NEW DELHI :The Securities and Exchange Board of India (Sebi) continues to maintain a cautious stance when it comes to sharing documents with the accused despite the Supreme Court’s (SC’s) disapproval of its approach.
The Securities and Exchange Board of India (Sebi) continues to maintain a cautious stance when it comes to sharing documents with the accused despite the Supreme Court’s (SC’s) disapproval of its approach.
In the recent past, the regulator has declined requests for additional documents by accused parties in at least four different cases, two people with direct knowledge of the matter said.
In the recent past, the regulator has declined requests for additional documents by accused parties in at least four different cases, two people with direct knowledge of the matter said.
Last year, the SC pulled up Sebi for “selective" sharing of documents. In a case pertaining to Reliance Industries Ltd (RIL), the court observed that refusal to share necessary reports and documents is a gross violation of the right to natural justice. The top court had then ordered Sebi to share the documents with RIL.
Sebi collects several pieces of evidence during its investigation and relies on the same while passing orders. Hence, the accused would need access to such documents to defend themselves. While Sebi has a document-sharing policy, it provides the accused only with the documents it deems relevant, legal experts said.
“Selective document disclosure violates the accused’s rights and fairness principles. Sebi creates a hyper-technical distinction to deny providing all documentation collected during investigation or are in its possession," said Sumit Agrawal, the founder of Regstreet Law Advisors and a former Sebi official.
Agrawal said that Sebi provides only those it considers material for the accused to file a reply.
“The Supreme Court, in the Reliance matter, held that the regulator, to be fair and transparent, must provide all documentation even though it may be against Sebi," Agrawal said.
An email sent to a spokesperson for Sebi remained unanswered when going to press.
Others said Sebi’s approach is aimed at curbing potential frivolous litigation by the accused to delay proceedings. “In some cases, we have seen the parties keep asking for more and more documents just to delay the case. They also use the documents supplied by Sebi to file trivial appeals in courts even before Sebi issues its orders," one of the two people cited above said.
Legal experts said the SC order in the Reliance matter acts as a precedent.
Lalit Kumar, a partner at law firm J Sagar Associates, said the SC laid a general obligation of disclosure on Sebi in the Reliance matter based on three fundamental purposes of disclosure of information: reliability, free trial and transparency, and accountability.
“The court did not approve selective disclosure in law as it amounts to cherry-picking, which derogates the commitment to a fair trial. Although the judgement was on specific facts of the matter, it binds Sebi to follow this ruling in similar situations," Kumar added.
Globally, regulators consider sharing all the evidence with the accused as a priority, legal experts said. For instance, in the US, an accused is entitled to receive all the evidence-related documents during the discovery process.
“In the US, during the litigation phase, both the SEC and the accused parties engage in discovery, exchanging relevant evidence and information. The relevancy is on both sides. This process allows each side to build their case and prepare for trial. Convenient evidence is treated as malicious prosecution," Agrawal added.
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