ASHOKA MARKETING LIMITED & ANR. vs SECURITIES AND EXCHANGE BOARD OF INDIA & ORS.
$-
* IN THE HIGH COURT OF DELHI AT NEW DELHI
BEFORE
HON’BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV
+ W.P.(C) 15556/2023 & CM APPL.62322/2023
Between: –
BHARAT NIDHI LIMITED
Through its Authorised Representative
Having its office at First floor, Express Building 9-10,
Bahadur Shaah Zafar Marg, New Delhi 110002.
PETITIONER
(Through: Mr. Sandeep Sethi, Sr. Advocate with Mr. Ameya Gokhale, Mr. Vaibhav Singh, Ms. Radhika I, Ms. Riya Basu, Ms. Simran Malhotra, Mr. Manas Kotak and Ms. Riya Kumar, Advocates.)
AND
SECURITIES AND EXCHANGE BOARD OF INDIA
Having its headquarters at SEBI Bhavan,
Plot No. C 4-A, G Block, Near Bank of India,
Bandra Kurla Complex,
Bandra East, Mumbai 400051.
Also having office at:
NBCC Complex, Office Tower-1, 8th Floor,
Plate B, East Kidwai Nagar, New Delhi 110023.
…. RESPONDENT NO.1
VINEET JAIN
15, Motilal Nehru Marg, New Delhi 110002.
…. RESPONDENT NO.2
ASHOKA MARKETING LIMITED
First floor, Express Building 9-10, Bahadur
Shah Zafar Marg, New Delhi 110002.
…. RESPONDENT NO.3
ARTH UDYOG LIMITED
16A, Lajpat Nagar-IV,
New Delhi 110024.
…. RESPONDENT NO.4
MATRIX MERCHANDISE LIMITED
101, Pratap Nagar, Mayur Vihar,
Phase 1, East Delhi, New Delhi 110091.
…. RESPONDENT NO.5
MAHAVIR FINANCE LIMITED
101, Pratap Nagar, Mayur Vihar,
Phase-1, East Delhi, New Delhi 110091.
…. RESPONDENT NO.6
TM INVESTMENTS LIMITED
814, Plot No. 7, Roots Tower,
Laxmi Nagar, District Centre, East Delhi,
New Delhi 110092.
…. RESPONDENT NO.7
SANMATI PROPERTIES LIMITED
814, Plot No. 7, Roots Tower,
Laxmi Nagar, District Centre, East Delhi,
New Delhi 110092.
…. RESPONDENT NO.8
(Through: Mr. J. J. Bhatt, Sr. Advocate with Mr. Abhishek Baid, Ms. Praneet Das, Mr. Mohit Kr. Bafna, Mr. Anup Jain and Mr. Ashok Kr. Jain, Advocates for R-1.)
+ W.P.(C) 15557/2023 & CM APPL.62323/2023
Between: –
ASHOKA MARKETING LIMITED
Through its Authorised Representative
Having its office at First floor, Express Building 9-10,
Bahadur Shah Zafar Marg, New Delhi 110002.
.
PETITIONER NO.1
ARTH UDYOG LIMITED
Through its Authorised Representative
Having its office at 16A, Lajpat Nagar-IV,
New Delhi 110024.
PETITIONER NO. 2
(Through: Mr. Jayant Mehta, Sr. Advocate with Mr. Ameya Gokhale, Mr. Vaibhav Singh, Ms. Radhika I, Mr. Riya Basu, Ms. Simran Malhotra, Mr. Manas Kotak and Ms. Riya Kumar, Advocates.)
AND
SECURITIES AND EXCHANGE BOARD OF INDIA
Having its headquarters at SEBI Bhavan,
Plot No. C 4-A, G Block, Near Bank of India,
Bandra Kurla Complex,
Bandra East, Mumbai 400051.
Also having office at:
NBCC Complex, Office Tower-1, 8th Floor,
Plate B, East Kidwai Nagar, New Delhi 110023.
…. RESPONDENT NO.1
BHARAT NIDHI LIMITED
First floor, Express Building 9-10,
Bahadur Shaah Zafar Marg, New Delhi 110002.
…. RESPONDENT NO.2
MATRIX MERCHANDISE LIMITED
101, Pratap Nagar, Mayur Vihar,
Phase 1, East Delhi, New Delhi 110091.
…. RESPONDENT NO.3
MAHAVIR FINANCE LIMITED
101, Pratap Nagar, Mayur Vihar,
Phase-1, East Delhi, New Delhi 110091.
…. RESPONDENT NO.4
TM INVESTMENTS LIMITED
814, Plot No. 7, Roots Tower,
Laxmi Nagar, District Centre, East Delhi,
New Delhi 110092.
…. RESPONDENT NO.5
SANMATI PROPERTIES LIMITED
814, Plot No. 7, Roots Tower,
Laxmi Nagar, District Centre, East Delhi,
New Delhi 110092.
…. RESPONDENT NO.6
VINEET JAIN
15, Motilal Nehru Marg, New Delhi 110002.
…. RESPONDENT NO.7
(Through: Mr. J. J. Bhatt, Sr. Advocate with Mr. Abhishek Baid, Ms. Praneet Das, Mr. Mohit Kr. Bafna, Mr. Anup Jain and Mr. Ashok Kr. Jain, Advocates for R-1.)
+ W.P.(C) 15558/2023 & CM APPL.62324/2023
Between: –
MATRIX MERCHANDISE LIMITED
101, Pratap Nagar, Mayur Vihar,
Phase 1, East Delhi, New Delhi 110091.
…. PETITIONER NO.1
MAHAVIR FINANCE LIMITED
101, Pratap Nagar, Mayur Vihar,
Phase-1, East Delhi, New Delhi 110091.
…. PETITIONER NO.2
TM INVESTMENTS LIMITED
814, Plot No. 7, Roots Tower,
Laxmi Nagar, District Centre, East Delhi,
New Delhi 110092.
…. PETITIONER NO.3
SANMATI PROPERTIES LIMITED
814, Plot No. 7, Roots Tower,
Laxmi Nagar, District Centre, East Delhi,
New Delhi 110092.
…. PETITIONER NO.4
VINEET JAIN
15, Motilal Nehru Marg, New Delhi 110002.
…. PETITIONER NO.5
(Through: Mr. Amit Sibal, Sr. Advocate with Mr. Ameya Gokhale, Mr. Vaibhav Singh, Ms. Radhika I, Mr. Riya Basu, Ms. Simran Malhotra, Mr. Manas Kotak and Ms. Riya Kumar, Advocates.)
AND
SECURITIES AND EXCHANGE BOARD OF INDIA
Having its headquarters at SEBI Bhavan,
Plot No. C 4-A, G Block, Near Bank of India,
Bandra Kurla Complex,
Bandra East, Mumbai 400051.
Also having office at:
NBCC Complex, Office Tower-1, 8th Floor,
Plate B, East Kidwai Nagar, New Delhi 110023.
