IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL No. 1167 of 2022
[@ SPECIAL LEAVE PETITION (CRL) NO. 3417/2022]
RELIANCE INDUSTRIES LIMITED                    … APPELLANT
VERSUS
SECURITIES AND EXCHANGE 
BOARD OF INDIA & ORS.  … RESPONDENTS
J U D G M E N T
N.V.     RAMANA    , CJI   
1. Leave granted.
2. This   appeal   is   filed   against   the   impugned   order   dated
28.03.2022,   passed   by   the   High   Court   of   Judicature   at
Bombay   in   Criminal   Interim   Application   No.   1945   of   2021   in
Criminal Revision Application No. 209 of 2020.  
1 REPORTABLE

3. Brief   facts   necessary   for   disposal   of   this   appeal   are   that   a
complaint   was   filed   on   21.01.2002   by   one   Shri   S.
Gurumurthy, with the Securities and Exchange Board of India
[for short ‘the SEBI’] against Reliance Industries Ltd. [for short
‘RIL’],   its   associate   companies   and   its   directors,   alleging   that
they   fraudulently   allotted   12   crore   equity   shares   of   RIL   to
entities   purportedly   connected   with   the   promoters   of   RIL,
which   were   funded   by   RIL   and   other   group   companies   in
1994.   It was alleged that the company and its directors were
in   violation   of   Section   77   of   the   Companies   Act,   1956.   Based
on   the   aforesaid   complaint,   the   SEBI   appointed   an
investigating   officer   to   inquire   into   the   aforesaid   complaint.
Accordingly,   a   report   was   submitted   by   the   said   investigating
officer on 04.02.2005.  
4. It   may   be   necessary   to   note   that   SEBI   chose   not   to   take   any
action   with   respect   to   the   aforesaid   letter.     The   appellant
alleged   that   a   note   was   prepared   by   the   Legal   Affairs
Department  of the SEBI  on 17.05.2006, wherein it was noted
that   the   report   had   not   brought   out   any   specific   violation   of
2

any legal provision by RIL. However, the note was said to have
observed   that   there   was   requirement   of   an   opinion   by   an
external   expert   inter   alia   on   the   possibility   of   initiating
appropriate  criminal   proceedings  against   RIL.   In  this   context,
a   retired   Judge   of   this   Court,   Justice   (Retd.)   B.N.   Srikrishna
was   approached   by   SEBI   for   the   same.     The   learned   retired
Judge is stated to have given his first opinion to SEBI, which
was divulged by SEBI in parts, to the appellant herein.  
5. On 16.04.2010, SEBI sent a letter to RIL alleging that RIL had
funded   purchase   of   its  own   shares   by   38   related   entities   and
thereby violated Section 77 (2) of the Companies Act, 1956 and
consequently, violated Regulations 3, 5 and 6 of the Securities
and   Exchange   Board   of   India   (Prohibition   of   Fraudulent   and
Unfair   Trade   Practices   relating   to   Securities   Market)
Regulations, 1995.   RIL, in reply, addressed numerous letters
to SEBI requesting for copies of the documents and submitting
inter   alia   that   the   issue   concerning   violation   of   Section   77   of
the   Companies   Act,   1956   was   examined   by   the   Ministry   of
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Corporate   Affairs   which   had   concluded   that   the   transaction
was compliant with the applicable law.  
6. In   any   case,   the   Adjudicating   Officer   of   SEBI   issued   a   show
cause   notice   to   the   promoters   of   RIL   under   Rule   4   of   the
Securities and Exchange Board of India (Procedure for Holding
Inquiry and Imposing Penalties by Adjudicating Officer) Rules,
1995   alleging   violation   of   Regulation   11(1)   of   the   SEBI
Takeover Regulations (as it then stood).  
7. It   is   borne   out   from   the   records   that   an   Office   Memorandum
dated   18.7.2011   was   issued   by   the   Ministry   of   Corporate
Affairs wherein it was noted that provisions under  Section 77
of the Companies Act, 1956 was not attracted.  
8. When   the   matter   stood   thus,   on   29.09.2011,   RIL   filed   a
settlement   application   before   SEBI,   without   prejudice   to   its
rights,   in   order   to   put   a   quietus   to   the   aforesaid   issue   which
had taken place many years ago.  
9. In any case, SEBI issued a letter dated 23.04.2014, answering
the   request   of   documents   sought   by   the   appellant   herein   in
the following manner:
4

“With   regard   to   the   documents/information
sought in paragraphs 5(a) to (d) of the said letter,
SEBI’s response is as under:
1. Request   5(a):   The   copy   of   the  opinion   received   by
SEBI on June 11, 2009 from a retired judge of the
Hon’ble   Supreme   Court   of   India   cannot   be
provided   since   it   is   privileged   and   confidential   in
nature.
2. Request   5(b):   a   copy   of   the   case   for   opinion
provided   by   SEBI   to   the   Hon’ble   retired   judge   for
seeking the opinion is enclosed.
3. Request   5(c):   A   copy   of   the   communication   from
Ministry   of   Corporate   Affairs   dated   February   7,
2012   and   dated   September   1,   2011   forwarding
letter dated July 18, 2011 is enclosed.
4. Request   5(d):   A   copy   of   the   relevant   opinion   /
views   dated   April   6,   2006,   June   11,   2009   and
August   25,   2010   of   the   legal   department   of   SEBI
are enclosed.” 
10. It   is   a   matter   of   record   that   in   the   year   2017­18,   the   SEBI
decided to re­examine the issue and accordingly sought advice
of Justice (Retd.) B.N. Srikrishna for the second time.  Justice
(Retd.) B.N. Srikrishna addressed a letter dated 26.07.2017 to
the SEBI in the following manner:
“Considering   the   importance   of   the   matter   I   am   of
the   view   that   some   very   senior   person   should   be
consulted in this matter.
5

