 67 (2008) 9 SCC 763 Signing Date:24.07.2023 13:01:47

proceedings from being overridden by the later Act i.e. the RDDB Act.

39. We, thus, find a harmonious scheme in relation to the proceedings for reconstruction of the company under the SICA, which includes the reconstruction of debts and even the sale or lease of the sick company's properties for the purpose, which may or may not be a part of the security executed by the sick company in favour of a bank or a financial institution on the one hand, and the provisions of the RDDB Act, which deal with recovery of debts due to banks or financial institutions, if necessary by enforcing the security charged with the bank or financial institution, on the other.

40. There is no doubt that both are special laws. SICA is a special law, which deals with the reconstruction of sick companies and matters incidental thereto, though it is general as regards other matters such as recovery of debts. The RDDB Act is also a special law, which deals with the recovery of money due to banks or financial institutions, through a special procedure, though it may be general as regards other matters such as the reconstruction of sick companies which it does not even specifically deal with. Thus, the purpose of the two laws is different.

41. Parliament must be deemed to have had knowledge of the earlier law i.e., SICA, enacted in 1985, while enacting the RDDB Act, 1993. It is with a view to prevent a clash of procedure, and the possibility of contradictory orders in regard to the same entity and its properties, and in particular, to preserve the steps already taken for reconstruction of a sick company in relation to the properties of such sick company, which may be charged as security with the banks or financial institutions, that Parliament has specifically enacted Sub-section (2). The SICA had been enacted in respect of specified and limited companies i.e., those which owned industrial undertakings specified in the schedule to the IDR Act , as mentioned earlier, whereas the RDDB Act deals with all persons, who may have taken a loan from a bank or a financial institution in cash or otherwise, whether secured or unsecured etc."

[Emphasis supplied]

144. The judgement of KSL Industries Ltd. (supra) is, however, distinguishable. As was noted in paragraph no.35 of Madras Petrochem Ltd. (supra), the non-obstante clause contained in Section 34(1) of the RDB Act, 1993 explicitly provides for a carve out, and makes itself subject to Section 34(2) . This is not the case with the non- obstante clause contained in Section 35 of the SARFAESI Act, 2002.

This is an important distinction between the provisionsDigitally of the RDB Signed By:PRATIMA Signing Date:24.07.2023 13:01:47

Act, 1993 and the SARFAESI Act, 2002 as it affects the scope of the non-obstante clause, and the effect it shall have. In order to better appreciate the difference, the provisions are reproduced.

145. Section 34 of the RDB Act, 1993 is reproduced as under:

[Emphasis supplied]

146. Sections 35 and 37 of the SARFAESI Act, 2002 read as under:

[Emphasis supplied]

147. The important finding made by the Hon‟ble Supreme Court in paragraph no.35 of Madras Petrochem Ltd. (supra) relating to the ambit and scope of the non-obstante clauses contained in the SARFAESI Act, 2002 and the RDB Act, 1993 reads as under:

[Emphasis supplied]

148. It can thus be seen that the effect of the non-obstante provision of the RDB Act, 1993 is expressly curtailed by the rider provided in the Section itself, it being the carve out for sub-section (2). This saving for sub-section (2) is done in a manner, such that the effect of the non-obstante clause is curtailed. Sub-section (2) is then interpreted in light of the curtailed non-obstante clause. In other words, while interpreting sub-section (2) i.e., the non-derogation provision, the non- obstante clause contained in Section 34(1) has no application. This is not the case under the SARFAESI Act, 2002 . The non-obstante clause contained in Section 35 of the SARFAESI Act, 2002 is not made subject to Section 37. Section 37 of the SARFAESI Act, 2002 must then be construed in light of the unfettered non-obstante clause under Section 35 .