…. RESPONDENT NO.1
BHARAT NIDHI LIMITED
First floor, Express Building 9-10,
Bahadur Shaah Zafar Marg, New Delhi 110002.
…. RESPONDENT NO.2
ASHOKA MARKETING LIMITED
Through its Authorised Representative
Having its office at First floor, Express Building 9-10,
Bahadur Shah Zafar Marg, New Delhi 110002.
.
RESPONDENT NO.3
ARTH UDYOG LIMITED
Through its Authorised Representative
Having its office at 16A, Lajpat Nagar-IV,
New Delhi 110024.
RESPONDENT NO. 4
(Through: Mr. J. J. Bhatt, Sr. Advocate with Mr. Abhishek Baid, Ms. Praneet Das, Mr. Mohit Kr. Bafna, Mr. Anup Jain and Mr. Ashok Kr. Jain, Advocates for R-1.)
————————————————————————————
% Pronounced on: 18.12.2023
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J U D G M E N T
1. This order shall decide a preliminary objection raised on behalf of respondent no.1-Securities and Exchange Board of India (hereinafter SEBI) on entertaining the instant writ petitions on the ground of lack of territorial jurisdiction and/or alternatively, on the ground of forum non-conveniens. The issue involved is common in all cases; hence, a combined order is being passed.
Description
2. The petitioner in W.P.(C) 15556/2023 i.e. Bharat Nidhi Limited (hereinafter BNL) is an unlisted public limited company incorporated under the provisions of the Companies Act, 1913 having its registered office at First floor, Express Building 9-10, Bahadur Shah Zafar Marg, New Delhi 110002.
3. The respective petitioners in W.P.(C) 15557/2023 and in W.P.(C) 15558/2023 are also companies registered either under the provisions of the Companies Act, 1913 or under the provisions of the Companies Act, 1956. All the petitioners have their registered offices at Delhi. Petitioner no.5 namely, Vineet Jain in W.P.(C) 15558/2023, is an Indian inhabitant residing at 15, Motilal Nehru Marg, New Delhi 110002.
4. The petitioners in all other writ petitions, barring W.P.(C) 15556/2023, are the shareholders of BNL.
5. SEBI is respondent no.1 in all the writ petitions, which is established under Section 3 of the SEBI Act, 1992. SEBI is, therefore, a statutory authority and is tasked with the regulation of the securities market and for matters connected therewith and incidental thereto. The other respondents in respective writ petitions are also some of the shareholders of BNL.
6. Pursuant to complaints and representations received from certain shareholders primarily alleging violation of SEBIs minimum public shareholding norms (hereinafter MPS Norms) and disclosure requirements by and in respect of BNL, SEBI issued a common show cause notice (hereinafter SCN) on 28.10.2020 to BNL and respondent nos. 2 to 8 of W.P.(C) 15556/2023. In the said SCN, SEBI alleged that the petitioner had violated:-
(a) Regulation 31(1)(b) of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 (LODR Regulations) read with SEBI circular no. CIR/CFD/CMD/13/2015 dated 30th November 2015 read with regulation 2(za) of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 and clause 35 of the listing agreement;
(b) Rule 19A(1) of Securities Contract Regulation Rules, 1957 read with regulation 38 of LODR Regulations read with provisions of 2(II) of SEBI Circular No. CIR/CFD/DIL/10/2010 dated 16th December 2010 read with Circular No. CIR/CFD/CMD/14/2015 dated 30th November 2015;
(c) Section 12(A)(a) and (b) of the SEBI Act and read with Regulation 3(b) and (c) and 4(1) of the SEBI (Prevention of Fraudulent and Unfair Trading Practices) Regulations 2003 (PFUTP Regulations).
7. The said SCN, therefore, provided that the noticees, may note that a settlement mechanism is provided under the SEBI (Settlement Proceedings) Regulation, 2018 (hereinafter Regulations of 2018) and if the noticees wish to opt for the settlement process, they may apply for the same in the manner given in the said Regulations upon intimation to the concerned authority.
8. Thereafter, BNL filed an application under the Regulations of 2018 on 27.12.2020 and responded to the SCN on 28.02.2021. Separate and independent settlement applications were also filed by respondent nos.2 to 8. The said settlement applications were considered by the Internal Committee of SEBI formed under the Regulations of 2018. Various meetings took place on 06.08.2021, 31.08.2021, 28.10.2021 and 02.12.2021 to deliberate on the settlement application and to discuss and negotiate the terms of the settlement. BNL and the settlement applicants in their respective applications too responded to various queries raised by the Internal Committee and the petitioner filed revised settlement terms with the Internal Committee based on inter se deliberations.
9. During the pendency of the settlement application, on or around 14th January 2022, a group of shareholders holding 1.27% shares in BNL (Ashok Shah Group) filed a writ petition bearing Writ Petition no.406 of 2022 before the High Court of Judicature at Bombay inter alia seeking an order restraining SEBI from considering the settlement application of the petitioner and respondent nos.2 to 8. On 08.04.2022, the said writ petition came to be withdrawn with the following observations:-
1. After the petition was heard for sometime, Mr. Seervai seeks leave of the court to withdraw the petition with liberty to approach this court or any forum as advised, if petitioners are not satisfied with the orders to be passed by SEBI in the settlement applications filed by some of the respondents or in the show cause notices issued to some of the respondents before us.Mr. Bhatt states that show cause notices have been issued to 62 entities and considering the situation that we have just come out of Covid-19, an attempt will certainly be made to dispose the proceedings at the earliest. Mr. Andhyarujina appearing for respondent no.4 states that proceedings before SEBI pertaining to respondent nos.3 and 4 are going on and it is not like what petitioners have stated that there is no progress. We are not going into this aspect but considering the over all situation, we would expect the SEBI, i.e., respondent no.1 to complete the proceedings pending before them which have been agitated in this petition, as early as possible within 6 months. Liberty to apply for extension.
2. All rights and contentions of the parties are kept open. We clarify that we have not made any observations on the merits of the matters pending before the SEBI.
3. Petition dismissed as withdrawn with liberty as prayed for.
10. Subsequently, the Internal Committee of SEBI finalised the terms of settlement in respect of BNL, and in terms of Regulation 13(3) of the Regulations of 2018, forwarded the same for consideration of the High Powered Advisory Committee (hereinafter HPAC). As per Regulation 11 of the Regulations of 2018, the HPAC was constituted, comprising of a Judicial member who has been a Judge of the Supreme Court or a High Court and three external experts having expertise in the securities market or connected matters.
11. The HPAC considered the Settlement Application and also the settlement terms as forwarded to it by the Internal Committee. The HPAC noted that a writ petition bearing W.P.(C) 10756 of 2019 titled as Aditya Aggarwal and Ors. v. SEBI and Ors. alleging violation of certain SEBI regulations by BNL was pending before this court.
12. The HPAC, therefore, by an email dated 20.04.2022 directed inter alia BNL i.e., the petitioner in W.P.(C) 15556/2023 to specifically bring the fact of filing of Settlement Application to the notice of this court and seek specific permission to decide and dispose of the Settlement Application.