I   would   suggest   SEBI   to   approach   Mr.   Y.H.
Malegam,   Chartered   Accountant,   who   may   be
consulted   in   this   matter.     He   is   a   person   of   high
standing   and   great   repute.     In   my   opinion,   he
would be the most appropriate person to advise us
as to whether the monies transferred to RUPL and
RPTL   were   towards   project   advances   and   other
charges or were merely round tripping.
You may depute one senior person to meet him and
discuss with him the facts.  It would enable him to
take a view in the matter and make a report to you.
After   the   report   of   Mr.   Malegam   is   received,   you
may further discuss the matter with me.”
11. It is stated by the appellant that Mr. Y.H. Malegam, Chartered
Accountant   examined   the   records   of   RIL   and   various   other
companies and submitted his report to SEBI.    
12. Based   on   the   report   of   Mr.   Y.H.   Malegam,   an   opinion   was
sought from the learned retired Judge for the second time.
13. On   21.01.2019,       the   appellant   addressed   a   letter   to   SEBI
seeking   further   material   in   connection   with   the   pending
settlement application in the following manner:
“Accordingly,   we   request   SEBI   to   provide   us
inspection and copies of the following in connection
with the subject settlement:
(a) All further material collected by SEBI;
(b) Further internal reports and noting;
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(c) Reports   from   external   experts,   including
report   from   Shri   Y.H.   Malegam,   which   was
confirmed   by   the   Committee   as   having   been
received;
(d) Any   further   case   for   opinion   and   opinion
obtained by SEBI.”
14. In   reply,   SEBI   rejected   the   request   for   disclosure   of   the
documents in the following manner:
“With  regard  to your   request for   the said  report, it
may be noted that no such report or other material
as asked is asked   (sic)   is made part of the pending
settlement proceedings.   Further, your  attention is
drawn   to   Regulation   13(2)(a)   of   the   SEBI
(Settlement   Proceedings)   Regulations,   2018,   which
reads as under:
“(a)   Call   for   relevant   information,   documents   etc.,
pertaining to the alleged default(s) in possession of
the applicant or obtainable by the applicant;
Explanation   –   Nothing   in   these   regulations   shall
confer   a   right   upon   the   applicant   to   seek
information from the Board or require the Board to
seek   information   from   any   other   person   for   the
purpose   of   relying   upon   it   in   the   settlement
proceedings   or   request   the   Board   to   permit   it   to
present   information   not   already   disposed   in   the
applicant, [Illegible] the applicant our   (sic)   aware of
at   the   time   of   making   the   application   or   which
information   upon   diligent   enquiry   being   made
could bare became known to the applicant.”
In   view   of   the   same,   I   am   directed   to   inform   you
that   the   request   for   the   said   report   and   other
material has not been acceded to.”
7

15. Aggrieved   by   the   aforesaid   communication   of   the   SEBI,   the
appellant   challenged   the   same   before   the   High   Court   of
Bombay   in   Writ   Petition   (Lodg.)   No.   300   of   2019.     The   High
Court,   vide   order   dated   04.02.2019,   dismissed   the   aforesaid
petition.   It   may   not   be   out   of   context   to   note   that   SEBI   also
rejected   the   supplementary   application   filed   by   the   appellant
herein.  
16. On   16.07.2020,   SEBI   filed   a   complaint   in   the   Court   of   SEBI
Special Judge, Mumbai praying therein as under:
“(a) That   this   Hon’ble   Court   may   be   pleased   to
issue   the   process   against   the   accused   for   the
continuing offences punishable under Section 24(1)
r/w Section  27 of  the  SEBI  Act, 1992 as amended
in  2002,  for   having  violated Regulations  3,5  and 6
of   the   SEBI   (PFUTP)   Regulations   1995,   Regulation
11   of   the   SEBI   (SAST)   Regulations,   1997   and   be
further   pleased   to   deal   with   the   accused   in
accordance with the law.
(b) That   this   Hon’ble   Court   may   be   pleased   to
issue   the   process   against   the   accused   for   offences
punishable   under   Sections   77(2)   and   77A   r/w
Section 55A of the Companies Act, 1956.” 
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17. On   30.09.2020,   the   SEBI   Special   Court   dismissed   the
complaint filed by SEBI as being barred by limitation.  
18. The   aforesaid   order   has   been  challenged   by   SEBI   in   Criminal
Revision Application No. 209 of 2020 before the High Court of
Bombay.     In   the   aforesaid   proceedings,   the   appellant   filed   an
application   being   IA   No.   1945   of   2021,   seeking   the   following
documents:
(i) Report   of   Sh.   Y.H.   Malegam,   Chartered
Accountant.
(ii) Brief   for   opinion   /   Case   for   opinion   prepared
by   SEBI   for  obtaining  further   written  opinion
of Hon’ble Mr. Justice (Retd.) B.N. Srikrishna.
(iii) Revised written opinion issued by Hon’ble Mr.
Justice (Retd.) B.N. Srikrishna.
19. The High Court after extensively hearing the arguments on the
aforesaid   application   passed   the   impugned   order   on
28.03.2022 in the following manner:
“5. At   this   stage,   the   prayer   sought   for   in   the
Interim   Application   cannot   be   considered   without
hearing the main Revision Application.  It is pertinent
to   note  that  the  respondent  No.1  –  SEBI  i.e.  original
applicant   in   the   Revision   Application   has   filed   the
aforesaid   Revision   Application   seeking   quashing   and
setting   aside   of   the   impugned   order   dated   30 th
September, 2020, passed by the learned SEBI Special
Judge,   City   Civil   and   Sessions   Court,   Greater
Bombay, in SEBI Misc. Application No. 686 of 2020,
9

by   which   the   learned   Judge   dismissed   the
Miscellaneous   Application   No.   686   of   2020
(complaint) only on the ground, that it was barred by
limitation.   Therefore, the question that arises in the
Revision Application is whether the complaint filed by
SEBI was barred by limitation or not.
6. In   view   of   what   is   stated   hereinabove,   the
Interim   Application   will   have   to   be   heard   alongwith
the main Revision Application, on the next date.  It is
made   clear   that   all   contentions   of   the   parties   in   the
aforesaid   Interim   Application   are   kept   open,
including the question of maintainability.”
 
20. Aggrieved   by   the   aforesaid   order,   the   appellant­RIL   has   filed
the present appeal.
21. Mr. Harish Salve, learned Senior  counsel appearing on behalf
of the appellant contends:
i. That   the   challenge   to   the   maintainability   of   the
present   appeal   is   misconceived.   He   stated   that   the
interim application filed for seeking documents was
argued   at   length   before   the   High   Court,   which   was
ultimately not considered.
ii. That   the   SEBI,   being   a   regulator,   has   a   duty   to
disclose   documents   pursuant   to   Article   21.   This
constitutional   mandate   has   been   accepted   by   this
Court  and  has   been  applied  to  SEBI  in   T.   Takano
v.   Securities   and   Exchange   Board   of   India,
2022 SCC Online SC 210
iii. SEBI   cannot   claim   litigation   privilege   as   the
proceedings are not adversarial in nature.
10