149. In Mathew Varghese (supra), the Hon‟ble Supreme Court had an occasion to consider the meaning of the expression "not in derogation of" in Section 37 of the SARFAESI Act, 2002 and the effect it shall have. In paragraph no.43, the Hon‟ble Supreme Court stated as under:

[Emphasis supplied]

150. Recently, the Hon‟ble Supreme Court in the case of Authorised Officer State Bank of India v. C. Natarajan & Anr.68 , made significant findings relating to the interplay between Section 35 and Section 37 of the SARFAESI Act, 2002. The material portion of paragraph no.23 of the said decision reads as under:

[Emphasis supplied]

151. The judgement of the House of Lords in the case of Davies (supra), upon which reliance was placed by the learned counsel for respondent nos.1 and 2 must now be carefully considered. The issue in the cited case is not completely applicable to the present case, however, the reasoning may still be noted. The general question framed by Lord Macmillan was:

152. The provision under the Law Reform (Miscellaneous Provisions) Act, 1934, which to some degree is similar to Section 37 of the SARFAESI Act, 2002 reads as under:

153. On the interpretation of the above-mentioned provision, Lord Russel noted as follows:

154. If the aforesaid dicta is applied, then the rights conferred under the SARFAESI Act, 2002 are to be found in addition to the rights conferred under the SEBI Act, 1992 . However, in Davies (supra), the two statutes with which their Lordships concerned themselves were intricately connected. In the present dispute, difficulty would arise in ascertaining how a bank wanting to realise its debts under the process of SARFAESI Act, 2002 could take the aid of the SEBI Act, 1992 . This difficulty may not arise when the question relates to the interplay between the RDB Act, 1993 and the SARFAESI Act, 1992 . Indeed in such a scenario the rights conferred by SARFAESI Act, 1992 can be termed as being in addition to the rights under the RDB Act, 1993.

155. However, there is nothing in the opinion of Lord Russel that allows this court to construe the SEBI Act, 1992 as overriding as also preventing or thwarting the proceedings and actions by banks under the SARFAESI Act, 1992 .

156. Similar is the opinion of the Lord Macmillan on the issue of the construction of the provision. The material part reads as under:

157. It would be difficult to state, as a matter of general proposition, that the cause of action that leads to proceedings under the SARFAESI Act, 2002 and one that triggers actions under the SEBI Act, 1992 are the same. However, it can be safely stated that the rights of action are quite distinct and independent. They may further be applicable on the same set of assets. The issue that then arises is that whereas under

158. In such a scenario the issue becomes whether priority must be given to the general order of SEBI or the proceedings under the SARFAESI Act, 2002 . In light of the unbridled non-obstante clause contained in Section 35 of the SARFAESI Act, 2002; which is not made subject to Section 37 of the SARFAESI Act, 2002, this court finds that the SEBI Act, 1992 must give way to the SARFAESI Act, 2002 .

159. The reliance placed by learned counsel for respondent nos.1 and 2 on Bikram Chatterji (supra), is misplaced primarily because-- firstly, the case related to the Real Estate (Regulation and Signature Not Verified Development) Act, 2016, and the issue in the present caseDigitally is different, Signed By:PRATIMA Signing Date:24.07.2023 13:01:47

similarly facts of Bikram Chatterji (supra) are fundamentally different. In the present case, this court is concerned with the interpretation of a section containing a broadly worded non-obstante clause inserted through the means of an amendment, and the effect it shall have on Section 37 of the SARFAESI Act, 2002 which mentions and mandates the Act to not be in derogation of the SEBI Act, 1992 . Secondly, the factual matrix in Bikram Chatterji (supra) evinces averments of fraud on the part of the banks, the same being absent in the present case.

160. The cases of Deputy Director Directorate of Enforcement Delhi (supra), Bank of Baroda (supra), Solidaire India Ltd. (supra) are again found inapplicable as in the present case a simpliciter conflict between two legislations having non-obstante clause is not present. This court is concerned with the interpretation of Section 37 of the SARFAESI Act, 2002 which mentions and mandates the Act to not be in derogation of the SEBI Act, 1992 , and the subsequent harmonized interpretation that is required. SICOM Ltd. (supra) is again inapplicable as in the present case the rights and interests of SEBI over the mortgaged property cannot be termed as being that of an unsecured creditor, in simpliciter.

