Delhi High Court: SEBI Must Share Investigation Report with Accused, Withholding Violates Fair Trial Rights
Court sets aside trial court order, says accused entitled to report forming basis of prosecution
Judgment reinforces transparency, natural justice, and Article 21 protections in SEBI-led criminal cases
By Our Legal Reporter
New Delhi: December 26, 2025:
In a landmark judgment, the Delhi High Court has ruled that the Securities and Exchange Board of India (SEBI) cannot rely on its internal investigation report in criminal proceedings without providing a copy to the accused. The ruling, delivered by Justice Neena Bansal Krishna, underscores the importance of fair trial rights, transparency, and natural justice in regulatory prosecutions.
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The case involved Siddharth Shankar vs SEBI, where the accused challenged SEBI’s refusal to disclose its investigation report despite using it as the basis for prosecution.
Background of the Case
- SEBI filed a criminal complaint in December 2015 against Kassa Finvest Pvt. Ltd. and its directors, including Siddharth Shankar, alleging violations of the SEBI Act and the Securities Contracts (Regulation) Act.
- The prosecution relied on an investigation report prepared under Regulation 9, which formed the foundation of SEBI’s decision to prosecute.
- The accused sought a copy of the report, but the trial court refused disclosure.
- Shankar approached the Delhi High Court, arguing that denial of the report violated his right to a fair hearing.
Court’s Observations
Justice Krishna made several critical observations:
- Investigation report is essential: The report forms the basis of SEBI’s decision to prosecute and is therefore a vital document for the accused to prepare a defence.
- Natural justice requires disclosure: Withholding the report denies the accused a fair opportunity to contest allegations.
- Article 21 protection: The right to life and personal liberty includes the right to a fair trial. Transparency in evidence is central to this constitutional guarantee.
- Trial court order set aside: The High Court quashed the lower court’s refusal and directed SEBI to provide the report.
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The court stated: “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.”
Wider Legal Context
This ruling aligns with broader principles in Indian jurisprudence:
- Natural Justice: Courts have consistently held that evidence forming the basis of prosecution must be disclosed to the accused.
- Transparency in Regulatory Action: Regulatory bodies like SEBI must balance confidentiality with fairness.
- Article 21 of the Constitution: Protects the right to a fair trial, which includes access to documents relied upon by the prosecution.
Globally, securities regulators such as the US SEC and the UK FCA also follow disclosure norms to ensure fairness in enforcement actions.
Why This Judgment Matters
The Delhi High Court’s ruling has far-reaching implications:
- For Accused Persons
- Ensures they receive all documents forming the basis of prosecution.
- Strengthens their ability to prepare a defence.
- For SEBI
- Reinforces the need for transparency in enforcement actions.
- Prevents misuse of confidential reports to secure convictions.
- For Courts
- Provides clear guidance on balancing regulatory confidentiality with fair trial rights.
- Strengthens judicial oversight of regulatory prosecutions.
- For Investors and Markets
- Enhances trust in SEBI’s enforcement process.
- Ensures that prosecutions are conducted fairly, protecting market integrity.
Lessons for Stakeholders
The case highlights important lessons:
- For Regulators: Must ensure disclosure of investigation reports when relied upon in prosecutions.
- For Accused: Can demand access to documents forming the basis of charges.
- For Legal Practitioners: Must invoke Article 21 and natural justice principles in similar disputes.
- For Investors: Reinforces confidence in SEBI’s fairness and accountability.
Conclusion
The Delhi High Court’s ruling that SEBI cannot rely on an investigation report without giving a copy to the accused is a landmark in securities law enforcement. By setting aside the trial court’s refusal, the judgment reinforces natural justice, transparency, and constitutional protections under Article 21.
This decision ensures that regulatory prosecutions are conducted fairly, protecting both the rights of accused persons and the integrity of India’s financial markets.
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