13. Vide order dated 27.05.2022, this court in W.P.(C) 10756 of 2019 permitted SEBI to deal/adjudicate on the settlement application filed by BNL, on its own merits, in accordance with law. The operative part of the order dated 27.05.2022 reads as under:-
6. Mr. Deepak Jain, counsel for the Petitioners opposes the applications and argues that SEBI (Settlement Proceedings) Regulations, 2018 prohibit filing of settlement applications in respect of matters pending that are pending trial before any court.
7. On the perusal of previous orders, no directions are found which restrain SEBI from considering/ adjudicating the settlement applications. It appears that the instant applications have been filed by way of abundant caution at the instance of HPAC.
8. The Court has considered the objection put forth my Mr. Jain, but finds no cogent reason to reject the application. The decision on the settlement applications is the prerogative of SEBI. It is for the SEBI to deliberate and decide the same, in accordance with applicable provisions of SEBI Act, Rules, Regulations, etc. Whether the applications are prohibited or not is not for this Court to determine. Accordingly, the applications are disposed of with a clarification that SEBI shall be free to deal/ adjudicate the settlement applications filed by the Applicants, on its own merits, in accordance with law.
9. The decision on the settlement applications shall not prejudice the Petitioners and all rights and contentions of the parties herein are left open.
14. After obtaining permission from this court, the HPAC approved the terms of settlement and as per Regulation 14(3) of the Regulations of 2018 and forwarded the same to the Panel of Whole Time Members of SEBI (hereinafter Panel of WTMs). As per the provisions of Regulation 15 of the Regulations of 2018, the Panel of WTMs is the ultimate authority within SEBI for the passing of settlement orders. After due consideration of the Panel of WTMs, the petitioner-BNL received an email dated 20.07.2022 from SEBI inter alia informing the petitioner that SEBI has in principle agreed to accept the terms of settlement and the petitioner was also advised to pay the settlement amount to SEBI and provide an undertaking to comply with certain non-monetary terms in addition to the payment of the amount.
15. The petitioner-BNL appears to have remitted its settlement amount of Rs.2,43,10,000/- on 11.08.2022 and BNL also provided the undertaking to comply with the non-monetary terms as sought by SEBI.
16. On 12.09.2022, a settlement order was passed with respect to BNL and respondent nos.2 to 8. The terms of the settlement were enumerated in paragraph no.5 of the said order. The settlement applicants informed about the remittance of the respective settlement amounts between 10.08.2022 to 16.08.2022. SEBI had confirmed the credit of the same. On receipt of an undertaking to comply with the non-monetary terms forming part of the settlement terms in exercise of powers conferred under Section 15JB read with Section 19 of the SEBI Act and under Section 23JA of the Securities Contracts (Regulation) Act, 1956 (hereinafter SCR Act) and in terms of Regulation 23 read with Regulation 28 of the Regulations of 2018, it was ordered that the pending enforcement proceedings for the alleged defaults as mentioned at paragraph nos.1 and 2 of the said order were settled qua the applicants. The terms were enumerated in the order dated 12.09.2022. Paragraph nos.8 to 10 of the Settlement Order dated 12.09.2022 read as under:-
8. In view of the above, in exercise of the powers conferred under Section 15JB read with Section 19 of the SEBI Act and under Section 23JA of the SCR Act and in terms of Regulation 23 read with Regulation 28 of the Settlement Regulations, it is hereby ordered that the pending enforcement proceedings for the alleged defaults as mentioned at paragraph 1 and 2 are settled qua the applicants on the following terms:
i. This Order disposes of the enforcement proceedings initiated by SEBI for the defaults as mentioned earlier in respect of the applicants;
ii. SEBI shall not initiate any other enforcement action against the applicants for the said defaults; and
iii. Bharat Nidhi Limited shall submit a report of compliance with the terms of its undertaking given at paragraph 5, within 15 days of the passing of this settlement order, failing which the settlement order shall cease to operate qua all the applicants.
9. The passing of this Order is without prejudice to the right of SEBI under Regulation 28 of the Settlement Regulations to take enforcement actions including continuing proceedings against the applicants, if SEBI finds that:
a) any representation made by the applicants in the present settlement proceedings is subsequently found to be untrue;
b) the applicants have breached any of the clauses/ conditions of Undertakings/Waivers filed during the present settlement proceedings; and
c) there was a discrepancy while arriving at the settlement terms.
10. This Settlement Order is passed on this 12th day of September, 2022 and shall come into force with immediate effect.
17. On or around 10th October 2022, the Ashok Shah Group and another set of shareholders of BNL (Pina Shah Group) filed two writ petitions, i.e., W.P. no. 447 of 2023 and W.P. no. 530 of 2023 before the Honble High Court of Judicature at Bombay inter alia challenging the Settlement Order and the petitioners Postal Ballot Notice.
18. On 17.10.2022, the Honble High Court of Judicature at Bombay passed an interim order inter alia directing respondent no.2 therein, not to finalize the offers till the next date of hearing, however, respondent no.2 was granted liberty to proceed to the extent of inviting offers.
19. On 05.12.2022, the Honble High Court of Judicature at Bombay, on an application filed on behalf of the petitioner, passed the following order:-
1. The matter is mentioned in the morning by respondent No.2.
2. Mr. Dhond, learned Senior Advocate for respondent No.2 submits that respondent No.2 has to complete the process of bye-back within a stipulated period as enumerated in Rules 17(5) and 17(7) of the Companies (Share Capital and Debentures) Rules, 2014.
3. This Court has continued the interim orders till 10th December 2022 on 30th November 2022 and had granted liberty to the petitioner to file rejoinder on or before 20th December 2022.
4. Considering that the prohibitory orders are operating restraining the respondents from finalizing the offer, the respondent No.2 may claim benefit of the interim orders so far as time frame is concerned.
5. Place the matter on 6th January 2023.
6. Interim orders passed earlier to continue till then.
20. Contemporaneously, there were various developments and correspondences between the parties, however, they may not be necessary, at this stage, to be referred extensively except to state the fact that on 05.09.2023, SEBI verbally submitted before the Honble High Court of Judicature at Bombay about the change in its WTMs and the decision likely to be taken as to whether the Settlement Order stood revoked.
21. The order dated 05.09.2023 passed by the Honble High Court of Judicature at Bombay reads as under:-
1. We had placed this matter for final hearing today at 2.30 p.m.
2. Mr. Seervai, learned Senior Counsel for the Petitioners, has commenced his arguments. At the midst of the hearing Mr. Bhatt, learned Senior Counsel for the Respondent No.1-SEBI, has stated before us that there was a change in the Whole Time Members (WTM) of the SEBI. He states that SEBI would now be in a position to take a decision as to whether the settlement order in question (Exhibit- A) has stood revoked. Mr. Bhatt would contend that if the settlement order stands revoked, in such event, further adjudication of the present petition would not be called for.