iv. That   the   selective   disclosure   of   excerpts   of   the
opinion   by   Justice   (Retd.)   B.N.   Srikrishna,
amounted   to   cherry   picking   by   SEBI   which   cannot
be  allowed.  The  accused  is  entitled   to   the   complete
document to ensure a fair trial. 
v. That the action of SEBI of disclosing excerpts of the
report   clearly   amounts   to   waiver   of   litigation
privilege claimed by SEBI. 
22. Mr. Arvind Datar, learned Senior Counsel appearing on behalf
of the respondents contends:
i. That the present appeal is not maintainable as there
is   no   criminal   complaint   pending   as   on   this   date.
The appellant cannot seek documents in a criminal
revision   against   dismissal   of   the   complaint   on   the
ground of limitation. 
ii. The   issue   before   the   High   Court   was   limited   to   the
issue of limitation and the attempt of the accused to
expand   the   proceedings   to   seek   documents   cannot
be entertained. 
iii. That   the   impugned   order   was   a   mere   adjournment
order   which   has   not   affected   any   rights   of   the
accused.   Therefore,   the   appeal   is   not   maintainable
against such an adjournment order. 
iv. The law laid down in   T. Takano v. Securities and
Exchange   Board   of   India ,   2022   SCC   Online   SC
210, is not applicable to the present case as it was
rendered   in   the   context   of   investigation   under
different Regulations.
v. The   documents   are   being   sought   at   a   pre­mature
stage.  If  cognizance   is  taken   by  the  trial  Court,   the
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accused   would   be   entitled   for   the   documents   in
terms   of   Section   207   of   CrPC.   Any   attempt   to   seek
documents   beyond   the   scope   of   Section   207   CrPC
cannot be accepted. 
vi. The opinion of the Retd. Judge and the report of the
Chartered Accountant are clearly covered as part of
litigation   privilege   in   terms   of   the   Indian   Evidence
Act. Such opinions cannot be a matter of production
by a party.
23. Having   heard   the   parties   at   length   and   perusing   the   records,
the following questions arise for consideration: 
i. Whether this appeal is maintainable?
ii. Whether   SEBI   is  required   to  disclose  documents   in
the present set of proceedings?
ISSUE I
24. At the outset, Mr. Datar, learned Senior Counsel appearing on
behalf   of   the   respondents   has   challenged   the   maintainability
of   the   present   appeal   on   two   grounds   namely:   (1)   that   the
impugned   order   is   a   mere   adjournment   order   against   which
this Court should not exercise its discretionary jurisdiction; (2)
that no criminal complaint exists, to seek document disclosure
as  the trial  Court  had  already  dismissed SEBI’s complaint  on
the   ground   of   delay.   On   the   contrary,   Mr.   Harish   Salve,
12

learned   Senior   Counsel   appearing   on   behalf   of   the   appellant
has   portrayed   that   the   High   Court   was   not   justified   in
adjourning  a  case  after   hearing  the  parties on  more than  two
occasions on the application. 
25. The present dispute pertains to certain facts which took place
in 1992­1994, when the initial complaint was instituted before
SEBI   in   the   year   2002,   which   is   alleged   to   be   closed   by   the
note   of   the   Legal   Affairs   Department   of   SEBI   dated
17.05.2006.   Further,   the   letter   of   the   Ministry   of   Corporate
Affairs   dated   07.02.2012   also   clarifies   inter­alia,   that   no
violation of Section 77 of the Companies Act, 1956 was made
out, in the following manner:
4.   It   has   further   been   reported   by   the   ROC   that
there   was   no   violation   of   Section   81(1A)   of   the
Companies   Act,   1956   in   respect   of   preferential
allotment   of   shares.   Also,   there   was   no   specific
guidelines   for   valuation   or   determination   of
premium   in   respect   of   issue   of   convertible
debentures   at   the   relevant   time.   The
determination   of   premium   was   within   the
authority   of   the   company   subject   to   compliance
with   Section   81(1A)   which   appears   to   have   been
done.
5.MCA   had   conducted   inspection   of   books   of
accounts   of   M/s.   Reliance   Industries   Ltd.   in
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2002   and   for   the   various   violations   reported   in
the inspection report, necessary penal action was
initiated as stated in para 2 and 3 above.
6. The inspection report of 2002 also revealed as
follows:­
i.)   Provision   of   Section   77   of   the   Act   were   not
attracted   in   respect   of   funds   invested   by   the
company   in   Somnath   Syndicate,   a   partnership
firm in which company is a partner;
ii.)   No   funds   was   given   by   RIL   to   34   entities   to
which NCDs were allotted;
iii.)   Ambanis   were   neither   directors   nor
shareholders of the entities to whom shares were
allotted;
iv.)   Ambanis   were   not   allotted   any   shares
pursuant to PPD­IV issue.
7.  In view of above, no action is required to be
taken   on   the   part   of   Ministry   of   Corporate
Affairs .
( Emphasis supplied )
  In this context, the  re­examination of the  complaint  by  SEBI
ought  to  happen   only  after  providing   adequate  opportunity  to
the accused to fully defend his case. 
26. There  is  no  doubt   that  the  Special   Court   of  SEBI   in   M.A.  No.
686   of   2020   has   dismissed   the   complaint   of   SEBI   on   the
ground   of   limitation.   Against   such   an   order,   SEBI   has   filed   a
Criminal Revision being Criminal Revision Application No. 209
of 2020 before the High Court which is pending. On perusal of
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this Criminal Revision Petition it is clear  that SEBI  has made
the following prayer: 
(a)  This Hon’ble Court be pleased to quash and set­
aside the impugned order dated 30 th
  September,
2020   and   direct   the   Ld.   Special   Court   Judge
to issue process against the Accused .
(emphasis supplied)
Interestingly,   SEBI   has   not   restricted   the   revision   petition   to
the   grounds   of   condonation   of   delay   or   inapplicability   of
limitation   as   the   offences   alleged,   are   continuing   in   nature;
rather  SEBI has pleaded the case on merits. This is apparent
from the following grounds advanced by SEBI on merits:
F. The   Ld.   Judge   erred   to   appreciate   that   the
allotment including the allotment of bonus shares,
was   fraudulent   since   it   was   issued   without   any
authority,   and   in   violation   of   securities   laws,
including   the   Companies   Act.   When   the   actual
issue   and   allotment   of   NCDs   with   detachable
warrants   and   subsequent   conversion   of   warrants
into   equity   shares   itself   was   undertaken   without
any   authority   of   the   AGM,   and   the   earmarking   of
‘bonus’   issue   of   shares   for   the   benefit   of   a
debenture­holder i.e. a non­share­holder  was done
and  the total  private placement of  12 crore shares
was carried out without any authority either of the
shares   holders   or   in   law   resulting   in   cementing   of
‘control’   and   exercise   thereof   there   was   a   clear
breach   of   the   fiduciary   duty   of   the   accused
directors of the issuer company. 
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G. The Ld. Judge erred in failing to appreciate that
the fraud was consummate and involved a complex
subterfuge,   spread   over   a   long   period   of   time.   The
accused   Directors   sat   in   sub­committees   that
negotiated   and   earmarked   without   any   share
holder   authority,   the   NCDs   with   warrants
convertible of shares with a sizeable free allotment
of   bonus   shares   to   allottees   of   the   NCDs   which
were   essentially   paper   companies   and   related
companies of the accused and later on joined them
as   person   acting   in   concert   (PACs)   when   the
warrants attached to the NCDs were converted into
shares in 2000. When the directors negotiated  the
placement   of   NCDs   with   warrants   with   the   Unit
Trust of India (UTI) whose allotment is made as per
Resolution 13 as disclosed on  the stock exchange,
no such ‘free’ bonus was given to UTI. However, all
this   was   not   considered   by   the   Ld.   Judge   who
erred in failing to appreciate that the directors also
granted a conversion price to the accused allottees
which   was   much   less   than   the   conversion   price
given to UTI. 
…
…
P.  The   Ld.   Judge   erred   in   failing   to   appreciate
the  ratio  laid down  by  the  Hon’ble Supreme Court
in the matter  of Fiona Shrikhande Versus State of
Maharashtra   and   another,   (2013)   14   Supreme
Court   Cases   44   wherein,   the   Hon’ble   Supreme
Court   has   held   that   at   the   complaint   stage,   the
Magistrate is merely concerned with the allegations
made   out   in   the   complaint   and   has   only   to   prima
facie satisfy whether there are sufficient grounds to
proceed   against   the   accused.   In   the   facts   of   the
present   case   there   were   more   than   sufficient
grounds   for   the   Ld.   Judge   to   prima­facie   be
16

