T. TAKANO versus SECURITIES AND EXCHANGE BOARD OF INDIA & ANR.

Citation: [2022] 16 S.C.R. 212 · Decided: 18-02-2022 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Appeal(s) allowed

Cited by 2 judgment(s) · cites 4 · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
212
SUPREME COURT REPORTS
[2022] 16 S.C.R.
T. TAKANO
v.
SECURITIES AND EXCHANGE BOARD OF INDIA & ANR.
(Civil Appeal Nos. 487-488 of 2022)
FEBRUARY 18, 2022
[DR DHANANJAYA Y CHANDRACHUD AND
SANJIV KHANNA, JJ.]
Securities and Exchange Board of India Act 1992 (SEBI) –
ss. 11(1), 11(4), 11B, 11B(1), 11B(2), 11C and 15HA – SEBI
(Prohibition of Fraudulent and Unfair Trade Practices) Regulations
2003 (PFUTP Regulations) – Regn. 3(b), 3(c), 3(d), 4(1), 4(2)(e),
4(2)(k), 5, 6, 9, 10, 11 and 12 – Regn. 6 – Disclosure of investigation
report – Appellant was employed as MD and CEO in a public listed
company – Show cause notice issued to the appellant for violation
of the provisions of the SEBI Act, SCRA and PFUTP Regulations –
Show cause notice specifically relied upon the report of the
investigation and invokes, inter alia, a violation of the PFUTP
Regulations by the appellant – Appellant responded to show cause
notice stating that he had not received the report of the investigation
conducted by SEBI – Respondent-SEBI stated that the investigation
report is an ‘internal document’ which cannot be shared – Appellant
reiterated the demand to receive report of the investigation
conducted by SEBI – Whether an investigation report under
Regulation 9 of the PFUTP Regulations must be disclosed to the
person to whom a notice to show cause is issued – Held: The Board
should determine such parts of the investigation report u/Regn. 9
which have a bearing on the action which is proposed to be taken
against the person to whom the notice to show cause is issued and
disclose the same – The Board shall be duty-bound to provide copies
of such parts of the report which concern the specific allegations
which have been levelled against the appellant in the notice to show
cause – It can redact information that impinges on the privacy of
third parties – It cannot exercise unfettered discretion in redacting
information – The institution/authority/agency can withhold
disclosure of those sections of the report which deal with third party
personal information and strategic information bearing upon the
[2022] 16 S.C.R. 212
212
A
B
C
D
E
F
G
H
213
stable and orderly functioning of the securities market – Respondent
should prima facie establish that the disclosure of the report would
affect third-party rights and the stability and orderly functioning of
the securities market – The onus then shifts to the appellant to prove
that the information is necessary to defend his case appropriately.
Allowing the appeals, the Court
HELD: 1.1 The appellant is unable to prove that the
disclosure of the entire report is necessary for him to defend the
case. The first respondent made the following arguments making
a prima facie case that the disclosure of the report would violate
third party rights: (i) Investigation reports contain information
on the volatile nature of the market; (ii) The report also contains
the personal information of various stakeholders. Disclosure will
violate the right to privacy of the third party individuals; and (iii)
It includes strategic information. [Para 47][255-B-D]
1.2 The appellant did not sufficiently discharge his burden
by proving that the non-disclosure of the above information would
affect his ability to defend himself. However, merely because a
few portions of the enquiry report involve information on third-
parties or confidential information on the securities market, the
respondent does not have a right to withhold the disclosure of
the relevant portions of the report. The first respondent can only
claim non-disclosure of those sections of the report which deal
with third party personal information and strategic information
on the functioning of the securities market. [Para 48][255-D-E]
1.3 The Board should determine such parts of the
investigation report under Regulation 9 which have a bearing on
the action which is proposed to be taken against the person to
whom the notice to show cause is issued and disclose the same.
It can redact information that impinges on the privacy of third
parties. It cannot exercise unfettered discretion in redacting
information. On the other hand, such parts of the report which
are necessary for the appellant to defend his case against the
action proposed to be taken against him need to be disclosed. It
is needless to say that the investigating authority is duty-bound
T. TAKANO v. SECURITIES AND EXCHANGE BOARD OF
INDIA & ANR.
A
B
C
D
E
F
G
H
214
SUPREME COURT REPORTS
[2022] 16 S.C.R.

Excerpt shown. Read the full judgment & AI analysis in Lexace.