161. Further, the said decisions also need to be given weightage in light of the pronouncement of the Hon‟ble Supreme Court in the case of Pegasus Assets Reconstruction P. Ltd. (supra), further applied in Madras Petrochem Ltd. (supra). In paragraph no.51 of Madras Petrochem Ltd. (supra) the Hon‟ble Supreme Court explained the ratio of Pegasus Assets Reconstruction (supra) in the following words:

[Emphasis supplied]

162. In addition to the cases relied upon by the learned senior counsel being considered on merits, the Hon‟ble Supreme Court‟s ruling also provides that decisions relating to statutes other than the SARFAESI Act, 2002 , do not have much persuasive value.

163. This court is, therefore, of the considered opinion that Section 35 of the SARFAESI Act, 2002 is not subject to Section 37 of the SARFAESI Act, 2002. In such a case, the effect of the non-obstante clause cannot be curtailed.

164. In the present factual scenario, it must also be noticed that the two statutes operate in their respective spheres.

165. The material part of the statement of objects and reasons for the SARFAESI Act, 2002 reads as under:

[Emphasis supplied]

166. The object clause of the SEBI Act, 1992 reads as under:

167. It is thus seen that the two Acts operate in different spheres. While the SARFAESI Act, 2002 was enacted to allow the swift realisation of securities, that were registered by banks under the Act; the SEBI Act, 1992 , on the other hand, manifests the intention of the Parliament to protect investors, and confers upon SEBI powers to regulate the securities market. In the process of regulating, SEBI can issue directions to, inter alia, persons, who are found conducting themselves or their business, contrary to the interest of the market.

168. As is in the present case, the action of the petitioner bank is wholly unconnected with the subject-matter of the said Orders. The petitioner bank is attempting to realise its secured asset,Signature which Notis the Verified Digitally Signed mortgage made in favour of the petitioner bank, for the loan taken by By:PRATIMA Signing Date:24.07.2023 13:01:47

respondent nos.3 and 4. The mortgaged property, is neither a security in the context of the securities market nor is associated with such a security, and is also not specifically governed by the SEBI Act, 1992 . There is, therefore, a functional aspect that needs to be considered in the present issue. SEBI and the said Orders function in a field different from the field in which the petitioner bank has taken their actions under the SARFAESI Act, 2002 .

169. The scheme of the statutes would reveal that in the facts and circumstances similar to the present case, a carve can be made to allow banks to realise their security which they had registered through a statutorily prescribed process. Indeed in such a case, the operation of the SARFAESI Act, 2002 is the specific legislation which applies to a specified secured debt while the directions under the SEBI Act, 1992 , which prevent the dissipation or alienation of assets, is the generalised law applicable to a broader set of assets.

170. Such harmonisation should be prioritised so as to prevent the two provisions coming in a direct conflict with each other. The said principle is further noted in GP Singh‟s Principles of Statutory Interpretation 15th Ed., p. 111:

It should not be lightly assumed that "Parliament had given with one hand what it took away with the other". The provisions of one section of a statute cannot be used to defeat those ofSignatureanotherNot Verified "unless it is impossible to effect reconciliation between them".

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same rule applies in regard to sub-sections of a section. In the words of Gajendragadkar, J:

[Emphasis supplied]

171. Indeed the intention of the legislature would get compromised if banks are disallowed from realising their security that they had registered following the statutory scheme. In this context Craies on Legislation, 9th Ed., at pp. 670-671 notes as under:

172. The provisions of the SARFAESI Act, 2002 must then be construed according to the legislative intent.

69 Digitally Signed Madanlal Fakirchand Dudhediya v. Shree Changdeo Sugar Mills Ltd. , AIR 1962 SC 1543.

By:PRATIMA 70 Venkataramana Devaru v. State of Mysore, AIR 1948 SC 255. Signing Date:24.07.2023 13:01:47

173. In order to determine the intent, it would be helpful to employ the mischief rule. A concise explanation of this rule is found in Bennion on Statutory Interpretation, 7th Ed., pp. 329-331.

GENERAL Section 10 .1: Presumption that court to apply remedy provided for the „mischief‟ 10.1 Parliament intends an enactment to remedy a particular mischief. It is presumed therefore that Parliament intends the court, in construing the enactment, to endeavour to apply the remedy provided by it in such a way as to suppress that mischief.

Comment The reason for passing an Act is almost invariably to change the existing law so as to remedy a perceived defect in it. That defect is the 'mischief to which the Act is directed. This chapter is concerned with the mischief and its remedy.

