WTM/MPB/EFD-1-DRA-II/ 35 /2018

SECURITIES AND EXCHANGE BOARD OF

MS. MADHABI PURI BUCH, WHOLE TIME MEMBER

Order Under Regulation 28 of Securities and Exchange Board of India (Intermediaries) Regulations, 2008 In respect of Sl. No NAME PAN 1. Commodities Limited AABCI2930D

In Re Inspection of Documents. ______

1. India Infoline Commodities Limited (hereinafter referred to as “IICL” / “Noticee”) a commodity broker / member of National Spot Exchange Limited (hereinafter referred to as “NSEL”), of India Ltd (hereinafter referred to as “MCX”) and National Commodity & Derivatives Exchange Limited (hereinafter referred to as “NCDEX”).

2. Pursuant to the default at NSEL in 2012 and Economic Offences Wing’s (hereinafter referred to as “EOW”) initial investigations / arrests / complaints received from investors against the members / brokers of NSEL (including IICL), NSEL vide complaint letters dated March 17, 2015 and March 24, 2015 and EOW via report dated April 04, 2015 had requested Securities and Exchange Board of India (hereinafter referred to as “SEBI”) to take appropriate/necessary action.

3. It is noted that on September 28, 2015, Forward Market Commission (hereinafter referred to as “FMC”) got merged with SEBI and pursuant to this merger, IICL on December 23, 2015, had made an application to SEBI for registration as a commodity broker. Further, it is noted that as per Finance Act 2015, an intermediary may continue to buy, sell or deal in a commodity derivatives as a commodity broker, if it has made an application for such registration within a period of 3 months till the disposal of such application.

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4. Further, pursuant to merger of FMC with SEBI, the regulation and supervision of the commodity derivatives brokers has been entrusted to SEBI. Therefore, in view of the abovementioned NSEL complaint letters and EOW report, SEBI had appointed Kirtane & Pandit LLP, Chartered Accountants (hereinafter referred to as “Auditor”) to carry out performance audit/inspection of IICL.

5. Audit report along with Annexures were submitted by the auditor to SEBI. Based on the findings of the auditor and further analysis of the same by SEBI, it was decided by SEBI to initiate enquiry proceedings against IICL in terms of the SEBI (Intermediaries) Regulations, 2008 (hereinafter referred to as “Intermediaries Regulations”).

6. SEBI vide order dated October 06, 2016 had appointed a Bench of Designated Authorities to enquire into the alleged violations of various provisions of the SEBI (Stock Brokers & Sub Brokers) Regulations, 1992, (hereinafter referred to as the “Brokers Regulations”), SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 (hereinafter referred to as “PFUTP Regulations”), Forward Contracts (Regulation) Act, 1952, (hereinafter referred to as “FCRA”), Prevention of Money Laundering Act, 2002 (hereinafter referred to as “PMLA”), Central Government Notifications and various Circulars / Code of Conduct, Guidelines, Bye Laws, Business Rules etc. of FMC / SEBI / NSEL / NCDEX / MCX.

7. In terms of regulation 27 of the Intermediaries Regulations, the Designated Authorities vide Enquiry Report dated April 11, 2017 in respect of IICL recommended inter alia, that the application of IICL submitted for registration as a commodity broker may not be considered in the interest of securities market and the application of IICL may be rejected. Subsequently, SEBI issued separate Show Cause Notice dated April 24, 2017 enclosing a copy of Enquiry Report dated April 11, 2017 (hereinafter referred to as “SCN” / “Enquiry Report”) to IICL wherein IICL were advised to reply to the SCN within 21 days from the receipt thereof.

8. IICL vide letter dated May 12, 2017 had acknowledgment the receipt of SCN.

9. IICL vide various letters/emails dated May 12, 2017, June 08, 2017, July 10, 2017, September 15, 2017, September 19, 2017, September 22, 2017, October 06, 2017, October 27, 2017, November 21, 2017 and January 09, 2018 etc. had sought inspection of documents

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as well as copies of documents and submitted that SEBI has not provided complete inspection of all documents to them. However, SEBI submitted that it had granted inspection to IICL on June 19, 2017 and copies of all relied upon documents were also provided to IICL through various letters dated June 21, 2017, August 29, 2017, November 08, 2017 and January 05, 2018.

