The Delhi High Court ruled that SEBI cannot withhold its investigation report when it forms the basis of criminal prosecution. Denying such documents, the Court held, violates the accused’s right to a fair trial under Article 21.
The Delhi High Court has recently made an important observation on the rights of accused persons in regulatory prosecutions, holding that the Securities and Exchange Board of India (SEBI) cannot deny an accused access to its investigation report when that report forms the very foundation of the decision to prosecute.
Justice Neena Bansal Krishna set aside a trial court order which had earlier refused to direct SEBI to disclose its investigation report to Siddharth Shankar, an accused in a criminal complaint filed by the market regulator.
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The High Court made it clear that once SEBI chooses to initiate criminal proceedings, it cannot treat the investigation report as a confidential internal document and keep it hidden from the defence.
While explaining the legal position, the Court observed,
“It is evident that the Investigation Report prepared under Regulation 9, is the basis on which the Board decides whether there is violation and proceeds under Order 10, to take further action in terms of Regulations 11 and 12. It is a document which is relevant and essential for the Petitioner, to prepare their defence and to have a fair hearing,”.
The case arises from a criminal complaint filed by SEBI in December 2015 against Kassa Finvest Pvt. Ltd. and its directors, including Siddharth Shankar.
SEBI alleged violations of provisions of the SEBI Act and the Securities Contracts (Regulation) Act. Based on this complaint, the trial court summoned the accused persons in January 2016.
At the stage before framing of charges, Siddharth Shankar moved an application under Section 208 of the Code of Criminal Procedure seeking copies of several documents.
These included the investigation report referred to in the complaint, the material on the basis of which SEBI decided to prosecute, investor complaints, and statements recorded during the investigation.
SEBI opposed the application and argued that the investigation report was an internal document meant only for administrative purposes. It further claimed that since the report was not formally relied upon or annexed with the criminal complaint, there was no legal obligation to supply it to the accused.
Accepting this argument, the trial court dismissed the application in January 2018, holding that supply of documents already attached with the complaint was sufficient compliance with criminal procedure.
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Aggrieved by this order, Siddharth Shankar approached the Delhi High Court.
Allowing the petition, the High Court rejected SEBI’s stand and held that the investigation report is an “intrinsic component” of the decision to prosecute.
The Court examined SEBI’s regulatory framework and noted that the Board is legally required to apply its mind to the investigation report before deciding whether violations have occurred and whether prosecution should be initiated.
Once prosecution is launched, the report cannot be treated as a purely internal or administrative document immune from disclosure.
The High Court placed strong reliance on the Supreme Court’s judgment in T Takano v. SEBI, reiterating that disclosure obligations in criminal proceedings are not restricted only to documents that are expressly relied upon or annexed with the complaint.
Any material which has a direct and clear connection with the decision to prosecute, and which may help the accused in seeking discharge or preparing a defence, must be disclosed.
The Court observed that denying access to such material creates serious information imbalance between the prosecution and the accused. This information asymmetry, the Court noted, directly weakens the accused’s ability to effectively challenge the prosecution case and undermines the fairness of the criminal process.
Referring to Article 21 of the Constitution of India, the Court held that criminal trials must strictly adhere to the principles of fairness, transparency, and natural justice. Regulatory confidentiality, the Court clarified, cannot override an accused person’s fundamental right to a fair trial.
At the same time, the Court acknowledged that certain portions of the investigation report may contain sensitive information or third-party details.
However, it clarified that such concerns can be adequately addressed through limited redactions and protective measures, and not by adopting a policy of “blanket non-disclosure” of the entire report.
Allowing the petition, the Delhi High Court directed SEBI to supply the investigation report to the accused in accordance with law, clearly stating that criminal prosecutions cannot proceed on the basis of material that is concealed from the defence.
The petitioner Siddharth Shankar was represented by Advocates Adit S Pujari and Manvendra Singh Shekhawat.
SEBI was represented by Senior Advocate Sunil Dalal, along with Advocates Ashish Aggarwal, Shivani Joshi, Ankit Rana, Shipra Bali, Bharat Khurana and Sarthak Malhotra.
Case Title:
Siddharth Shankar Vs SEB
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