THE MISCHIEF Section 10 .2: Meaning of the „mischief‟ 10.2 (1) The mischief that Parliament intends an enactment to remedy may be either a social mischief which is coupled with a legal mischief, or a purely legal mischief.

(2) A social mischief is a factual situation, present or shortly expected, which Parliament desires to remedy. This may range from something obviously wrong (such as an outbreak of a particular type of antisocial behaviour) to the possibility of improving an already neutral or even beneficial state of affairs. (3) The legal mischief is a condition which constitutes a defect in the law, or is regarded by Parliament as constituting such a defect. The defect may consist of a failure to provide, to the fullest extent possible for no statute law, a remedy for a corresponding social mischief, or it may consist of a purely legal defect in the law without a corresponding social mischief.

Comment Parliament is taken to do nothing without a reason. Therefore there is a reason for the passing of every Act, and for every enactment within it. Signature Not Verified Digitally Signed By:PRATIMA Signing Date:24.07.2023 13:01:47

In almost all cases, the reason for passing an Act is to change the existing law. So the reason for an Act's passing must lie in some perceived defect in the existing law. If the existing law were not considered defective, Parliament would not need or want to change it. That defect is the 'mischief‟ to which the Act is directed."

174. In the Indian context, the said rule has been adopted ever since the case of Bengal Immunity Co v. State of Bihar .71 The mischief sought to be remedied has been adequately captured by the statement of objects and reasons of the SARFAESI Act, 2002 . It is reemphasised below:

[Emphasis supplied]

175. Thus the mischief sought to be cured was the lack of a statutory mechanism that provided, and further allowed, banks to realise their security interests with minimum interference from courts. The SARFAESI Act, 2002 was thus enacted to provide a statutory framework that allows for swifter and prioritised recovery of the bank‟s secured debt. There is thus a clear intention to prioritise the bank‟s realisation of its security under the SARFAESI Act, 2002 .

176. With this legislative intent in mind, the provisions of Section 37 and Section 35 need to be construed.

177. The bare text of Section 37 of the SARFAESI Act, 2002, when read superficially, can allow for two construction depending upon the importance given to different expressions. For clarity, Section 37 is again reproduced as under: Signature Not Verified Digitally Signed By:PRATIMA 71 AIR 1955 SC 661. Signing Date:24.07.2023 13:01:47

[Emphasis supplied]

178. There are thus two aspects of the provision. First is that the Act "shall be in addition to" the second is that it must not be "in derogation of". Indeed they are adjoined by the conjunction „and‟, and must be construed together. But a bare reading may allow both the constructions--those favouring the „non-derogation‟ mandate or the ones supporting the „in addition to‟ endorsement--to be considered as fair.

179. It is, at this stage, that the heading of the provision comes to the assistance of this court. It notes "Application of other laws not barred". A positive mandate is thus inherent in this heading. Conversely, there is an absence of a negative mandate. Meaning thereby, the provision allows for the SARFAESI Act, 2002 to take the aid of the enumerated statutes in order to fulfil its statutory purpose. The provision does not, in any manner, reduce the effect of the SARFAESI Act, 2002 .

180. In this context, Bennion on Statutory Interpretation, 7th Ed., p. 444 notes as under:

As discussed in CHAPTER 2, a variety of headings is used in Acts. Each section, Schedule, Chapter and Part has its own heading and italic headings are often placed above a group of sections or one or more paragraphs of a Schedule. Prior to 2001, sections had sidenotes or marginal notes placed in the margin, rather than a heading placed above, but the word heading' is used to cover them as well.* The correct approach to the use of headings in interpretation was sum-marised by the House of Lords in R v. Montila:

Where a heading differs from the material it describes, this puts the court ne inquiry, but it is most unlikely to be right to allow the plain meaning of the theres to be overridden purely by reason of a heading."

[Emphasis supplied]

181. Similarly, GP Singh‟s Principles of Statutory Interpretation, 15th Ed., pp. 129-130 notes as under:

182. Thus the aid of the heading may be taken to clarify the doubt that an interpreter may have while construing a particular provision. In the present case, this court is merely referring to the heading to further substantiate the finding it has drawn independently. Thus the heading is being treated as buttressing the finding already reached by the court.