10. In the interest of natural justice and as per regulation 28(2) of Intermediaries Regulations, the Noticee was granted an opportunity of personal hearing on January 24, 2018 at SEBI, Head Office, vide notice of hearing dated December 26, 2017.

11. The Noticee vide various aforesaid letters stated that the documents sought were required by them to finalize their reply and hence requested to grant an opportunity of hearing only after receipt of their detailed reply in the matter. In this regard, the Noticee had also cited the Order of Hon’ble Supreme Court in the matter of SEBI v. Price Waterhouse (Civil Appeal No. 6001 – 6002 and 6003-6004 of 2012 decided on 10.01.2017) wherein Supreme Court had held that a party before SEBI is entitled to get all the material on SEBI’s record.

12. In view of the stand of SEBI that it has granted inspection of all relied upon documents and the stand of the Noticee that they are entitled to get additional documents and their request that a hearing be fixed only after they file detailed reply based on all the requested documents, in order to overcome the impasse resulting from the conflicting stands, SEBI vide email dated January 23, 2018 informed the Noticee that the hearing scheduled on January 24, 2018 would be in respect of inspection of documents.

13. On January 24, 2018 Ms. Isha Raman and Mr. Supreme Waskar, Advocates from Suvan Law Advisors, along with Ms. Mamta Singh, Mr. Ravi Ramachandran and Mr. Chintan R. Modi from IICL, Authorized Representatives (hereinafter referred to as “ARs”) of IICL appeared for the hearing. Following was noted during the hearing held on January 24, 2018:

“…… (a) ARs requested for an adjournment of the hearing on account of the fact that present matter involves issues with respect to Constitutional law, jurisdiction of SEBI in the matter etc. and for that purpose they require various documents listed out in their representations before SEBI dated November 21, 2017 and the fundamental question

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of relevance of the said documents in the matter has to be argued by a Senior Counsel and they are in the process of briefing a Senior Counsel in the matter. (b) The undersigned explained the ARs of IICL that they were informed by SEBI that today’s hearing before this forum was to resolve the issues of inspection of documents between SEBI and IICL i.e. IICL claims that the SEBI has not provided the complete inspection of documents to them, whereas SEBI claims that all relied upon documents were provided to IICL. In this regard, the undersigned note that though IICL/ARs were aware of the purpose of today’s hearing, Senior Counsel of IICL was not present in the hearing and IICL/ARs state that the relevance of the said documents in the matter has to be argued by a Senior Counsel and they are in the process of briefing a Senior Counsel in the matter. (c) The undersigned note with great displeasure that IICL/ARs have not taken seriously the value of time of this forum as they have neither submitted any arguments as to why they want the information nor have they even acknowledged whether the long list of documents claimed to have been given by SEBI have been received by them or not, whereas one day before i.e. last minute adjournment has been sought by them. (d) Thereafter, ARs submitted that they have not received approximately 15 documents listed out in their representation dated November 21, 2017 or received illegible documents, etc., the details are as under: Table – 1

Items in Documents sought by the Noticee Submissions during the hearing by representation the Noticee of the Noticee Sl. No 5 Year wise and client wise concentration of UCCs in the SEBI replied that Query is not specific. instances of UCC modifications as mentioned in excel In this regard, the Noticee needs file referred in Document no. 7 (page no. 4 of 6). Senior Counsel to argue the relevance of the documents. Sl No. 6 FMC's vide its letter dated 16th September, 2013 called SEBI provided the copy of the letter for the Agenda notes and Minutes of the meetings of the without annexures. Board of Directors of NSEL as referred in point no. 6.3, page no. 7 of FMC order dated December 17, 2013.