satisfied   of   the   offence   and   issue   process   in   the
matter. 
…
…
W. The Ld. Judge failed to note that it was vitally
necessary to take cognizance of the offences in the
interest   of   justice   under   Section   473,   keeping   in
mind   the   devious   method   of   involving   38
companies   and   routing   of   funds   in   a   preplanned
and   preordained   sequence   of   transactions.   If   no
cognizance   is   taken   of   such   egregious   offences,   it
would   seriously   harm   the   interest   of   the   investors
in   the   securities   market.   It   is   in   the   interests   of
justice   that   large   conglomerates   having   lakhs   of
shareholders are not permitted to flagrantly violate
the law and seek to escape prosecution. 
27. Coming to the point of delay,   inter alia   the contention of SEBI
is that the Court should have considered Section 473 of CrPC
to   condone   delay   having   considered   the   facts   and
circumstances   in   proper   perspective.   At   this   juncture,   it   is
relevant to quote Section 473 of CrPC which reads as under:
“473.   Extension   of   period   of   limitation   in
certain   cases.   ­   Notwithstanding   anything
contained   in   the   foregoing   provisions   of   this
Chapter,   any   Court   may   take   cognizance   of   an
offence after the expiry of the period of limitation,
if   it   is   satisfied   on   the   facts   and   in   the
17

circumstances of the case that the delay has been
properly explained or that it is necessary so to do
in the interests of justice.”
The   aforesaid   provision   is   categorical   in   stating   that   any
limitation   prescribed   under   Section   468   of   CrPC   can   be
overlooked   if   sufficient   cause   is   made   out   in   the   facts   and
circumstances of the individual case in the interest of justice.
The   said   provision,   while   trying   to   balance   public   interest   in
initiating   criminal   prosecutions,   has   been   restricted   to
peculiarities   of   individual   case   while   clothing   the   Court   with
discretionary   power.   Such   a   discretion   vested   in   the   Court
ought   to   be   a   principled   exercise,   wherein   the   facts   and
circumstances   portrayed   justify   such   an   exercise.   The
intention   of   the   aforesaid   provision   is   to   make   the   inquiry   a
question   of   fact   and   not   of   untrammelled   discretion   as   to
whether   in   a   particular   case,   the   Court   should   condone   the
delay. 
28. It   is   in   this   context   that   the   High   Court   is  bound   to   consider
the   facts   of   the   present   case   concerning   the   modus   of
initiation of the case and other factors, before considering the
18

aspect   of   condonation   of   delay   in   terms   of   Section   473   of
CrPC.   The   approach   of   the   High   Court   of   adjourning
adjudication   of   the   interim   application   seeking   disclosure   of
documents   cannot   be   appreciated.   Ideally,   the   High   Court
ought   to   have   considered   the   interim   application   before
dealing with the limitation aspect.
29. Initiation   of   criminal   action   in   commercial   transactions,
should take place with a lot of circumspection and the Courts
ought  to   act   as  gate  keepers  for   the   same.   Initiating  frivolous
criminal actions against large corporations, would give rise to
adverse   economic   consequences   for   the   country   in   the   long
run.   Therefore,   the   Regulator   must   be   cautious   in   initiating
such an action and carefully weigh each factor.
30. In   ordinary   course,   this   Court   would   have   remanded   the
matter   for   adjudication   by   the   High   Court   on   the   interim
application   moved   by   the   appellant   seeking   such   disclosure.
However,     arguments   have   been   extensively   advanced   before
this   Court   touching   upon   important   aspects   of   criminal
19

jurisprudence which require consideration. Moreover, the facts
stated above, clearly indicate that the acts which are sought to
be prosecuted go back to  the year  1992­1994, and  over  three
decades   have   passed   without   there   being   any   end   to   the
litigation.   In   this   regard,   the   Court   intends   to   examine   this
important   issue   and   pass   appropriate   orders   to   ensure   that
the adjudication is not delayed unnecessarily,  ad infinitum.
ISSUE II
31. This   brings   us   to   the   issue   as   to   whether   the   interim
application   seeking   documents,   filed   by   the   appellant   herein
deserves   to   be   allowed   in   the   instant   case.   The   respondents
have raised objections for such disclosure on two counts:
i. That   such   a   request   was   already   rejected   by   the   High
Court   in   an   earlier   writ   petition   filed   by   the   appellant
herein, when the settlement proceedings were on going;
ii. That   the   respondents   claim   legal   privilege,   as   against
both the opinions of Justice (Retd.) B. N. Srikrishna and
20

the   Report   of   the   Chartered   Accountant,   viz.   Sh.   Y.H.
Malegam.
32. Coming   to   the   first   objection,   there   is   no   gainsaying   the   fact
that   the   respondent   (regulator)   had   issued   a   letter   dated
16.04.2010,   conveying   the   findings   of   the   investigation.   In
furtherance   thereto,   the   appellant   had   sought   to   settle   the
issue   considering   the   fact   that   substantial   time   had   already
elapsed.
33. During the settlement proceedings, SEBI had appointed Sh. Y.
H.   Malegam,   Chartered   Accountant   on   the   advice   of   Justice
(Retd.)   B.   N.   Srikrishna.   Accordingly,   the   Chartered
Accountant   is   supposed   to   have   submitted   a   Report   to   SEBI.
During the settlement proceedings, the appellant submitted an
application dated 21.01.2019, wherein it sought the aforesaid
documents.   In   response   SEBI,   vide   letter   dated   28.01.2019,
rejected   the   request   by   relying   on   the   provisions   of   Section
13(2)   of   the   Securities   and   Exchange   Board   of   India
21