183. From the above analysis, it can be concluded that proceedings under the SARFAESI Act, 2002 are to be treated as a carve out, and therefore remain unaffected by, orders under the SEBI Act, 1992 .

184. This court shall now delve into the aspect of the dispute related to the interpretation of Section 26E of the SARFAESI Act, 2002, Section 31B of the RDB Act, 1993 and Section 28A(3) of the SEBI Act, 1992.

185. At the outset, it may be noted that reliance on Section 28A(3) of the SEBI Act, 1992 is misplaced. The present dispute is not concerned with the recovery of amounts by a recovery officer. A bare reading of the provision, would make apparent its inapplicability in the present dispute. Section 28A(3) reads as under:

186. Further, Section 28A(1) reads as follows:

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(b) attachment of the person‟s bank accounts;

(c) attachment and sale of the person‟s immovable property;

(d) arrest of the person and his detention in prison;

(e) appointing a receiver for the management of the person's movable and immovable properties, and for this purpose, the provisions of sections 220 to 227, 228A, 229, 232, the Second and Third Schedules to the Income-tax Act, 1961 (43 of 1961) and the Income-tax (Certificate Proceedings) Rules, 1962, as in force from time to time, in so far as may be, apply with necessary modifications as if the said provisions and the rules made thereunder were the provisions of this Act and referred to the amount due under this Act instead of to income-tax under the Income-tax Act, 1961 .

187. It is for this reason also that M/s. Midfiled Industries Ltd. (supra), has no application in the present dispute. In M/s. Midfiled Industries Ltd. (supra), the High Court of Telangana adjudicated upon the issue--whether recovery proceedings under Section 28A of the SEBI Act, 1992 would have precedence over the SARFAESI Act, 2002 . Importantly, in M/s. Midfiled Industries Ltd. (supra), there was a recovery order passed against the concerned banks therein. In the present case, there is no such order. The said judgement in therefore distinguished.

188. In Commissioner of Sales Tax, Indore (supra), the High Court of Madhya Pradesh adjudicated upon the conflict between the Madhya Pradesh Value Added Tax Act, 2002 and the rights of the petitioner bank therein to realise its assets. The court came to the conclusion, with which this court is in agreement, that in light of Section 31 of the RDB Act being inserted through the Enforcement of Security Interest and Recovery of Debts and Loans and Miscellaneous Provisions Act and the Amendment Act, 2016 (hereinafter 'said Amendment'), doubts regarding primacy between a secured debt and all other debts Signature Not Verified and government dues such as revenue, taxes, cesses andDigitally ratesSigned By:PRATIMAdue to Signing Date:24.07.2023 13:01:47

Central Government, State Government and local authorities, has been settled. The conclusion then reached by the court is that priority must be given to the secured debt.

189. Further, in Assistant Commissioner (CT), Anna Salai-III Assessment Circle (supra) a three-judge Bench decision, authored by Hon‟ble the Chief Justice of the High Court of Madras Sanjay Kishan Kaul (as His Lordship then was), also came to the same conclusion that was reached in the case of Commissioner of Sales Tax, Indore (supra).

190. A judgement by the Division Bench of the High Court of Gujarat in Kalupur Commercial Co-operative Bank Ltd. (supra), unlike The Indian Overseas Bank (supra) and Commissioner of Sales Tax (supra), specifically deals with the issue contended by the respondent nos.1 and 2. It was argued by the learned counsel for the respondent nos.1 and 2 that insofar as the petitioner bank has not initiated any action under RDB Act, 1993, Section 31B of the said Act shall have no operation.

191. In Kalupur Commercial Co-operative Bank Ltd. (supra), the High Court came to the conclusion that irrespective of the then petitioner bank taking action under the SARFAESI Act, 2002 . Section 31B of the RDB Act, 1993 may still be in operation. The said conclusion was reached on the basis --firstly, because Section 31B of the RDB Act, 1993 is a substantive provision and the definition of "secured creditor" as per the RDB Act, 1993 Section 2(la) is the same as the one provided under SARFAESI Act, 2002 ; secondly, because the reason for the introduction of the said Amendment was to provide primacy to the rights of the secured creditors as is seen from the Signature Not Verified statement of objects and reasons of the SARFAESI Act , Digitally 2002Signedand the By:PRATIMA Signing Date:24.07.2023 13:01:47

RDB Act, 1993; thirdly, because by virtue of Section 37 of the SARFAESI Act, 2002 the RDB Act, 1993 and the SARFAESI Act, 2002 are to be read in addition to and not in derogation of each other.