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Sl No. 7 The internal audit report of NSEL for the period 1st SEBI provided Copy of internal audit April, 2011 to 30th September 2011 as referred in point without Annexure IX no. 6.4, page no. 7 of FMC order dated December 17, 2013. Sl. No. 8 Forensic Report of M/s. Grant Thornton India LLP as Certain pages are illegible referred in point no.11, page no. 31 of FMC order dated December 17, 2013. Sl. No. 12-19 Names of all the other trading members, List of NSEL SEBI mentioned that data not members who have been granted registration by-SEBI relevant/relied upon in the Enquiry in any capacity, List of NSEL brokers who have been Report denied registration by SEBI pursuant to its application to SEBI in any capacity, Names of all the other In this regard, the Noticee need Senior individuals/listed companies to whom any Show Cause Counsel to argue the relevance of the Notice has been issued by SEBI In this matter (if any), documents. Total number of investors who had traded on NSEL, Number of entities out of above (i.e. investor) against whom any proceedings have been initiated in the context of their trading on NSEL, Number of defaulters out of above against whom any proceedings have been initiated by SEBI and Names of NSEL brokers and persons of such NSEL brokers against whom a look out notice issued by EOW of Mumbai Police in context of NSEL matter. Sl. No. 23 Copy of order dated October 6, 2016. SEBI mentioned that query is not specific as to which order the broker has requested for. In this regard, the Noticee clarified that they require Appointment order dated October 6, 2016 of Designated Authority in the matter. Sl. No. 24 Basis to suggest that PPT/misleading information was SEBI provided Copy of letter dated removed by NSEL. February 12, 2013 and letter dated July 12, 2013 have been made available to the broker.

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However, the Noticee sought evidence w.r.t. the date of removal of objectionable part of PPT by NSEL. Sl. No. 31 FMC letters to NSEL, that it had failed to comply with SEBI mentioned that query is not its direction in timely manner and also has submitted specific, other relevant documents wrong Information regarding SGF. have been provided. In this regard, the Noticee need Senior Counsel to argue the relevance of the documents.

Sl. No. 35 Minutes of Board Meeting-dated 31st March, 2010 and SEBI mentioned that Item no 26 of list 11th August, 2010. of documents provided on November 08, 2017 The Noticee received minutes of Board meeting of NSEL dated 26/5/2010 only. They have not received Minutes of Board Meeting-dated 31st March, 2010 and 11th August, 2010. The said documents are required as SCN mention about FMC Order wherein it was mentioned about the Board meeting minutes of NSEL and credit facility extended to members. Sl. No. 41 Copy of file notings approving letter dated October 06, SEBI mentioned that Copy of Forensic 2016 for appointing the Designated Authorities as Auditors Report and relevant analysis referred in the point no. 2 page no. 2 of the SEBI Show made by SEBI on the same has been Cause Notice dated April 24, 2017. provided. However, we have not received the copy of file notings. Sl.No. 44-48 Out of 22 defaulter brokers of NSEL (buyers), name of SEBI mentioned that query is not the defaulter brokers whose performance specific or enquiry report is self- audit/inspection of books of accounts have been ordered explanatory. by SEBI as referred in the point no. XVIII page no. 10 of During the hearing, SEBI clarified to the SEBI Show Cause Notice dated the Noticee that for items from 44-48 April 24, 2017.; Copies of any Bye- there is nothing further to provide. Law/mandate/Rule/Regulation/Circular prescribing

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that the Noticee was to verify the authenticity of warehouse receipts and existence of warehouse goods as referred in the point no. 32 page no. 51 of the SEBI Show Cause Notice dated April 24, 2017 etc.

Sl. No. 49 Documents/particulars to show that the SCN dated April SEBI mentioned that Copies of 27, 2012 issued by DCA, GOI to NSEL was available in relevant documents have been the public domain and was also widely covered In the provided. media through news articles. Letter dated 11th October The Noticee submitted that the article 2013 by FTIL. Documents/particulars to show that the in Economic Times says about SCN dated April 27, 2012 issued by DCA, GOI to NSEL issuance of SCN to NSEL but not the was available in the public domain and was also widely entire SCN. covered in the media through news articles. Letter dated In this regard, during the hearing 11th October 2013 by FTIL. SEBI clarified that only news report as to issuance of SCN to NSEL was in the ET and not the entire SCN.

(e) Further, SEBI is instructed to provide legible copies of documents sought by the Noticee / ARs. SEBI is also instructed to communicate the Noticee that Office notings are for internal purpose and the crystallization of finding comes only in Enquiry. (f) Considering the above submissions of the Noticee regarding non receipt of several documents, the Noticee is advised to submit a list of documents required and further the Noticee has been granted the liberty to conduct inspection and get copies of documents from SEBI before the next date of hearing in the matter. (g) Hearing in the matter is adjourned to February 07, 2018……”

14. Pursuant to the hearing held on January 24, 2018, IICL was granted an inspection of documents on January 30, 2018 and February 02, 2018 and IICL had conducted the inspection of documents on said dates.

