Issue 2

WHETHER THE FACTS OF THE MATTER WARRANTED PASSING OF AN EX

PARTE AD INTERIM ORDER AND WHETHER SPB HAS EXERCISED ITS POWERS
WITHIN THE CONFINES OF LAW OF LAND.

It is submitted that SEBI is mandated to grant a hearing to parties before passing an interim
order. In the instant case, it is the humble contention on behalf of the directors that, SEBI has
violated principle of natural justice, by not giving the appellants a chance of personal hearing
before passing such interim order. It is stated that once prejudice has been done by violation of
natural justice, post decisional hearing cannot avail justice.It is humbly submitted that the facts
of the matter warranted passing of an ex parte ad interim order, SPB has violated the first
principle of natural justice, by not giving an appellants a chance of personal hearing before
passing such interim order. Therefore, SPB has not exercised its powers within the confines of
law of land
ISSUE – 2 WHETHER THE FACTS OF THE MATTER WARRANTED PASSING OF
AN EX PARTE AD INTERIM ORDER AND WHETHER SPB HAS EXERCISED ITS
POWERS WITHIN THE CONFINES OF LAW OF LAND.

1. It is humble submitted before the court that the facts of the matter warranted passing of an
ex parte ad interim order passed by SPB is not in its exercising powers within the confines of
law of land as [1.1] Doesn’t have power to call for information [2.1] Doesn’t provide the
prior notice to the Appellant.

[1.1] DOESN’T HAVE POWER TO CALL FOR INFORMATION

2. SBP summoned the compliance officer of Moon Pharma and directed Moon Pharma to
provide certain information with respect to the Agreement with Bockhardt including the
following: 1) detailed list of events starting from initial conversations with Bockhardt till the
execution of the final Agreement; 2) minutes of the internal meetings of its Board of
Directors with respect to discussions held for the Agreement; and 3) full list of the designated
persons of the Company who were involved in the discussions pertaining to the Agreement
along with the details of trading window closure.

o SECTION 20- Power to call for information

 The Board may call for information from the intermediary, its principal officer,
compliance officer, an issuer or its director, an investor or other client of the
intermediary or any other person associated with securities market.1

[2.1] DOESN’T PROVIDE THE PRIOR NOTICE TO THE APPELLANT

3. Darcy and Jane requested for inspection of all documents that were referred to and relied upon
by SPB while issuing the order, including but not limited to:

a. Call records available with SEBI

b. All documents obtained from Moon Pharma; and,

c. Internal File notings of the surveillance team of SBP with respect to the case.

o SECTION 23. Obligations of Intermediary on inspection:

(1) It shall be the duty of every director, proprietor, partner, trustee, officer, employee
and any agent of an intermediary who is being inspected, to produce to the inspecting
authority such books, accounts, records including telephone records and electronic
records and documents in his custody or control and furnish him with such statements
and information relating to its activities within such time as the inspecting authority may
require.

(2) The intermediary shall allow the inspecting authority to have reasonable access to
the premises occupied by such intermediary or by any other person, on his behalf and
also extend reasonable facility for examining any books, records including telephone
records and electronic records and documents in the possession of the intermediary or
any such other person and also provide copies of documents or other material which in
the opinion of the inspecting authority are relevant for the purposes of the inspection.

(3) Without prejudice to the provisions of sub-section (3) of section 11 of the Act, the
inspecting authority shall, in the course of inspection, be entitled to examine or record
statements of any principal officer, director, trustee, partner, proprietor or employee of
such intermediary.
1
The securities of Exchange Board of India ( SEBI),1992
 (4) It shall be the duty of every director, proprietor, trustee, partner, officer or employee
of such intermediary to give to the inspecting authority all assistance.2

Therefore, it is humbly submitted before the court that the facts of the matter warranted passing
of an ex parte ad interim order passed by SPB is not in its exercising powers within the confines
of law of land.

Respondant issue 2

ISSUE-2 WHETHER THE FACTS OF THE MATTER WARRANTED PASSING OF AN

EX PARTE AD INTERIM ORDER AND WHETHER SPB HAS EXERCISED ITS POWERS
WITHIN THE CONFINES OF LAW OF LAND?