3. We are of the opinion that it would be appropriate to know the stand of the SEBI. Depending as what the SEBI informs the Court on the adjourned date of hearing, further course of action on the proceedings can be decided.
4. Accordingly, stand over to 13th September 2023 at 2.30 p.m.
22. On 13.09.2023, the Honble High Court of Judicature at Bombay has passed the following order:-
Today the matter is placed before us on the backdrop of our order dated 5th September 2023. From what has been heard from the learned Counsel for the parties, it appears that the issues as raised in the petition cannot be resolved. The parties agree that the proceedings would be required to be now heard and decided.
2. We, accordingly, place the proceedings for hearing on 4th October 2023 at 2.30 p.m. to be followed on 5th October 2023 and 9th October 2023.
23. Thereafter, on 05.10.2023, the matter was further considered and during the course of the hearing on that day, the petitioner-BNL (respondent no. 2 therein) made an oral request to place on record a compilation of certain documents, the request being strongly opposed by the petitioners therein. Therefore, the request made by BNL was rejected for the reasons recorded in the said order. Paragraph nos.11 to 17 of an order dated 05.10.2023 read as under:-
11. Having heard learned counsel for the parties on the above issue, in our opinion, we find much substance in the contentions as urged on behalf of the petitioners by Mr. Seervai and Mr. Joshi. At the outset, we may observe that we cannot accept a compilation of documents to be placed on record of the proceedings at the stage the present proceedings stand, that is the Court having already commenced final hearing on the petitions. More particularly on a crucial issue the petitioners have already and quite substantively having argued their case for the entire second session yesterday.
12. It may be that such averments are made in the affidavit as noted by us above, however, such averments would not confer any right or entitlement on respondent no. 2 to place on record a big bunch of documents, at the midst of the final hearing as requested by Mr. Dhond in his oral application. This would be certainly contrary to the basic rule the Court would adopt on pleadings. Respondent no. 2 was clearly aware as to what would be the principles in regard to the pleadings which has been very clearly set out in paragraph 17 of respondent no. 2’s affidavit (supra), wherein respondent no.2 has categorically stated that respondent no. 2 craves leave to file a “further affidavit” to place additional material should the same be deemed necessary or be directed by this Court. This implies two things. Firstly, till the filing of the said affidavit dated 5 June, 2023, whatever respondent no. 2 thought “deemed necessary” was already part of the record and as far as second statement as made in paragraph 17 is concerned, we have not directed respondent no. 2 to file any further affidavit.
13. This apart, for the clarity on the timing of such application as made on behalf of respondent No.2, we have referred to our earlier orders passed right from 17 July, 2023, which would point out that there were several opportunities which were available to respondent No.2, which could have been utilized by respondent No. 2 to place on record any further additional affidavit as desired by respondent No.2 as stated in paragraph No. 17 of its affidavit (supra) dated 5 June, 2023. Thus, after such long lapse of time and that too after the proceedings have commenced final hearing and the petitioners had commenced their arguments and quite substantially it would not be fair to the petitioners that new material documents unknown to the parties are permitted to be placed on record. It would also not be fair to the process of adjudication of the proceedings. Moreover, this would be completely contrary to the basic law of pleadings under which any plea to be taken by a party which may be on documents or otherwise would be required to be taken by way of a pleading in that regard, and such documents on which a plea is taken are required to form part of the record, in a manner known to law. This is the normal rule, so that such plea and documents are made known to all the parties on which the parties can advance their case before the Court.
14. If we permit such compilation of documents to be placed on record, we permit a completely new course of action, which would be permitting respondent no. 2 to make out a case on documents which are not part of the record and on which there is no specific pleading on any such document and above all which are not in the knowledge of the petitioners. This can certainly cause a grave and serious prejudice to the petitioners.
15. We may also observe and as relevantly pointed out by Mr. Seervai that on 11 March, 2023, advocate for the petitioner has addressed a categorical letter to the advocate for respondent no. 2 requesting that the documents referred and relied upon be furnished to the petitioners, as also that such documents being relied be forthwith provided to the petitioners. It has been pointed out to us that such letter of the advocate for the petitioner, was not replied by the advocate for respondent no. 2. Pointing out the said letter addressed, Mr. Seervai and Mr. Joshi’s plea is quite significant that today’s attempt to place on record the bunch of documents would be nothing but to condone such suppression of the documents by respondent no. 2, which are till date kept away by respondent no. 2 from the petitioners and by such method, an attempt on the part of respondent no. 2 to get wiser, after the petitioners have advanced substantive argument on their plea. We hence see much substance in the contention of Mr. Seervai.
16. Mr. Dhond would however submit and which appears to be quite a novel plea taken for the first time and without any such prior plea taken earlier, that there were certainly confidentiality requirements in respondent no. 2’s correspondence with SEBI, hence the documents were earlier not placed on record. This appears to be an argument in desperation and without any basis, as the prior affidavits of respondent no. 2 are completely silent on any such confidentiality requirement.
17. We, thus, do not permit respondent no. 2 to place on record any new documents. We accordingly reject such request as made by Mr. Dhond and proceed with the final hearing of the petition.
24. By a subsequent order dated 23.10.2023, the Honble High Court of Judicature at Bombay directed SEBI to furnish some other documents in terms of the prayer made therein to Ashok Shah Group and Pina Shah Group, within a period of three weeks from the date of passing of the order. Paragraph nos. 29 to 33 of the order dated 23.10.2023 read as under:-
29. Thus none of the contentions as urged on behalf of respondent nos.2 to 9 in opposing the prayer of the petitioners to furnish documents would persuade us to hold that there was any embargo legal and/or factual for such documents not to be furnished/supplied to the petitioners. The objection of such respondents that the petitioner ought not to have raised such plea on the documents at the midst of the final hearing, as this itself would show that no prejudice was caused to the petitioners, in our opinion, is certainly not a tenable contention, for more than one reason. Firstly on such case the petitioners have made a specific interim prayer as noted by us above. They have also supported such prayer, by pleading a case of a serious prejudice being caused to them in the capacity of being the shareholders of BNL. It is also not the case that they had in any manner given up their case on their necessity and entitlement to have such documents. In any event, the petition is being heard finally at the admission stage, which would not mean that a situation is brought about, that the specific contentions on documents, as urged by the petitioners and subject matter of specific prayers would stand given up by the petitioners much less on the law would understand. Moreover, as observed above, the case of the petitioners is that the very basis of the SEBI undertaking investigation on the complaints as made by the petitioners of BNL violating the rules, regulations and norms as prescribed by SEBI, being violated by BNL and the same forming subject matter of investigation by SEBI and the resultant show cause notice were foundational facts, hence, in such context, it was the petitioners entitlement to receive all the documents in that regard. Such documents therefore have all relevancy as law would contemplates in the present lis between the parties. Thus, the impression of respondent nos.2 to 9 that the petitioners should not be provided with such documents, is not acceptable. Once it is the entitlement of the petitioners in law to receive such documents, they need to be furnished such documents, unless furnishing of these documents would stand prohibited in law, which is certainly not a situation in the present facts.