15. On February 07, 2018 Mr. Shyam Mehta, Sr. Counsel, Mr. Abhishek Borgikar and Ms. Isha Raman, Advocates along with Ms. Mamta Singh, Mr. Ravi Ramachandran and Mr. Chintan R. Modi from IICL, Authorized Representatives (“ARs”) of IICL appeared for the hearing. ARs made their oral submission with respect to inspection of documents. The matter was heard at length. ______Order in respect of India Infoline Commodities Limited Page 7 of 16

16. During the hearing, ARs of IICL stated that IICL has sought for inspection of documents as well as copies of documents by their various letters/emails and submitted that SEBI has not provided complete inspection of all relevant documents to them, whereas SEBI states that all relied upon documents were provided to IICL vide inspection granted on June 19, 2017 and copies of documents were also provided to IICL through various letters dated June 21, 2017, August 29, 2017, November 08, 2017 and January 05, 2018. ARs also stated that pursuant to the hearing held on January 24, 2018, SEBI had granted the inspection of documents on January 30, 2018 and February 02, 2018, wherein SEBI had provided the copies of additional documents sought by them through various aforesaid letters as well as at the time of hearing held on January 24, 2018. Also, at the time of inspection held on January 30, 2018 and February 02, 2018, SEBI had provided the legible copies of documents sought by them.

17. During the course of hearing ARs were advised to submit their rationale for seeking various additional documents in the matter. ARs submitted that the rationale for seeking the documents is based on three categories viz., (A) Documents necessary for dealing with the issue of jurisdiction (B) Documents necessary for dealing with the issue of discrimination and (C) Documents relating to the merits of the case referred to or relied upon in the Enquiry Report. ARs vide letter dated February 07, 2018 once again submitted the list of below mentioned documents which was already submitted by IICL and requested for inspection of the said documents. ARs explained the rationale/relevance of seeking inspection of below mentioned documents. ARs further stated that complete inspection of all documents as well as copies of the same are required to make a comprehensive reply to SCN as the said documents relate to the specific averments/allegations made in the SCN. Detailed item by item discussion held during the hearing was as follows: “…………

Table No. 2 Sl. No. Documents/information sought Observations and Conclusion 1 List of NSEL members who have IICL states that the underlying basis for the present been granted registration by proceedings is the very participation of IICL as a broker SEBI pursuant to its application in NSEL. All the brokers trading in NSEL at the relevant in any capacity. time have undertaken the same activities as IICL. Despite this SEBI has granted registration to a majority of such

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Sl. No. Documents/information sought Observations and Conclusion brokers but has handpicked IICL and initiated proceedings against it. IICL requires this information to understand why IICL is being treated differently.

SEBI clarified to IICL that the selection of 5 brokers including IICL was on the basis of objective criteria viz., based on 2 documents i.e. EOW report and NSEL complaint, copies of which were already provided to IICL.

Further, it was clarified by SEBI that at the moment, qua the NSEL matter, no proceedings have been initiated against any other brokers (other than the 5 brokers) or any investors; however, SEBI has the right to initiate any proceedings in future as it deems fit.

Given this unequivocal stand by SEBI, IICL has all the information it needs to make its representations qua the issue of discrimination and would not be disadvantaged in any way without access to the additional documents/information in this regard.

SEBI’s stand on the same stands confirmed / clarified. 2 List of NSEL brokers who have IICL submits that the rationale is the same as Sr. no. 1 been denied registration by SEBI above of this table. pursuant to its application to SEBI in any capacity. SEBI’s clarification is same as Sr. no. 1 above of this table. 3 Copy of file noting recording the IICL states that SEBI has taken a considered view in approval for issuing letter dated many proceedings before various fora/courts that it has April 04, 2016 by SEBI for no jurisdiction in so far as the NSEL scam is concerned. appointment of the auditor to Despite this, it has initiated action against IICL in look into our trading on National relation to its activities as a broker in NSEL. IICL Spot Exchange Limited (NSEL) requires this information to understand the reason for as referred in the point no. 1 initiating proceedings by appointing an auditor to look

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Sl. No. Documents/information sought Observations and Conclusion page no. 2 of the SEBI Show into IICL trading activities in NSEL although SEBI is of Cause Notice dated April 24, the view that it has no jurisdiction over the NSEL scam. 2017. SEBI states that copy of relevant portion of Office Note for approval of appointment of Auditor and letters issued to the Auditor was provided to IICL on February 02, 2018.

