HC to examine validity of PIL against consent mechanism

Sebi lawyer argues that changes made to framework in 2012 makes petition invalid

The Delhi High Court has said that it will examine whether a amendment made by the Securities and Exchange Board of India ( Sebi) to its consent order mechanism last year will frustrate a pending petition against the settlement scheme.

The court said in an order following the hearing of a public interest litigation (PIL) filed by Delhi-based businessman Deepak Khosla challenging the validity of the mechanism introduced by the regulator through a circular dated April 20, 2007.

According to the order put up on the court website, the learned senior counsel appearing for the respondent/Sebi submitted that the circular dated 20th April, 2007 has since been amended  in May 2012 and that being so, “The cause of action as also the prayers which are made by the petitioner  in the present petition no longer survive.”

But Khosla’s lawyer argued that the amendment made to the circular does not

 have the effect to the challenge made to the circular dated 20th April, 2007 issued by Sebi. He maintained that Khosla was not challenging the amended circular, but, only confining his arguments to the circular dated 20th April, 2007.

“This aspect has to be examined as to whether the present petition would survive in view of the amended circular or has become infructuous,” the court said in its order posting the next hearing to April 12.

Khosla did not pick calls. When contacted, VIrendra Jain, president of Midas Touch Investors Association, which was allowed by the court to implead as a party to Khosla’s petition, said the court had conducted hearings without giving notice to the association. “We are a party to the petition. We had made our submissions. We were informed about a hearing on January 30. Though we were present on that day, Khosla did not turn.”

According to Jain, the court had adjourned the petition to April 25.

“But, our legal advisers are examining how there have been subsequent proceedings have been conducted and orders have been passed without notice to us,” he added.