30. We may also add that the regulations are framed under the SEBI Act, 1992. The avowed object and intention of the Act is to protect the interests of investors in securities and to promote the development of, to regulate the securities market. Thus, all actions which are taken by the SEBI and through the various bodies as constituted under the Act and the regulations are required to act considering the paramount interest of the investors. For such reasons as well, we do not find as to why the petitioners ought not to be entitled to the documents. We do not find that there is any impediment whatsoever in law or otherwise for the documents, as demanded, to be supplied to the petitioners.
31. In the light of the above discussion, we are inclined to grant to the petitioners interim relief in terms of prayer clause (g).
32. SEBI is directed to furnish to the petitioners copies of all such documents within a period of three weeks from today.
33. List the proceedings for further hearing on 29 November 2023 (Part Heard).
25. The petitioner assailed the order dated 05.10.2023 and 23.10.2023 before the Honble Supreme Court by way of a Special Leave Petition (Civil) (Diary) No. 45529 of 2023 (BNL SLP). The order dated 23.10.2023 was also challenged by respondent nos.2 to 8 by filing a separate Special Leave Petition (Civil) Diary No. 45770 of 2023.
26. Vide order dated 06.11.2023, both the petitions i.e., Special Leave Petition (Civil) (Diary) No. 45529 of 2023 and 45770 of 2023 were disposed of while directing that the parties would be at liberty to pursue their remedies in accordance with law on all counts after the final judgment of the High Court. It was observed by the Honble Supreme Court that the impugned order therein was purely of an interlocutory nature, therefore, no interference was called for.
27. The order dated 06.11.2023 passed by the Honble Supreme Court is reproduced as under:-
1. Mr CA Sundaram, senior counsel, states that all material which is directed to be disclosed by the High Court shall be used only for the purpose of the proceedings pending before the High Court and shall not be disseminated to any third party.
2. Since the impugned orders of the High Court are purely of an interlocutory nature, we are not inclined to entertain the Special Leave Petitions under Article 136 of the Constitution.
3. However, the parties would be at liberty to pursue their remedies in accordance with law on all counts after the final judgment of the High Court.
4. The Special Leave Petitions are dismissed.
5. Pending applications, if any, stand disposed of.
28. As the matter stood, the petitioner received the impugned order dated 10.11.2023 by way of an email from SEBI inter alia communicating that the Settlement Order stands revoked and withdrawn in terms of Regulation 28 of the Regulations of 2018 for failure to comply with the Settlement Order and on 14.11.2023, the petitioner received the physical copy of the impugned order.
29. On 29.11.2023, when the matter was taken up by the Honble High Court of Judicature at Bombay, learned counsel who appeared on behalf of SEBI, tendered an affidavit of Mr. Sachin Sonawane, Deputy General Manager-SEBI dated 20.11.2023 and placed on record SEBIs order dated 10.11.2023, whereby, the settlement order dated 12.09.2022 which was challenged in the said writ petition was stated to have been revoked by SEBI.
30. The Honble High Court of Judicature at Bombay extensively heard learned counsel for the parties on those developments, and more particularly, as to whether the petition would, thereafter, be rendered infructuous in view of the settlement order being revoked by the SEBI and the proceedings were accordingly adjourned to 01.12.2023 for passing orders.
31. For the sake of clarity, the order dated 29.11.2023 reads as under:-
1. We have heard learned counsel for the parties on the backdrop of our order dated 23 October 2023. We were informed that respondent Nos.2 to 9 had approached the Supreme Court assailing our order dated 23 October 2023 in the proceedings of SLP No.45529 of 2023 which came to be dismissed by the Supreme Court by order dated 6 November 2023. We have perused the order dated 6 November 2023 passed by the Supreme Court.
2. We are informed by Mr. Bhatt, learned Senior counsel for SEBI that recently even the SEBI had also approached the Supreme Court assailing the said orders, which came to be dismissed by the Supreme Court on 28 November 2023.
3. Mr. Bhatt has also tendered affidavit of Mr. Sachin Sonawane, Deputy General Manager-SEBI dated 20 November 2023 placing on record SEBI’s orders dated 10 November 2023 whereby the settlement orders dated 12 September 2022 as challenged in the present petition Stands revoked by the SEBI.
4. We have extensively heard learned counsel for the parties on these developments, and more particularly, as to whether the petition is now rendered infructuous in view of the settlement order being revoked by the SEBI.
5. We would pass appropriate orders on these proceedings on such submissions made before us on behalf of the petitioners and the respondents on the adjourned date of hearing.
6. We are however of the opinion that the orders passed by the Supreme Court on the SEBI’s Special Leave Petition needs to be apprised to the Court and placed on record.
7. The proceedings are accordingly adjourned to 1 December 2023 “For passing orders.
32. On 01.12.2023, the Honble High Court of Judicature at Bombay pronounced the order, wherein, the following directions were passed:-
I. The petitioners are entitled to the benefits of the order dated 23 October 2023 as confirmed by the Supreme Court, by rejection of the Special Leave Petitions of respondent Nos.2 and 9 and thereafter, by rejection of the Special Leave Petition filed by the SEBI.
II. The order dated 23 October 2023 passed by the Court, be forthwith complied by SEBI.
III. All the contentions of the petitioners and of the respondents on issues in regard to prayer clause (c) and (d) are expressly kept open to be agitated at appropriate time in appropriate proceedings.
IV. The petitions stand disposed of in the above terms. No costs.
33. The record would indicate that between 29.11.2023 to 01.12.2023, these writ petitions came to be filed by respective petitioners praying for relief inter alia to set aside the impugned order passed by SEBI dated 10.11.2023.
34. Under the aforesaid background of facts, Mr. J.J. Bhatt, learned senior counsel who appeared on behalf of SEBI, raised a preliminary objection on the following grounds:-
(i) No cause of action at all has arisen within the territorial jurisdiction of this court to entertain the instant writ petitions, much less material, integral and essential cause of action;
(ii) Alternatively, he submits that while applying the theory of forum conveniens, parties to the instant writ petitions be relegated to the jurisdictional High Court, where the entire or material cause of action had actually arisen.
35. To substantiate his arguments, he submits that the initial SCN was admittedly issued in Mumbai which may have been served in Delhi but the response thereto was considered in Mumbai. He also submits that the application for settlement was registered in Mumbai and the entire deliberation had taken place on different dates in Mumbai. The impugned decision has also been taken in Mumbai and the challenge to the settlement order remained the subject matter of scrutiny in two writ petitions where all the petitioners in their respective writ petitions actively participated; and therefore, the petitioners involved in the instant writ petitions ought to have agitated their prayers before the jurisdictional High Court, where the material, integral and essential part of the cause of action has arisen i.e., at Mumbai.