SEBI further explained that file notings are for internal purpose and the cyrstalised decision to do audit and appointment of auditor and issue of SCN is already shared with IICL in the form of SCN and communication of audit.

Further, it is clarified by SEBI that since IICL has applied to SEBI, for the purpose of granting registration to IICL to act as a commodity broker, SEBI has jurisdiction to determine whether IICL is a fit and proper person to act as a commodity broker. SEBI further states that the existence or absence of jurisdiction is determined only by statute.

SEBI’s stand on the same stands confirmed / clarified. 4 Affidavits or any other IICL states that SEBI has taken a considered view in documents filed by SEBI in any many proceedings before various fora/courts that it has court proceedings where it has no jurisdiction in so far as the NSEL scam is concerned. been stated on oath that no Despite this, it has initiated action against IICL in regulatory action will be taken relation to its activities as a broker in NSEL. IICL by SEBI with respect to the NSEL requires this information to understand the reason for Scam. initiating proceedings by appointing an auditor to look into IICL trading activities in NSEL although SEBI is of the view that it has no jurisdiction over the NSEL scam. SEBI is instructed to convey their stand with respect to the same.

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Sl. No. Documents/information sought Observations and Conclusion It is clarified by SEBI that since IICL has applied to SEBI, for the purpose of granting registration to IICL to act as a commodity broker, SEBI has jurisdiction to determine whether IICL is a fit and proper person to act as a commodity broker. SEBI further states that the existence or absence of jurisdiction is determined only by statute.

SEBI further explained that requested document has not been relied upon by SEBI in the SCN.

SEBI’s stand on the same stands confirmed / clarified. 5 List of entities (i.e. investors) IICL submits that the rationale is the same as Sr. no. 4 against whom any proceedings above of this table. have been initiated by SEBI in the context of their trading on SEBI’s clarification is same as Sr. no. 1 and 4 above of NSEL. this table. 6 List of defaulters against whom IICL submits that the rationale is the same as Sr. no. 4 any proceedings have been above of this table. initiated by SEBI in the context of their trading on NSEL SEBI’s clarification is same as Sr. no. 1 and 4 above of this table. 7 List of brokers agent whom look IICL states that it wants to know whether SEBI has taken out notice was issued by EOW action against all those entities against whom lookout with respect to NSEL Scam and notice was issued by EOW or SEBI has handpicked some action is taken by SEBI. of the entities selectively, and if so, the basis for such a selective approach.

SEBI’s clarification is same as Sr. no. 1 above of this table.

………..”

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18. With respect to the issue of jurisdiction, on the basis of documents available on record, it is observed that since the Noticee has applied to SEBI, for the purpose of granting registration to the Noticee to act as a commodity broker, SEBI has jurisdiction, inter alia, to determine whether the Noticee is a fit and proper person to act as a commodity broker. Further, the existence or absence of jurisdiction is determined by statute as the statute can vest or oust the jurisdiction and any representations or statements made by any party are not material to the arguments on jurisdiction. Thus, I am of the view that the Noticee is not disadvantaged in any way without access to additional documents/information in this regard.

19. With respect to the issue of discrimination, I note that, the following observations of the Hon’ble Supreme Court in the context of argument of discrimination to claim negative equality in Union of India and anr. vs. International Trading Co. and anr. (AIR 2003 SC 3983) dated May 07, 2003, would be squarely applicable to the facts of this case.