(Settlement   Proceedings)   Regulations,   2018   [hereinafter
‘Settlement Regulations’].
34. The   aforesaid   letter   dated   28.01.2019,   was   impugned   by   the
appellant   before   the   High   Court   of   Judicature   at   Bombay   in
W.P.   (Lodg.)   No.   300   of   2019.   The   High   Court,   by   final   Order
dated 04.02.2019, while dismissing the aforesaid writ petition
held as under:
“10. The internal Committee of the SEBI is seized
of   the   matter.   During   the   proceedings,   an
application   came   to   be   filed   by   the   petitioner
seeking   copies   of   certain   documents   including
copy   of   the   report   submitted   by   Mr.   Malegam.
The   provisions   of   Regulation   13(2)(a)   are   clear.
These   regulations   do   not   confer   any   right   on
the   Petitioner   to   ask   for   a   copy   of   the   said
report. In that view of the matter, the issue of
principles   of   fairness   does   not   arise   at   this
stage,   considering   the   purpose   of   the
proceedings   before   the   internal   Committee
and powers of the High Power Committee and
the Regulations framed in this regard . There is
no   right   conferred   under   the  Regulations   on  the
Petitioner to ask for such a copy. In the facts, we
are   not   convinced   to   exercise   our   writ
jurisdiction.
As   and   when   the   adjudicatory   proceedings
takes place, the Petitioner may ask for copies
of   such   documents   in   accordance   with   the
22

procedure   established   to   conduct   the
proceedings .”
( emphasis supplied )
We   may   only   note   that   the   High   Court   was   dealing   with
specific   requests   that   were   made   during   the   Settlement
proceedings   under   Regulation   13(2)   of   the   Settlement
Regulations.   From   a   reading   of   the   Explanation   appended   to
Regulation   13(2)(a)   of   the   Settlement   Regulations,   it   is   clear
that the intention of Settlement proceedings is to facilitate the
Regulator   to   consider   the   feasibility   of   settlement   in   certain
cases,   without   allowing   a   roving   and   fishing   expedition.
However,  the  findings  of  the  High  Court  in  the  aforesaid  case
are   of   no   avail   to   the   SEBI,   as   we   are   at   a   stage   when   SEBI
has   invoked   the   provisions   under   the   criminal   law   to
prosecute the appellant herein.
35. At   this   juncture,   SEBI   relies   on   Regulation   29   of   Securities
and   Exchange   Board   of   India   (Settlement   Proceedings)
Regulations 2018, which notes as under :
C ONFIDENTIALITY   OF   INFORMATION .   
29.   (1)     All     information     submitted     and
discussions     held     in     pursuance     of     the
23

settlement proceedings under   these   regulations
shall     be     deemed     to     have     been     received     or
made  in  a fiduciary capacity and the same may
not   be   released   to   the   public,   if   the   same
prejudices the Board and/or the applicant.
2) Where an application is rejected or withdrawn,
the   applicant   and   the   Board   shall   not   rely   upon
or   introduce   as   evidence   before   any   court   or
Tribunal,   any   proposals   made   or   information
submitted   or   representation   made   by   the
applicant under these regulations:
Provided     that     this     sub­regulation     shall     not
apply   where   the   settlement   order   is   revoked
or withdrawn under these regulations.
Explanation. – When  any  fact  is  discovered  in
consequence     of     information     received     from     a
person   in   pursuance   of   an  application,   so   much
of   such   information,   whether   it   amounts   to   an
admission or not, as relates distinctly to the fact
thereby discovered, may be proved.
Reliance   on   the   above   provision   is   misconceived,   as   both   the
clauses   must   be   interpreted   to   deter   usage   of   the   applicant’s
proposals/representations   and   allied   information   before
Courts/Tribunals, in the event the settlement fails. It does not
deal with the disclosure obligations cast on SEBI. In any case,
the purpose of settlement is to ensure that parties come to an
understanding   having   assessed   their   relative   merits.   It   is
expected   that   parties   in   such   proceedings   are   transparent,
24

more so for Regulators like SEBI, who are expected to share all
the   documents,   which   are   necessary   for   understanding   the
issue.
36. It   is   a   matter   of   record   that   subsequently,   the   settlement
proceedings were terminated by SEBI and thereafter SEBI has
decided   to   initiate   a   criminal   complaint   against   the   appellant
herein.
37. In   this   context,   the   objection   of   SEBI   that   the   issue   of
disclosure   of   documents   is   res   judicata   as   the   same   was
disallowed by the High Court in the earlier round of litigation,
cannot be sustained in the eyes of law.
38. This   brings   us   to   the   right   of   the   accused­appellant   to   seek
document   disclosure   in   the   present   case.   In   this   case,   the
appellant   has   been   pursuing   SEBI   for   these   documents   as
they   believe   that   an   attempt   is   being   made   by   SEBI   to
suppress the Opinions and Reports as they are adverse to the
cause of SEBI.
25

39. A cursory glance at the background of the matter would reveal
that   initially,   a   complaint   was   submitted   to   SEBI   on
21.01.2002,   wherein   the   appellant   and   its   directors   were
purportedly   involved   in   irregularities   in   allotment   of   Non­
Convertible   Debentures   in   the   year   1994.   Accordingly,   an
Investigation   Report   was   submitted   by   the   Investigating
Authority   on   04.02.2005.   SEBI   in   its   counter­affidavit   has
admitted   that   the   aforesaid   Report   was   inconclusive   and
recommended further enquiry in this regard.
40. In   pursuance   thereof,   SEBI   approached   Justice   (Retd.)   B.   N.
Srikrishna in the year 2009. He is supposed to have given his
first   Opinion,   which   formed   the   basis   of   initiating   action
against the appellant herein. It is SEBI’s case that during the
Settlement proceedings, the appellant had disclosed numerous
documents,   which   mandated   SEBI   to   re­examine   its   stand.
Accordingly,   the   matter   was   referred   to   Justice   (Retd.)   B.   N.
Srikrishna for a second time. 
26