192. The material part of the statements of objects and reasons of the RDB Act, 1993 reads as follows:

193. Sections 31B of the RDB Act, 1993, read as under:

194. Sections 26E of the SARFAESI Act, 2002 read as under:

195. Section 32 of the SEBI Act, 1992 reads as under:

196. This court is in agreement with the decisions of Commissioner of Sales Tax, Indore (supra), and The Indian Overseas Bank (supra), however, their ratios must be understood in the right perspective. The said two decisions deal with a conflict with taxing statutes, meaning thereby statutes not finding mention in Section 37 of the SARFAESI Act, 2002 or Section 34(2) of the RDB Act, 1993.

197. In the present case, however, the SEBI Act, 1992 has its express mention in Section 37 of the SARFAESI Act, 2002. The manner of interpreting a conflict between SARFAESI Act, 2002 or RDB Act, 1993 and a taxing statute not mentioned in the non-derogation provision, shall, therefore, be fundamentally different from the present case. However, the analysis in Kalupur Commercial Co-operative Bank Ltd. (supra), on Section 31B of the RDB Act, 1993 being attracted regardless of the actions being initiated by a Bank under SARFAESI Act , is relevant.

198. This court is in agreement with the views expressed by the High Court of Gujarat that regardless of the proceedings or actions being initiated under the SARFAESI Act, 2002 , recourse may be taken of the RDB Act, 1993, by virtue of Section 37 of the SARFAESI Act, 2002.

199. The subsequent consideration then relates to Section 26E of the SARFAESI Act, 2002. Section 26E provides that the debt due to any Signature Not Verified secured creditor shall be paid in priority over all other Digitally debtsSigned By:PRATIMA and all Signing Date:24.07.2023 13:01:47

revenues, taxes, cesses and other rates payable to the Central Governments or local authority.

200. The material part of the statement of objects and reasons of The Enforcement of Security Interest and Recovery of Debts Laws and Miscellaneous Provisions (Amendment) Bill, 2016 reads as under:

[Emphasis supplied]

201. Furthermore, the notes on clauses related to Section 26E of the SARFAESI Act, 2002 inserted through the amending Act is as follows:

[Emphasis supplied]

202. The statement of objects and purpose of the amending Act make it clear that the provisions of the SARFAESI Act, 2002 create a prioritization. It being that the debts of the secured creditor are to be prioritised over any dues to the government or any local authority.

203. The insertion of Section 26E was, therefore, for a broader purpose, it being to protect our banks from the force of the State machinery that had hitherto interfered with the rights of the banks to realise their dues. As the Hon‟ble Law Minister noted in the statement of objects and reasons, the amendment of 2016 was proposed to suit the changing credit landscape and augment ease of doing business.

204. Section 26E of the SARFAESI Act, 2002 may not be squarely applicable in the present factual scenario, however itSignature evinces Not the Verified Digitally Signed By:PRATIMA Signing Date:24.07.2023 13:01:47

continued intention of the legislature of prioritisation the secured debts owed to banks.

205. From the analysis above, it may be concluded that an interpretation of Section 35 and Section 37 of the SARFAESI Act, 2002 would reveal that the proceedings under the SARFAESI Act, 2002 are to be treated as a carve out to, and remain unaffected by, the orders passed under the SEBI Act, 1992 .

206. On the facts of the present case, the said Orders do not prevent the petitioner bank from proceeding further under the SARFAESI Act, 2002 to auction its mortgaged property.

207. The conclusions reached by the court are summarized as under:

208. The writ petition is disposed of in the above terms.

(PURUSHAINDRA KUMAR KAURAV) JUDGE JULY 21, 2023 Signature Not Verified Digitally Signed By:PRATIMA Signing Date:24.07.2023 13:01:47