“……two wrongs do not make one right. A party cannot claim that since something wrong has been done in another case directions should be given for doing another wrong. It would not be setting a wrong right, but would be perpetuating another wrong. In such matters there is no discrimination involved. The concept of equal treatment on the logic of Article 14 of the Constitution of India, 1950 (in short ‘the Constitution’) cannot be pressed into service in such cases. What the concept of equal treatment presupposes is existence of similar legal foothold. It does not countenance, repetition of a wrong action to bring both wrongs on a par. Even if hypothetically it is accepted that a wrong has been committed in some other case by introducing a concept of negative equality the respondents cannot strengthen their case. They have to establish the strength of their case on some other basis and not by claiming negative equality……”

20. While Hon’ble Supreme Court has clearly laid down the non-availability of the above ground of discrimination to establish the strength of one’s case, even otherwise, when an argument of discrimination is advanced on the ground of violation of Article 14 of the Constitution of India, the same is in effect challenging the decision taken by SEBI in its administrative capacity to launch action against the Noticee. I consider that this quasi-judicial forum is not the right forum to test the decision, already taken by SEBI in its administrative capacity on this ground. Needless to say, Noticee has other appropriate forum for judicial review of administrative action of SEBI on the ground of perceived discrimination.

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21. Without prejudice to paragraphs 19 & 20 above, with respect to the issue of discrimination, on the basis of documents available on record, it is noted that the stand taken by SEBI in selection of the 5 brokers (including Noticee) for initiating proceedings against them is that the selection was on the basis of two documents i.e. EOW report and NSEL complaints; and admittedly copies of both documents have been provided to the Noticee. It is also noted that, at the moment, qua the NSEL matter, no proceedings have been initiated against any other brokers (other than the 5 brokers) or any investors; however, needless to say, SEBI has the power to initiate any proceedings as it deems fit, if warranted at any point of time as per law. Thus, I am of the view that given this unequivocal stand by SEBI, the Noticee has all the information it needs to make its representations qua the issue of discrimination and would not be disadvantaged in any way without access to additional documents/information in this regard.

22. From the proceedings of inspection of documents dated January 30, 2018 and February 02, 2018 and Table No. 1 & 2 mentioned above at paragraphs 13 & 17 respectively, the only impasse between SEBI and IICL was with respect to the documents mentioned at Table No. 2 at paragraph 17. I note that with respect to the documents mentioned at Table No. 2 at paragraph 17 SEBI has given its clarification in the said table. From Table No.2, I note the following:

(a) The documents mentioned at Sr. No. 1, 2, 5, 6 & 7 on Table No. 2 lead to the issue of discrimination. The issue of discrimination is discussed at paragraph 21 above. (b) The documents mentioned at Sr. No. 3 & 4 of Table No. 2 lead to the issue of jurisdiction. The issue of jurisdiction is discussed at paragraph 18 above.

23. While discussing on the scope of right of fair hearing, in Kanwar Natwar Singh vs Directorate of Enforcement & Anr (MANU/SC/0795/2010), the Hon’ble Supreme court in its order dated October 05, 2010 reiterated that “…the right to fair hearing is a guaranteed right. Every person before an Authority exercising the adjudicatory powers has a right to know the evidence to be used against him. This principle is firmly established and recognized by this Court in Dhakeswari Cotton Mills Ltd. Vs. Commissioner of Income Tax, West Bengal [(1955) 1 SCR 941, MANU/SC/0073/1954]……”

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24. The Hon’ble Supreme Court further held in its order dated October 05, 2010 passed in Kanwar Natwar Singh vs Directorate 0f Enforcement & Anr (MANU/SC/0795/2010) that “…even the principles of natural justice do not require supply of documents upon which no reliance has been placed by the Authority to set the law into motion. Supply of relied on documents based on which the law has been set into motion would meet the requirements of principles of natural justice”. “…Concept of fairness is not a one way street. The principles of natural justice are not intended to operate as roadblocks to obstruct statutory inquiries. Duty of adequate disclosure is only an additional procedural safeguard in order to ensure the attainment of the fairness and it has its own limitation.

25. I also note that Hon’ble Securities Appellate Tribunal (hereinafter referred to as “SAT”) made the observations of in the matter of Shri B. Ramalinga Raju v. SEBI (SAT order dated May 12, 2017, MANU/SB/0057/2017) …. “There can be no dispute that while determining the rights and obligations of the parties the quasi judicial authority must adhere to the principles of natural justice which inter alia, includes the obligation to furnish requisite documents on the basis of which charges are framed and permit cross-examination of the persons whose statements are relied upon ….”