41. Thereafter, Justice (Retd.) B. N. Srikrishna wrote back to SEBI
asking   them   to   consult   Sh.   Y.   H.   Malegam,   a   renowned
Chartered   Accountant   to   determine   the   culpability   of   the
appellant   and   various   directors.   It   is   reported   that   this
exercise   had   culminated   in   the   Second   opinion   of   Justice
(Retd.) B. N. Srikrishna.
42. SEBI   is   a   regulator   and   has   a   duty   to   act   fairly,   while
conducting   proceedings   or   initiating   any   action   against   the
parties.   Being   a   quasi­judicial   body,   the   constitutional
mandate of SEBI is to act fairly, in accordance with the rules
prescribed   by   law.   The   role   of   a   Regulator   is   to   deal   with
complaints   and   parties   in   a   fair   manner,   and   not   to
circumvent   the   rule   of   law   for   getting   successful   convictions.
There   is   a   substantive   duty   on   the   Regulators   to   show
fairness, in the form of public co­operation and deference. 
43. The   duty   to   act   fairly   by   SEBI,   is   inextricably   tied   with   the
principles   of   natural   justice,   wherein   a   party   cannot   be
condemned   without   having   been   given   an   adequate
27

opportunity to defend itself. In   State Bank of Patiala v.  SK
Sharma ,   (1996)   3   SCC   364,   this   Court   while   dealing   with
document disclosure and natural justice held as under:
“28.   The decisions cited above make one thing
clear, viz., principles of natural justice cannot be
reduced   to   any   hard   and   fast   formulae.   As   said
in   Russell   v.   Duke   of   Norfolk   [(1949)   1   All   ER
109   :   65   TLR   225]   way   back   in   1949,   these
principles  cannot  be  put  in  a  strait­jacket.  Their
applicability   depends   upon   the   context   and   the
facts   and   circumstances   of   each   case.
(See   Mohinder   Singh   Gill   v.   Chief   Election
Commr.   [(1978) 1 SCC 405 : (1978) 2 SCR 272] )
The   objective   is   to   ensure   a   fair   hearing,   a   fair
deal,   to   the   person   whose   rights   are   going   to   be
affected.  (See   A.K.  Roy   v.   Union  of  India   [(1982) 1
SCC   271   :   1982   SCC   (Cri)   152]   and   Swadeshi
Cotton Mills   v.   Union of India [(1981) 1 SCC 664] .)
As   pointed   out   by   this   Court   in   A.K.
Kraipak   v.   Union of India   [(1969) 2 SCC 262] , the
dividing line between quasi­judicial function and
administrative   function   (affecting   the   rights   of   a
party)   has   become   quite   thin   and   almost
indistinguishable   —   a   fact   also   emphasised   by
House   of   Lords   in   Council   of   Civil   Service
Unions   v.   Minister   for   the   Civil   Service   [(1984)   3
All ER 935 : (1984) 3 WLR 1174 : 1985 AC 374,
HL] where the principles of natural justice and a
fair hearing were treated as synonymous. …”
44. At   this   juncture,   the   appellant   has   pressed   into   service   the
ratio laid down by this Court in   Takano case   (supra), to seek
28

document   disclosure.   On   the   other   hand,   the   respondents
have   tried   to   distinguish   the   present   case   by   stating   that   the
present   case   is   not   one   of   disclosure   which   is   being   sought
during   investigation   by   SEBI   under   the   Securities   and
Exchange Board of India (Prohibition of Fraudulent and Unfair
Trade   Practices   Relating   to   Securities   Market)   Regulations,
2003.   Although   we   agree   with   the   respondents   that   the
Takano   Case   (supra)   was   rendered   under   the   aforesaid
Regulations, however, we are of the opinion that the reasoning
of   this   Court   alludes   to   a   general   obligation   of   disclosure   on
the   part   of   SEBI.     This   Court   has     held   in   the   Takano   Case
(supra)   that   three   fundamental   purposes   of   disclosure   of
information   are   (i)   reliability,   i.e.,   the   Court   will   be   able   to
perform its function accurately only if both parties have access
to information and possess opportunity to address arguments
and   counter   arguments;   (ii)   fair   trial,   i.e.,   this   will   enable   the
parties   to   effectively   participate   in   the   proceedings;   and   (iii)
transparency   and   accountability,   i.e.,   the   investigative
agencies   are   held   accountable   through   transparency   and   not
29

opaqueness.   Keeping   a   party   abreast   of   the   information   that
influenced   the   decision   promotes   transparency   of   the   judicial
process   which   was   discussed   in   the   aforesaid   case   in   the
following manner:
“ 24.   While   the   respondents   have   submitted   that
only   materials   that   have   been   relied   on   by   the
Board   need   to   be   disclosed,   the   appellant   has
contended   that   all   relevant   materials   need   to   be
disclosed.   While   trying   to   answer   this   issue,   we
are   faced   with   a   multitude   of   other   equally
important issues. These issues, all paramount in
shaping   the   jurisprudence   surrounding   the
principles   of   access   to   justice   and   transparency,
range from identifying the purpose and extent of
disclosure   required,   to   balancing   the   conflicting
claims of access to justice and grounds of public
interest   such   as   privacy,   confidentiality   and
market   interest.   An   identification   of
the   purpose   of disclosure would lead us closer to
identifying   the   extent   of   required   disclosure.
There   are   three   key   purposes   that   disclosure   of
information serves:
(i)   Reliability:   The   possession   of   information   by
both   the   parties   can   aid   the   courts   in
determining   the   truth   of   the   contentions.   The
role   of   the   court   is   not   restricted   to   interpreting
the   provisions   of   law   but   also   determining   the
veracity and truth of the allegations made before
it.   The   court   would   be   able   to   perform   this
function   accurately   only   if   both   parties   have
access   to   information   and   possess   the
opportunity   to   address   arguments   and   counter­
arguments related to the information;
30

(ii)   Fair Trial:   Since a verdict of the Court has far
reaching   repercussions   on   the   life   and   liberty   of
an   individual,   it   is   only   fair   that   there   is   a
legitimate   expectation   that   the   parties   are
provided   all   the   aid   in   order   for   them   to
effectively participate in the proceedings;
(iii)   Transparency   and   accountability:   The
investigative agencies and the judicial institution
are   held   accountable   through   transparency   and
not   opaqueness   of   proceedings.   Opaqueness
furthers   a   culture   of   prejudice,   bias,   and
impunity   ­   principles   that   are   antithetical   to
transparency. It is of utmost importance that in a
country   grounded   in   the   Rule   of   Law,   the
institutions   adopt   those   procedures   that   further
the   democratic   principles   of   transparency   and
accountability.   The   principles   of   fairness   and
transparency of adjudicatory proceedings are the
cornerstones of the principle of open justice. This
is   the   reason   why   an   adjudicatory   authority   is
required   to   record   its   reasons   for   every
judgement   or  order  it  passes.  However,   the   duty
to   be   transparent   in   the   adjudicatory   process
does   not   begin   and   end   at   providing   a   reasoned
order.   Keeping   a   party   bereft   of   the   information
that   influenced   the   decision   of   an   authority
undertaking   an   adjudicatory   function   also
undermines   the   transparency   of   the   judicial
process.   It   denies   the   concerned   party   and   the
public at large the ability to effectively scrutinise
the decisions of the authority  since it creates an
information asymmetry.
25.   The   purpose   of   disclosure   of   information   is
not   merely   individualistic,   that   is   to   prevent
errors in the verdict but is also towards fulfilling
the   larger   institutional   purpose   of   fair   trial   and
transparency.  Since   the  purpose  of   disclosure   of
31