1. It is submitted that the facts of the matter warranted passing of an ex parte ad interim
order and SPB has exercised its powers within the confines of law of land, it is the
humble contention on behalf of the respondent that, [1.1] SEBI doesn’t violated principle
of natural justice, that [2.1] pre-decisional hearing by SEBI is mandatory.

2. Ex-parte interim orders are made by regulatory authorities when there is urgency. In
Liberty Oil Mills & Ors. vs. Union of India & Ors. 3 the Supreme Court had observed
that the urgency must be infused by a host of circumstances, viz. large scale misuse and
attempts to monopolise or corner the market. Supreme Court further held that the
regulatory agency must move quickly in order to curb further mischief and to take action
immediately in order to in still and restore confidence in the capital market

[1.1] SEBI DOESN’T VIOLATED PRINCIPLE OF NATURAL JUSTICE WHILE PASSING

THE INTRIM ORDER.

2
ibid
3
AIR (1984) SC 1271
 3. It is most humbly submitted that in the instant case SEBI while issuing an ex-parte order
dated June 23, 2022, doesn,t violated principle of natural justice as Rule of audi alteram
partem means that a reasonable opportunity of being heard should be given to the
parties and in the instant case, the partiest are allowed to present before the committee
and put over there side infornt of the respondent.

{1.1.1} Rule of Audi Alteram Partem has been adhered to by SEBI.

4. The rule of audi alteram partem ensures that no one should be condemned unheard. 4It is
contended on behalf of the appellants that order passed without giving an opportunity of
pre- decisional hearing is a gross violation of principles of natural justice 5 as the rule of
audi alteram partem is the soul of principle of natural justice. 6

5. The principle of audi alteram partem has been held to be a fundamental principle of the
rules of natural justice. This requires the maker of a decision to give prior notice of the
proposed decision to the persons affected and an opportunity to make a representation.
The exercise of a power which affects the rights of an individual must be exercised in a
manner which is fair and just and not arbitrary or capricious. 7

6. In Automotive Tyre Manufacturers Assn. v. Designated Authority,8 the Hon'ble

Supreme Court held that, "It is thus, well settled that unless a statutory provision, either
specifically or by necessary implication excludes the application of principles of natural
justice, because in that event the court would not ignore the legislative mandate, the
requirement of giving reasonable opportunity of being heard before an order is made, is
generally read into the provisions of a statute, particularly when the order has adverse
4
Sangram Singh v. Election Tribunal, AIR 1955 SC 425 (India); Ashok Kumar Shankar v. Union of India, (2007) 4
SCC 54 (India).
5
Krishna Pal Singh v. State of Uttarakhand, (2021) SCC OnLine Utt 491 (India).
6
Kanwar Amninder Singh v. High Court of Uttarakhand, (2021) SCC OnLine Utt 157 (India).
7
Jai Ram Yadav v. State of U.P., 2020 SCC OnLine All 1362 (India).
8
(2011) 2 SCC 258 (India).
 civil consequences which obviously cover infraction of property, personal rights and
material deprivations for the party affected."

7. That a quasi-judicial order made without following the principles of natural justice is
void and nullity.9 The non-observance of natural justice is in itself prejudice to any man
and proof of prejudice independently proof of denial of natural justice is unnecessary.10

8. As, SEBI has adequate powers to pass ex-parte interim orders under section 11 and
section 11B of the SEBI Act. Let’s discuss the powers of SEBI:

Subject to the provisions of SEBI Act, it shall be the duty of SEBI to protect the interests of
investors in securities and to promote the development of, and to regulate the securities market,
by such measures as it thinks fit. [section 11(1) of SEBI Act].

Section 11B of the SEBI Act relates to ‘Powers to issue directions and levy penalty’. According
to the said provisions, save as otherwise provided in section 11 of SEBI Act (i.e. except, but,
other than), if after making or causing to be made an enquiry

[2.1] PRE-DECISIONAL HEARING BY SEBI IS THE GENERAL RULE.

9. It is most humbly submitted that in the instant case, SEBI had passed an ex-parte interim
order and through the same interim order which prohibited Moon Pharma from
accessing capital markets and raising funds till further orders. Further, Mr. Bennett was
prohibited from taking up a directorship in any other listed entity till further orders from
SPB. Thus, such an order was violative of the principles of natural justice.