36. According to him, W.P. nos.530 of 2023 and 447 of 2023 were disposed of by the Honble High Court of Judicature at Bombay vide order dated 01.12.2023 taking note of the impugned order dated 10.11.2023 and all relevant aspects have been extensively considered by the concerned High Court in the presence of the present petitioners and therefore, the High Court of Judicature at Bombay is the forum conveniens for the petitioners and the respondent-SEBI as well. He further submits that entertaining a writ petition at the instance of the petitioners challenging the impugned order of revocation of settlement before this court would lead to conflicting orders and also inconvenience to the parties as throughout the entire proceedings, the petitioners were defending themselves and prosecuting their remedies either before the authorities of SEBI at Mumbai or before the jurisdictional High Court i.e., Bombay.
37. Learned senior counsel for the respondent-SEBI has placed reliance on the decision of the Honble Supreme Court in the cases of State of Goa v. Summit Online Trade Solutions Private Limited and Others1, National Textile Corpn. Ltd. and others v. Haribox Swalram and others2, Union of India and Ors. v. Adani Exports Ltd. & Anr.3 and the decision of the High Court of Judicature at Hyderabad in the case titled as BSE Limited v. JM Financial Asset Reconstruction Company Limited and others4.
38. Submissions made on behalf of the respondent-SEBI were strongly opposed by learned senior counsel who appeared on behalf of the respective writ petitioners.
39. Mr. Sandeep Sethi, learned senior counsel who appeared on behalf of the petitioner in W.P.(C) 15556/2023 took this court through paragraph no.81 of the said writ petition to explain as to how this court has the territorial jurisdiction to entertain the instant writ petition. He also submits that a major part of shareholders and shareholdings of BNL is at Delhi and for the purposes of petitioners, all actions have taken place at Delhi including the alleged violations. He, therefore, submits that under the conspectus of settlement and the proceedings recorded in the order of settlement, it would be clearly discernible that the material, integral and essential cause of action has arisen within the territorial jurisdiction of this court and therefore, the instant writ petition is maintainable.
40. According to him, in any case, it is the convenience of the petitioner which should be a decisive factor and not the location of the office of the respondent. Since the petitioner has conveniently approached this court and according to him, this court has ample jurisdiction to decide the validity of the impugned revocation, therefore, the petitioner should not be burdened to approach any other High Court.
41. Learned senior counsel has placed reliance on a decision of the Honble Supreme Court in the case of Vodafone International Holdings BV v. Union of India and Another5 to submit that law on situs of share situates at the place where the company is incorporated and/ or the place where the share can be dealt with by way of transfer. He has also placed reliance on the decisions of the Honble Supreme Court in the cases of Union of India v. Oswal Woollen Mills Ltd.6, Shanti Devi vs. Union of India7, Nawal Kishore Sharma v. Union of India and Ors.8, Navinchandra N. Majithia v. State of Maharashtra and Ors.9 and on the decision of this court in the case of Noida Mint Employees Union and Ors. v. Union of India and Ors.10.
42. Learned senior counsel has also distinguished the decision of the Honble Supreme Court in the case of State of Goa (supra) and sought to draw an analogy in his favour from the decision of this court in the case of Angika Development Society v. Union of India and Ors.11.
43. Mr. Jayant Mehta, learned senior counsel appearing on behalf of the petitioners in W.P. (C) 15557/2023 explained from paragraph no.64 of the said writ petition regarding as to how the jurisdiction lies before this court. According to him, the entire cause of action had arisen at Delhi, except the order passed by SEBI in Mumbai. The petitioners are based in Delhi and the respondent-SEBI itself required the petitioners to take permission from this court in the pending writ petition bearing W.P.(C) 10756 of 2019. According to him, since only minority shareholders had approached the Honble High Court of Judicature at Bombay, therefore, this court does not lack its jurisdiction to entertain the instant writ petition.
44. In any case, according to him, when the petitioners are legally entitled to knock the doors of this court, they cannot be relegated to any other High Court applying the doctrine of forum conveniens. He has also submitted that in the pending writ petitions before this court, at no point of time, the respondent-SEBI has raised any objection regarding the territorial jurisdiction of this court. He has further submitted that the order dated 01.12.2023 has been passed by the Honble High Court of Judicature at Bombay after the petitioners have already approached this court i.e., on 30.11.2023. He has also distinguished the decision relied upon by the learned senior counsel appearing on behalf of the respondent-SEBI while explaining from the respective decision, the fundamental difference in the circumstances. He has extensively read over paragraph no.12 of the decision in the case of State of Goa (supra) and paragraph nos. 10, 12 and 12.1 of the decision in the case of National Textile Corpn. Ltd. and others (supra). He has also relied upon the decision in the case of Dina Nath Public School v. Provident Fund Commr.12
45. He has distinguished the decision relied upon by the petitioner in the case of Adani Exports Ltd. & Anr. (supra) while reading paragraph nos.6 and 18.
46. He has also relied on the principles laid down in Angika Development Society (supra) to submit that in that case, this court relegated the petitioner to the Honble High Court of Patna as the entire cause of action had arisen within the jurisdiction of that High Court and merely on the ground that the office of the respondent in that case was situated at Delhi, this court declined to entertain the said writ petition. He, therefore, submitted that applying the same analogy, this court has to bear in mind that the entire cause of action has arisen within the territorial jurisdiction of this court except the order being passed at Mumbai.
47. Mr. Amit Sibal, learned senior counsel appearing on behalf of the petitioners in W.P.(C) 15558/2023 explained the scope of Article 226 of the Constitution of India to submit that if the petitioners in the instant case are relegated to different High Courts applying the principle of forum conveniens, the same would contravene the purpose of amendment under Article 226 of the Constitution of India. He has extensively explained the scheme of Article 226 of the Constitution of India while reading various decisions. According to him, the initial SCN was received at Delhi and the impugned order has also been received at Delhi.
48. While reading paragraph no.66 of W.P.(C) 15558/2023, he has submitted that the averments made in the said paragraph are not controverted; and therefore, the same will have to be accepted as correct. He has also submitted that nothing has been done at Mumbai except passing of the order and everything has taken place at Delhi and the principle of forum conveniens cannot be applied to the detriment of the litigants who approach the High Court for enforceability of his or her fundamental rights under the Constitution of India.
49. He has also distinguished the decision relied upon on behalf of the respondent-SEBI. In addition, he submitted that the principles laid down by the larger bench of this court in the case of Sterling Agro Industries Ltd. v. Union of India and Ors.13 will have full application and applying the same principles, this court has the jurisdiction to entertain the instant writ petition. He has also placed reliance on the decision in the case of Animish Pradip Raje v. Securities and Exchange Board of India and Anr.14, decided by the Honble Division Bench of the High Court at Telangana. Reliance is also placed on the decision of the Honble Supreme Court in the case of Om Prakash Shrivastava v. Union of India.15
50. In rejoinder submissions, learned senior counsel appeared on behalf of the respondent-SBI and submitted that he may not be misunderstood to have said that merely the location of SEBIs head office is at Mumbai, therefore, he has raised the objections on the territorial jurisdiction, rather his case is that no part of the cause of action had arisen within the territorial jurisdiction of this court. According to him, alternatively, under the facts of the instant cases, applying the principles of forum conveniens, the petitioners must be relegated to the jurisdictional High Court i.e., the Honble High Court of Judicature at Bombay.