information   targets   both   the   outcome   (reliability)
and   the   process   (fair   trial   and   transparency),   it
would   be   insufficient   if   only   the   material   relied
on   is   disclosed.   Such   a   rule   of   disclosure   only
holds nexus to the outcome and not the process.
Therefore, as a default rule, all relevant material
must be disclosed.”
45. There   is   no   doubt   that   the   set   of   facts   portrayed   herein   are
unique. The impugned action of the appellant hails back to the
year   1994,   and   almost   three   decades   have   gone   by   without
there   being   any   light   at   the   end   of   the   tunnel.   The
investigation   report   by   SEBI   in   2005   was   inconclusive   about
the   alleged   offence.   There   is   even   a   communique   by   the
Minister   of   Corporate   Affairs,   Union   of   India   recommending
closure   of   the   case   as   they   found   nothing   to   further   the
prosecution under Section 77 of the Companies Act, 1956. In
this   light,   SEBI’s   action   to   initiate   a   criminal   complaint
without   providing   the   appellant   an   adequate   opportunity   to
defend   itself   by   releasing   necessary   Reports   and   other
documents,   cannot   be   appreciated   by   this   Court   as   it   is   in
gross   violation   of   the   appellant’s   right   to   natural   justice.
Recently, in   S. P. Velumani v. Arappor Iyakkam , 2022 SCC
32

Online   SC   663,   while   dealing   with   the   necessity   of   document
disclosure   in   cases   where   prosecuting   authorities   blow   hot
and cold, this Court has held as under:
“22…The   principles   of   natural   justice   demanded
that   the   appellant   be   afforded   an   opportunity   to
defend   his   case   based   on   the   material   that   had
exonerated   him   initially,   which   was   originally
accepted by the State.” 
46. The   approach   of   SEBI,   in   failing   to   disclose   the   documents
also   raises   concerns   of   transparency   and   fair   trial.
Opaqueness   only   propagates   prejudice   and   partiality.
Opaqueness   is   antithetical   to   transparency.   It   is   of   utmost
importance   that   in   a   country   grounded   in   the   Rule   of   Law,
institutions   ought   to   adopt   procedures   that   further   the
democratic   principles   of   transparency   and   accountability.
Principles   of   fairness   and   transparency   of   adjudicatory
proceedings   are   the   cornerstone   of   the   principles   of   open
justice. 
47. Even   for   adjudication   of   condonation   of   delay   under   Section
473,   CrPC,   the   modus   of   initiation   of   criminal   complaint   and
33

the   conclusions   reached   therein   are   relevant   in   the   facts   and
circumstance of the case. 
48. Viewed   from   a   different   angle,   the   respondents   have
vehemently   relied   on   litigation   privilege   under   Section   129   of
the   Evidence   Act,   1872   to   claim   exemption   from   document
disclosure. Section 129 of the Evidence Act reads as under:
129.   Confidential   communications   with
legal   advisers.— No   one   shall   be   compelled
to   disclose   to   the   Court   any   confidential
communication   which   has   taken   place
between   him   and   his   legal   professional
adviser,   unless   he   offers   himself   as   a
witness, in  which  case he  may  be compelled
to disclose any such communications as may
appear   to   the   Court   necessary   to   be   known
in   order   to   explain   any   evidence   which   he
has given, but no others.
49. The   rationale   of   such   a   provision   has   been   well   known   to
common law since ages.     Sir George Mackenzie's   Observations
upon   the   18th   Act   of   the   23rd   Parliament   of   King   James   the
Sixth   against   Dispositions   made   in   Defraud   of   Creditors
34

etc   (1675),   in   Sir   George   Mackenzie's   Works   Vol   2   (1755),   p1
are significant. He said this, at p 44:
"An   Advocate   is   by   the   Nature   of   his
employment tied to the same Faithfulness that
any Depositor is: For his Client has depositate
in his Breast his greatest Secrets; and it is the
Interest   of   the   Common­wealth,   to   have   that
Freedom   allowed   and   secured   without   which
Men   cannot   manage   their   Affairs   and   private
Business:  And  who   would  use   that   Freedom   if
they   might   be   ensnared   by   it?   This   were   to
beget a Diffidence betwixt such who should, of
all others, have the greatest mutual Confidence
with   one   another;   and   this   will   make   Men   so
jealous   of   their   Advocates   that   they   will   lose
their   private   Business,   or   succumb   in   their
just   Defence,   rather   than   Hazard   the   opening
of their Secrets to those who can give them no
Advice when the case is Half concealed, or may
be forced to discover them when revealed."
In   England,   the   Legal   professional   privilege   is   often   classified
under   two   sub­headings:   legal   advice   privilege   and   litigation
privilege.   Legal   advice   privilege   comprises   of   communications
between   a   client   and   his   legal   adviser,   and   is   available   when
proceedings   are   in   existence   or   contemplated.   Litigation
privilege   on   the   other   hand,   covers   a   wider   class   of
35

communications, such as those between the legal adviser and
potential witnesses. 
50. Coming   to   legal   advice   privilege   in   England,   the   House   of
Lords   through   Justice   Carswell   in   Three   Rivers   District
Council   and   others   (Respondents)   v.   Governor   and
Company   of   the   Bank   of   England   (Appellants) ,   [2004]
UKHL 48, has summarized the law as under:
“The   conclusion   to   be   drawn   from   the   trilogy
of 19th century cases to which I have referred
and   the   qualifications   expressed   in   the
modern   case­law   is   that   communications
between   parties   or   their   solicitors   and   third
parties   for   the   purpose   of   obtaining
information   or   advice   in   connection   with
existing   or   contemplated   litigation   are
privileged,   but   only   when   the   following
conditions are satisfied:
(a)   litigation   must   be   in   progress   or   in
contemplation;
(b) the communications must have been made
for   the   sole   or   dominant   purpose   of
conducting that litigation;
(c)   the   litigation   must   be   adversarial,   not
investigative or inquisitorial.”
51. The   distinction   in  application   of   this  privilege   qua   adversarial
and   investigative   litigation/inquisitorial   litigation   is   reasoned
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by   English   Courts   in   In   Re   K   (Infants),   [1965]   AC   201   as
under:
“Where the judge is not sitting purely, or even
primarily,   as   an   arbiter   but   is   charged   with
the paramount duty of protecting the interests
of   one   outside   the   conflict,   a   rule   that   is
designed   for   just   arbitrament   cannot   in   all
circumstances prevail.”
52. Further,   In   Re   E   (S.A.)   (a   Minor)   (Wardship:   Court’s   Duty) ,
[1984] 1 WLR 156, while pointing out that a court in wardship
proceedings was not exercising an adversarial jurisdiction and
that:
“Its duty is not limited to the dispute between
the parties: on the contrary, its duty is to act
in the way best suited in its judgment to serve
the   true   interest   and   welfare   of   the   ward.   In
exercising   wardship   jurisdiction,   the   Court   is
a true family court. Its paramount concern is
the   welfare   of   the   ward.   It   will,   therefore,
sometimes   be   the   duty   of   the   court   to   look
beyond   the   submissions   of   the   parties   in   the
endeavor to do what it judges to be necessary”
53. Indian   position   seems   to   be   different   from   England.   Section
126   to   129   of   the   Evidence   Act   do   not   draw   any   distinction
between   adversarial   and   investigative   litigation   as   such,   and
privilege is applicable all through. This aspect is crucial, as it
37