26. I also note that the Noticee has placed reliance on the decision of the Hon’ble Supreme Court in case of SEBI v. Price Waterhouse (Civil Appeal No. 6003-6004 of 2012 decided on 10.01.2017). However, as regards the applicability of the said decision of Hon’ble Supreme Court to other cases in general, the following observations of Hon’ble SAT in the matter of Shri B. Ramalinga Raju v. SEBI (SAT order dated May 12, 2017, MANU/SB/0057/2017) are noteworthy:

“… Apex Court in case of Price Waterhouse has specifically recorded that the directions given in that case are general directions given as and by way of clarifications without going into the merits of the case. Therefore, directions given in the facts of Price Waterhouse cannot be said to be the ratio laid down by the Apex Court applicable to all other cases. In these circumstances, appellants are not justified in contending that the directions given by the Apex Court in case of Price Waterhouse must be applied to the case of the appellants.”

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Thus, the observations of Hon’ble Supreme Court in the matter of SEBI v. Price Waterhouse being case specific in nature, cannot be applied to the facts of the present case. In view of the above facts, circumstances and observations of Hon’ble SAT, I am not inclined to accede to the request of Noticee for grant of inspection of all the documents collected during examination as the relied upon documents have already been granted in consonance with the principles of natural justice.

27. Thus, upon consideration of the submissions of the Noticee, I note that Noticee has availed various opportunities of inspection of documents and has already obtained the copies of various documents from SEBI as outlined above and hence I am of the view that a fair opportunity to defend the case has thereby been granted to the Noticee by way of granting inspection of documents. I also note that IICL vide letter dated June 18, 2018 had submitted its reply dated June 15, 2018 on merit.

28. I note that the issue of jurisdiction and discrimination is discussed at paragraphs 18 and 21 above respectively. From paragraph 22, I note that SEBI had confirmed its stand in respect of documents mentioned at para 22(a) and 22(b). I am of the view that Noticee is not disadvantaged in any way without access to additional documents / information.

29. In summary, I am of the view that the Noticee has already been provided with all the relevant documents and clarifications which enable the Noticee to submit its defence in the present proceedings.

30. As a normal practice, the outcome on the issues of inspection is addressed by way of administrative notices/letters sent by SEBI. If formal orders are to be passed on every objection/issues raised by each Noticee in every proceeding, it will ultimately result in a multiplicity of orders in one and the same proceeding and further result in delay of dispensation of justice and also clog-up the quasi-judicial and appellate forum with unwarranted litigations. This will become a tool in the hands of entities who may not have substantive submissions to make on merit and seek to delay and wriggle out of rigors of timely enforcement action by raising such pleas with the intention of delaying final adjudication of the case on merits. SEBI has already passed an order on the aspect of outcome of inspection in a related matter Phillip Commodities India Pvt. Limited stating that the said order will not be cited as precedent. In the interest of uniformity to the related matter this ______Order in respect of India Infoline Commodities Limited Page 15 of 16

order is passed. Thus, I am of the opinion that this order should not be cited as a precedent in every matter where inspection is sought by parties. This order is passed to clarify expressly this stand i.e. outcome on the issues of inspection shall be addressed/communicated by way of administrative notices/letters.

31. Thus, in the interest of conclusion of the proceedings initiated vide SCN dated April 24, 2017, I direct the Noticee to submit its additional written submission if any within a period of 2 weeks from the date of this order and to appear for a personal hearing on merits on September 27, 2018 at 10:30 A.M., Head Office, Mumbai. If the Noticee opts not to submit additional written submission or appear for the personal hearing on merits on the scheduled date or do both, then, in the interest of justice and to avoid any further delay in bringing the present quasi-judicial proceedings to its logical conclusion, the proceedings on merits shall proceed on the basis of material available with SEBI.

32. A copy of this order may be served on the Noticee by e-mail/ speed-post/hand-delivery immediately.

-Sd- Date: AUGUST 30, 2018 MADHABI PURI BUCH

Place: MUMBAI WHOLE TIME MEMBER

SECURITIES AND EXCHANGE BOARD OF INDIA

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