51. He explained that the writ petition pending before this court is related to the issues which have no relevance to the dispute at hand. No specific decision is under challenge in the said writ petitions, whereas, all the petitioners in the instant writ petitions were the respondents before the Honble High Court of Judicature at Bombay and a substantial hearing was already conducted. He has also explained that it would not be inconvenient to the petitioners to approach the Honble High Court of Judicature at Bombay as all throughout, all the petitioners were participating in the proceedings before SEBI as well as they were actively contesting the writ petition at Honble High Court of Judicature at Bombay.
52. According to him, all the record, evidence etc. are available within the territorial jurisdiction of the Honble High Court of Judicature at Bombay and therefore, the petitions should be dismissed.
53. I have considered the submissions made by learned counsel appearing on behalf of the parties and perused the record.
54. The short controversy involved in the instant petitions, at this juncture is whether this court is the appropriate forum for deciding the present writ petitions and granting the reliefs as prayed for. In order to determine this issue, this court is called upon to adjudicateto what extent, if any, has the cause of action in the present writ petitions accrued in the territorial jurisdiction of this court. To decide the issue emanating from the instant writ petitions, reference must be made to the scope of Article 226 of the Constitution of India and its interplay with the doctrine of forum conveniens.
55. Before proceeding to analyse the law relating to forum conveniens and to appreciate the facts in the present petitions, it is pertinent to briefly embark upon the journey of the amendments in Article 226 of the Constitution of India to understand the objective and rationale behind the said enactment, more particularly about Clause 2 of Article 226, as it stands today.
56. Article 226 of the Constitution of India, as originally adopted before the amendments, reads as under:
226.
..
(1) Notwithstanding anything in Article 32, every High Court shall have power, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate cases any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose.
(2) The power conferred on a High Court by clause (1) shall not be in derogation of the power conferred on the Supreme Court by clause (2) of Article 32.
57. The Honble Supreme Court had an occasion to construe the original unamended Article 226 in the case of Election Commission, India v. Saka Venkata Rao,16 wherein, a strict and restrictive construction was accorded to Article 226.
58. Thereafter, the issue once again came up for consideration before the Honble Supreme Court in the case of Lt. Col. Khajoor Singh v. Union of India,17 whereby, the decision in the case of Saka Venkata Rao (supra) was approved and it was unequivocally settled that functioning or the effects of the action of the government would not confer the jurisdiction upon the High Court. It was held that the power of the High Court to issue writs was subject to two-fold limitations. Firstly, such writs cannot run beyond the territories subject to its jurisdiction and secondly, it was settled that the person or authority to whom the writ may be issued must be amenable to the jurisdiction of the High Court either by residence or location within territories subject to its jurisdiction.
59. While ruling upon the scope of introducing the concept of cause of action as a condition for the exercise of jurisdiction under Article 226, in the case of Lt. Col. Khajoor Singh (supra), it was held as under:
16. Article 226 as it stands does not refer anywhere to the accrual of cause of action and to the jurisdiction of the High Court depending on the place where the cause of action accrues being within its territorial jurisdiction. Proceedings under Article 226 are not suits; they provide for extraordinary remedies by a special procedure and give powers of correction to the High Court over persons and authorities and these special powers have to be exercised within the limits set for them. These two limitations have already been indicated by us above and one of them is that the person or authority concerned must be within the territories over which the High Court exercises jurisdiction. Is it possible then to overlook this constitutional limitation and say that the High Court can issue a writ against a person or authority even though it may not be within its territories simply because the cause of action has arisen within those territories? It seems to us that it would be going in the face of the express provision in Art. 226 and doing away with an express limitation contained therein if the concept of cause of action were to be introduced in it. Nor do we think that it is right to say that because Art. 300 specifically provides for suits by and against the Government of India, the proceedings under Art. 226 are also covered by Art. 300. It seems to us that Art. 300 which is on the same line as S. 176 of the Government of India Act, 1935, dealt with suits as such and proceedings analogous to or consequent upon suits and has no reference to the extraordinary remedies provided by Art. 226 of the Constitution. The concept of cause of action cannot in our opinion be introduced in Art. 226, for by doing so we shall be doing away with the express provision contained therein which requires that the person or authority to whom the writ is to be issued should be resident in or located within the territories over which the High Court has jurisdiction. It is true that this may result in some inconvenience to person residing far away from New Delhi who are aggrieved by some order of the Government of India as such, and that may be a reason for making a suitable constitutional amendment in Art. 226.
60. In order to remedy the practical constraints due to the restrictive interpretation of Article 226 after the aforesaid judgment, the Constitution (Fifteenth Amendment) Act was brought in 1963, which inserted Clause (1A), which was subsequently renumbered as Clause (2) vide Forty-second Constitutional Amendment, 1976. Clause 2 of Article 226 of the Constitution of India reads as under:
226.
.
..
(2) The power conferred by clause (1) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories.
61. The rationale behind the Constitution (Fifteenth Amendment) Act, 1963, which paved the way for the applicability of the concept of cause of action which was earlier rejected to be read into Article 226(1), is captured in the Statement of Objects and Reasons appended to the Constitution (Fifteenth Amendment) Bill, 1962 and the same reads as under:
Under the existing article 226 of the Constitution, the only High Court which has jurisdiction with respect to the Central Government is the Punjab High Court. This involves considerable hardship to litigants from distant places. It is, therefore, proposed to amend article 226 so that when any relief is sought against any Government, authority or person for any action taken, the High Court within whose jurisdiction the cause of action arise may also have jurisdiction to issue appropriate directions, orders or writs.
62. In the words of Sh. A.K. Sen, the then Law Minister, while introducing the Fifteenth Amendment Bill, the intention behind introducing the then Article 226(1A) which is the present-day Article 226(2) was as under:
We are amending Article 226 which has become very necessary in view of certain decisions of the Supreme Court that any application for the issue of writ under Article 226 against the Union of India can only be made in the Punjab High Court because Delhi, which is the headquarters of the Union of India happens to be within the jurisdiction of the Punjab High Court. So that, an ordinary man who wants to sue the Union of India in Kerala or Assam or Bengal or in far off places, has to travel all the way to Delhi and file his application in the Punjab High Court. In most cases for the common man whose resources are slender, it becomes an impossible thing. This demand has now arisen from everywhere. Though the original intention was never to make only the Punjab High Court the High Court against the Union of India, and it was contemplated that all the High Courts would have a similar jurisdiction, by a judicial decision of the Supreme Court, this unfortunate result has been brought about. Before the Constitution, the Privy Council took a different view altogether. They held in the Parlakimidi case and also in the case of Howrah Municipality that the seat of authority or Government was not material, so that, even if the seat, let us say, of the Union of India was Delhi, you could not sue in Delhi the Union of India for the issue of one of the writs unless the cause of action arose within the jurisdiction of this High Court also. They took quite a different view, quite the opposite view to what the Supreme Court has taken. When the law was in that state, this Constitution was framed thinking that every High Court will have jurisdiction within whose jurisdiction or territorial jurisdiction the cause of action had arisen. Therefore, we are trying to restore the position as it was in the contemplation of the framers of the Constitution in the Constituent Assembly, so that that man has not got to travel to Delhi with such scarce accommodation as is there.
