Writ Petition should not be entertained against a mere ‘Show-Cause Notice’: Karnataka HC

The case was not where the show cause notice was not issued by a competent authority. Further, a show cause notice cannot be quashed merely on the ground that there was a delay in its issuance. A writ petition in such a case cannot be entertained, as a show cause notice does not infringe any right, which is a prerequisite for the maintainability of a writ petition.  This was held in the case of SEBI v. Mukkaram Jan, [ Writ Appeal No. 270/2020 (GM-RES)] before Hon’ble Mr. Justice Satish Chandra Sharma and Hon’ble Mr. Justice S Vishwajith Shetty.

The brief facts of the dispute are as follows, the respondent company after declaring its dividend failed to distribute the same as per the statutory requirement u/s 207 of the Companies Act and thus, SEBI initiated prosecution against it, which is its duty as per Sections 11(1), 11(4), 11(B) or Section 15 C of the SEBI Act. In pursuant of these powers, SEBI issued a ‘show-cause notice’, giving them 3 weeks’ time. The respondent was called for a hearing, against which a writ petition was filed, wherein the Single Judge quashed the show cause notice, on the ground that there was a delay of 5 years in SEBI’s action.

The High Court after referring to the previous judgement was of the opinion that, “It is not a case where the show cause notice has not been issued by a competent authority and only on the point of delay, the notice could not have been quashed in the manner and method it has been done”. The High Court referred to the case of UOI v. Kunisetty Satyanarayana [ (2006) 12 SCC 28] and held that “the petition preferred by the respondent was certainly premature and therefore the writ appeal by SEBI is allowed.The order of the Learned Single Judge is hereby set aside.”

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Judgement Reviewed by Vagisha Sagar

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