9
A.R. Antulay v. R.S. Nayak, (1988) 2 SCC 602 (India).
10
F. L. Kapoor v. Jagmohan; AIR 1981 SC 136 (India).
 10. Regulation 10 of SEBI (PFUTP) Regulations also mandates that SEBI, after
consideration of the report referred in Regulation, if satisfied that there is a violation of
these regulations and after giving a reasonable opportunity of hearing to the persons
concerned, issue such directions or take such action as mentioned in Regulation 11 and
12. It is submitted that by analysing the said regulation, the term direction or action shall
include both interim and final orders.

{2.1.1} There was no urgency in the matter to dispense with pre-decisional hearing.

11. It is most humbly submitted that in the second proviso to Reg. 11 of SEBI (PFUTP)
Regulations, 2003, SEBI has been provided with the power to dispense with the
opportunity of pre-decisional hearing but the same has to be exercised only in situations
that demand extremely urgent proceedings.

12. It is argued that in absence of tearing hurry or urgency for the respondent to pass an ex
parte interim order, prohibited Moon Pharma from accessing capital markets and
raising funds till further orders and Mr. Bennett was prohibited from taking up a
directorship in any other listed entity till further orders for the appellants is harsh at the
ex-parte proceedings as the said allegations are being come into effect immediately from
June 23, 2022 and were to be in force until further orders.

13. In the case of North End Foods Marketing Pvt. Ltd. v. SEBI 11 it was held that,
"normally while passing an interim order, the principles of natural justice have to be
adhered to, namely, that an opportunity of being heard is required to be given."

11
2019 SCC OnLine SAT 6 (India).
 14. It is argued that there was no real urgency in the matter to pass an ex-parte interim
order12 especially during the pandemic period. There is no doubt that SEBI has the
power to pass an interim order and that in extremely urgent cases 13 SEBI can pass an ex-
parte interim order but such powers can only be exercised sparingly14 and only in
extreme15 urgent matters.16

{2.1.2} There were no reasons recorded by SEBI to dispense pre-decisional hearing.

15. That the rule requiring reasons to be given in support of an order is a basic principle of
natural justice which must inform the quasi-judicial process, which should be observed
in its proper spirit and “mere pretence of compliance with it would not satisfy the
requirements of the law.17

That, recording of reasons is a principle of natural justice and every judicial order must be
supported by reasons in writing. In S.N. Mukharjee v. UOI18 it was held that, "What is
necessary is that the reasons are clear and explicit so as to indicate that the authority has given
due consideration to the points in controversy." However, in the instant case, no reasons were
recorded in writing as to why no chance of pre-decisional hearing were provided to the
appellants.

Issue 2 respondant

12
Rajeev Vasant Sheth v. SEBI, 2020 SCC OnLine SAT 463 (India).
13
Affluence Fincon Services Pvt. Ltd. v. SEBI, 2020 SCC OnLine SAT 402 (India).
14
Anugrah Stock & Broking Pvt. Ltd. v. National Stock Exchange of India Ltd., 2020 SCC OnLine SAT 351
(India).
15
Cameo Corporate Services Limited v. SEBI, 2019 SCC OnLine SAT 249 (India).
16
Udayant Malhoutra v. SEBI, 2020 SCC OnLine SAT 76 (India); SEBI v. Udayant Malhotra, (2021) 1 SCC 15 219
(India).
17
Siemens Engg & Mfg. v. Union of India, AIR 1976 SC 1785 (India).
18
1990 AIR 1984, 1990 SCR Supl. (1) 44
WHETHER THE FACTS OF THE MATTER WARRANTED PASSING OF AN EX
PARTE AD INTERIM ORDER AND WHETER SPB HAS EXERCISED ITS POWERS
WITHIN THE CONFINES OF LAW OD LAND?

It is submitted that the facts of the matter warranted passing of an ex parte ad interim
order and SPB has exercised its powers within the confines of law of land, it is the humble
contention on behalf of the respondent that the SPB doesn’t violated principle of natural
justice, that the pre-decisional hearing by SEBI is mandatory.