touches   on   the   foundations   of   the   legal   profession   at   large   in
India. This Court does not want to express any opinion in this
regard as the case at hand is different and such an issue does
not arise, for the following reasons:
i. The investigation report was inconclusive, as admitted by
SEBI itself.
ii. Instead of SEBI  referring the issue to an expert, it could
have   undertaken   the   exercise   of   further   investigation   by
itself, which was not done.
iii. SEBI   ultimately   took   further   steps,   only   because   of   the
first opinion of Justice (retd.) B. N. Srikrishna.
iv. The   first   opinion   of   Justice   (retd.)   B.   N.   Srikrishna   is   a
part   and   parcel   of   the   investigation   and   documents
connected therewith.
v. Moreover, certain documents have already been disclosed
to the appellant herein.
54. The simple test in this case is whether SEBI has launched the
prosecution on the basis of the investigation report alone. The
answer  seems to be ‘No’ by SEBI’s own admission in its reply
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where   it   states   that   the   investigation   report   was   inconclusive
and hence further scrutiny of the transactions by experts was
called   for.   That   being   the   case,   further   Reports   and   opinions
obtained, from whomsoever it may be, are only an extension of
the investigation to help SEBI as a Regulator to ascertain the
facts and reach conclusions for prosecution or otherwise.
55. For the above reasons, we do not agree with the contention of
the   learned   Senior   Counsel   for   SEBI   that   the   first   opinion   of
Justice   (Retd.)   B.   N.   Srikrishna   is   covered   by   ‘legal   privilege’
under Section 129 of the Evidence Act. Same is the case with
the second opinion of Justice (Retd.) B. N. Srikrishna and the
Report   of   Sh.   Y.   H.   Malegam,   which   are   nothing   but   a
continuation   of   the   fact­finding   exercise   undertaken   by   SEBI
to determine culpability.
56. Moreover, learned Senior counsel, Mr. Arvind Datar, appearing
for   SEBI   has   pointed   out   that   the   present   set   of   proceedings
have emanated before Criminal Court, wherein the procedures
must be strictly in accordance with the provisions of CrPC. He
states that the stage of document production under  the CrPC
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is   provided   under   Section   207   and   208,   which   takes   place
after cognizance is taken by the Magistrate. This Court, in   S.
P. Velumani  (supra), while rejecting a similar contention, held
as under:
“26.   We   may   note   that   the   contention   of   the
State   may   be   appropriate   under   normal
circumstances wherein the accused is entitled to
all the documents relied upon by the prosecution
after the Magistrate takes cognizance in terms of
Section 207 of CrPC. However, this case is easily
distinguishable   on   its   facts.   Initiation  of  the   FIR
in   the   present   case   stems   from   the   writ
proceedings   before   the   High   Court,   wherein   the
State   has   opted   to   re­ examine   the   issue   in
contradiction   of   their   own   affidavit   and   the
preliminary   report   submitted   earlier   before   the
High Court stating that commission of cognizable
offence   had   not   been   made   out.   It   is   in   this
background we hold that the mandate of Section
207 of CrPC cannot be read as a provision etched
in stone to cause serious violation of the rights of
the appellant accused as well as to the principles
of natural justice.” 
Observing   the   facts   and   circumstances   of   this   case,   which
have been adumbrated above, we are of the firm opinion that
the   defence   taken   by   SEBI   that   they   need   not   disclose   any
documents   at   this   stage   as   such   a   request   is   pre­mature   in
terms of the CrPC, cannot be sustained.  
40

57. Before we part with the present appeal, another disconcerting
aspect of this case that comes to the fore is SEBI’s attempt to
cherry­pick   the   documents   it   proposes   to   disclose.   There   is   a
dispute   about   the   fact   that   certain   excerpts   of   the   opinion   of
Justice   (Retd.)   B.   N.   Srikrishna,   were   disclosed   to   the
appellant herein. It is the allegation of the appellant that while
the parts which were disclosed, vaguely point to the culpability
of   the   appellant,   SEBI   is   refusing   to   divulge   the   information
which   exonerate   it.   Such   cherry­picking   by   SEBI   only
derogates   the   commitment   to   a   fair   trial.   In   Nea   Karteria
Maritime   Co   Ltd   v.   Atlantic   and   Great   Lakes   Steamship
Corporation ,   [1981]   Com   LR   138   at   139,   Mustill   J.   held   as
under: 
‘I believe that the principle underlying the rule of
practice exemplified in  Burnell v British Transport
Commission   [1956]   1   QB   187   is   that   where   a
party is deploying in court material which would
otherwise   be   privileged,   the   opposite   party   and
the court must have an opportunity of satisfying
themselves   that   what   the   party   has   chosen   to
release from privilege represents the whole of the
material   relevant   to   the   issue   in   question.   To
allow   an   individual   item   to   be   plucked   out   of
context would be to risk injustice through its real
weight or meaning being misunderstood.’ 
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The   aforesaid   principle   is   often   referred   to   as   the   ‘Cherry­
picking’ principle. 
58. In   the   case   at   hand,   SEBI   could   not   have   claimed   privilege
over   certain   parts   of   the   documents   and   at   the   same   time,
agreeing   to   disclose   some   part.   Such   selective   disclosure
cannot   be   countenanced   in   law   as   it   clearly   amounts   to
cherry­picking.
59. In   view   of   the   aforesaid   discussion,   we   allow   the   present
appeal   and   direct   the   respondents   to   furnish   a   copy   of   the
following documents to the appellant forthwith:­
(i) First opinion of Justice (Retired) B.N. Srikrishna
(ii) Report of Y.H. Malegam
(iii) Second opinion of Justice (Retired) B.N. Srikrishna
...........................CJI.
(N.V. RAMANA)
      
 …...........................J.
(J.K. MAHESHWARI)
…...........................J.
(HIMA KOHLI)
NEW DELHI;
AUGUST 05, 2022.
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