63. According to DD Basu, Commentary on the Constitution of India, 8th Ed., Vol. 10, Articles 214-226 (Contd.), the rationale behind the amendments is explained in the following words:
Objects of Amendments
As a result of the view taken by the Supreme Court in Election Commn. v. Venkata and subsequent cases, it was location or residence of the respondent which gave territorial jurisdiction to a High Court under Article 226, the situs of the cause of action being immaterial for this purpose. The decision of the Supreme Court led to the result that only the High Court of Punjab would have jurisdiction to entertain petitions under Article 226 against the UOI and those other bodies which were located in Delhi.
The object of clause (1A), inserted by the 15th Amendment Act, 1963, was to restore the view taken by the High Court and to provide that the High Court within which the cause of action arises wholly or in part, would also have jurisdiction to entertain a petition under Article 226 against the UOI or any other body which was located in Delhi. The Amendment thus supersedes the Supreme Court decisions to the contrary.
The effect of the amendment is that it made the accrual of cause of action an additional ground to confer jurisdiction to a High Court under Article 226. As Joint Committee observed: This clause would enable the High Court within whose jurisdiction the cause of action arises to issue direction, orders or writs to any Government, authority or person, not withstanding that the seat of such Government or authority or the residence of such person is outside the territorial jurisdiction of the High Court. The Committee feels that the High Court within whose jurisdiction the cause of action arises in part only should also be vested with such jurisdiction. (Report of Joint CommitteeClause 8).
The Constitution (Fifteenth Amendment) came into force on 5th October, 1963. However, as seen above, this clause does not confer new jurisdiction on a High Court, but provides an additional ground and extends its jurisdiction beyond the boundaries of the State if the cause of action arose within its territory.
64. A perusal of Clause 2 of Article 226 indicates that the writ jurisdiction can be exercised by the High Court primarily in relation to the territories within which the cause of action, wholly or in part arises. However, the location of such Government or authority or residence of such person, outside the territories of the High Court will not deter the High Court from issuing the appropriate writ.
65. The introduction of Clause (2) in Article 226 of the Constitution of India widened the width of the area for issuance of writs by different High Courts, however, the same cannot be construed to completely dilute the original intent of the Constitution makers which is succinctly encapsulated in Clause (1) of Article 226. Rather, Clause (2) is an enabling provision, which supplements Clause (1) to empower the High Courts to ensure an effective enforcement of fundamental rights or any other legal right. Therefore, the power of judicial review cannot be circumscribed by the location of the authority against whom the writ is issued, however, the same does not mean that the constitutional mandate enshrined under Article 226 (1) can be completely neglected or whittled down.
66. On this aspect, it is significant to advert to a decision of the Co-ordinate Bench of this Court in the case of Jayaswals Neco Limited v. Union of India and Others,18 wherein, it was held that Article 226(2) has only extended the jurisdiction of the High Courts beyond its territorial limits but it does not supplant Article 226(1). The relevant paragraph of the said decision reads as under:
20. —
This amendment introduced the concept of cause of action which the Supreme Court had earlier refused to read into Article 226 (1). However, this does not mean that the concept of territorial jurisdiction under Article 226 (1) was supplanted by Article 226 (2). The decision of the Supreme Court in Election Commission, India v. Saka Venkata Subba Rao (supra) and Khajoor Singh (supra) were rendered in the context of Article 226 (1) and in the absence of any provisions of the nature of Article 226 (2). The introduction of Article 226 (2), as observed in the case of Navinchandra N. Majithia (supra) widened the width of the area in respect of writs issued by different High Courts. In fact, Article 226(2) can be construed as an exception to the limitations mentioned in Election Commission, India (supra) and approved in Khajoor Singh (supra). The power conferred on the High Courts under Article 226 could now be as well exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, in whole or in part, arose and it was no matter that the seat of the authority concerned was outside the territorial limits of the jurisdiction of that High Court. This distinction between the provisions of Article 226 (1) and 226 (2) has to be maintained. While Article 226 (1) empowers a High Court to issue writs to a person, authority or government within its territorial limits de hors the question of where the cause of action arose, Article 226 (2) enables High Courts to issue writs to persons, authorities or governments located beyond its territorial limits provided a cause of action arises (in whole or in part) within the territorial extent of the said High Court. What Article 226 (2) has done is to extend the jurisdiction of the High Courts beyond their territories in cases where part of the cause of action arises within its territories. Therefore, Article 226 (2) extends and does not supplant Article 226 (1). The decision of the Supreme Court in the case of State of Rajasthan and Ors. v. Swaika Properties and Anr.:1985 (3) SCC 217, Oil and Natural Gas Commission v. Utpal Kumar Basu and Ors.: 1994 (4) SCC 711 as well as Adani Exports (supra) and Kusum Ingots (supra) all pertain to Article 226 (2) of the Constitution and have reference to the question of cause of action. It is true, as observed in Kusum Ingots (supra), that the decision in Khajoor Singh (supra) would not be relevant insofar as the argument of cause of action is concerned inasmuch as Khajoor Singh (supra) was a decision rendered prior to the 15th Amendment of the Constitution. But, this does not mean that what Khajoor Singh (supra) has decided in respect of Article 226 (1) can be whittled down or ignored. That is a decision of seven judges of the Supreme Court and, with regard to the provisions of Article 226 (1), it is definitive.
[Emphasis supplied]
67. Thus, the salient aspects which emerge out of the aforesaid discussion can be delineated forthwith as:
(i) Article 226(2) does not take away the right of a High Court to dismiss a case on grounds of forum non-conveniens. The principles of forum non-conveniens and that of Article 226(2) operate in different field, where Article 226(2) (originally Article 226(1A)) was inserted to solve the problem of a litigant needing to go to a High Court where the seat of government authority was present.
(ii) In other words, merely because Article 226(2) allows jurisdiction to be conferred on a High Court in the absence of the seat of a government authority being under its jurisdiction; this does not in itself mean that the presence of a seat shall automatically grant jurisdiction.
(iii) Article 226(2) allows jurisdiction to be conferred if the cause of action, either in part or whole, had arisen in the jurisdiction of a High Court, however, where the purported cause of action is so minuscule so as to make a particular High Court non- convenient, it is then that the concept of forum non-conveniens applies.
68. The cause of action means a bundle of facts, which is necessary for the plaintiff to prove in order to succeed in the proceedings. It does not completely depend upon the character of the relief prayed for by the plaintiff. It is r