India News | Duty of Quasi-judicial Authority to Disclose Material Relied Upon During Adjudication: SC

New Delhi, Feb 18 (PTI) The Supreme Court on Friday held that a quasi-judicial authority has a duty to disclose the material that has been relied upon at the stage of adjudication and said that the investigative agencies and the judicial institution are held accountable through transparency and not opaqueness of proceedings.

It said that opaqueness furthers a culture of prejudice, bias, and impunity -- principles that are antithetical to transparency.

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A bench of Justices DY Chandrachud and Sanjiv Khanna said the regulations of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations 2003 (PFUTP) make it clear that the Securities and Exchange Board of India (SEBI) forms an opinion regarding the violation of Regulations after considering the investigation report and thus, the investigation report has to be duly disclosed to the noticee.

The bench said, “the following principles emerge from the discussion: a quasi-judicial authority has a duty to disclose the material that has been relied upon at the stage of adjudication, and an ipse dixit of the authority that it has not relied on certain material would not exempt it of its liability to disclose such material if it is relevant to and has a nexus to the action that is taken by the authority. In all reasonable probability, such material would have influenced the decision reached by the authority''.

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The bench said that if the material that is required to be disclosed is relevant for adjudication, then the principles of natural justice require its due disclosure.

Highlighting the importance of disclosure of information, the bench said that the possession of information by both the parties can aid the courts in determining the truth of the contentions and 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”, it said.

The top court said that the other purpose disclosure of information serves is a fair trial as 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.

The bench emphasised that disclosure of information also provides transparency and accountability and “the investigative agencies and the judicial institution are held accountable through transparency and not opaqueness of proceedings”.

It said, “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”.

It further added that the principles of fairness and transparency of adjudicatory proceedings are the cornerstones of the principle of open justice and 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”, it added.

The top court's verdict was on an appeal filed by T Takano, who was employed as the Managing Director and CEO in Ricoh India Limited, a public listed company, from 2012 till March 2015.

He has challenged the Bombay High Court order dismissing his plea against a show cause notice which was issued by the SEBI, alleging a violation of the provisions of the PFUTP, Regulations 2003.

The top court, which set aside the High Court order, held Takano has a right to disclosure of the material relevant to the proceedings initiated against him saying it is sufficient to disclose the materials relied on if it is for the purpose of issuing a show-cause notice for deciding whether to initiate an inquiry.

“The Board shall be duty-bound to provide copies of such parts of the report which concern the specific allegations which have been levelled against the appellant in the notice to show cause. However, this does not entitle the appellant to receive sensitive information regarding third parties and unrelated transactions that may form part of the investigation report”, it said.

The top court, however, said that the right to disclosure is not absolute, and if the disclosure of information may affect other third-party interests and the stability and orderly functioning of the securities market, then the board may provide a redacted copy of the report.

It added that the disclosure in terms of the present judgement shall be communicated to the Takano within one month from the date of this judgement and he shall be given one month to respond.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)