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IN THE HIGH COURT OF JUDICATURE AT MADRAS

(Special Original Jurisdiction)

W.P.NO: 7S OF 2024

M/s MK Dandeker & Co LLP

Rep. by its authorised signatory

Mr. Poosaidurai, Partner

2"4 Floor, New No 185,

Old No 100, Poonamallee High Road,

Kilpauk, Chennai — 600 010 ...Petitioner

-Versus-
1. Securities and Exchange Board of India
Plot No. C4-A, ‘G’ Block,
Bandra — Kurla Complex, Bandra (EF),
Mumbai — 400 051
2. National Financial reporting Authority
g Floor, HT Building, KG Marg,
New Delhi - 110003 ... Respondents
INDEX
S.No. Date Document Page No.
1. 14.11.2024 | List of Dates and Events o|-o 2)
2. 14.11.2024 .| Synopsis 03- ob
3. | 14.11.2024 | Coding Sheet a
oding Shee O 3
3

IN THE HIGH COURT OF JUDICATURE AT MADRAS

(Special Original Jurisdiction)
W.P.NO: OF 2024

M/s MK Dandeker & Co LLP

Rep. by its authorised signatory

Mr. Poosaidurai, Partner

2™ Floor, New No 185,

Old No 100, Poonamallee High Road,

Kilpauk, Chennai — 600 010 ...Petitioner

-Versus-

1. Securities and Exchange Board of India

Plot No. C4-A, ‘G’ Block,

Bandra — Kurla Complex, Bandra (E),

Mumbai — 400 051

2. National Financial reporting Authority

8" Floor, HT Building, KG Marg,

New Delhi - 110003 ... Respondents

SYNOPSIS FILED ON BEHALF OF THE PETITIONER

The instant the instant Writ Petition under Article 226

of the Constitution of
India, 1950 is filed seeking for the:

1.1. Issuance of a writ of certiorari to call for the records pertaining to the
impugned order dated 15 September 2023 passed by the Respondent No. |
bearing reference no. QUA/VS/CFID/CFID/29200/2023

Same insofar as it pertains to the allegations and/ or

against the Petitioner, and,

-24 and quash the

observations made
1.2. Pass such fi ‘
ch further other orders as this Hon’ble Court deems fit and proper

and thus render justice.

The present Writ Petition is necessitated on account of the Respondent No.1’s

actions which are ex-facie arbitrary and in gross violation of the sacrosanct

principles of natural justice as well as due process.

Respondent No. | passed two orders on 15 September 2023 with the first order
being in the matter of Talwalkars Better Value Fitness Limited (“TBVFL”) and
the second order being in the matter of Talwalkars Healthclubs Limited
(“THCL”), both passed under the provisions of Sections 11(1), 11(4), 114A),
11B (1), 11B (2) read with Section 15HA and Section 15HB of the SEBI Act.

The Petitioner was the statutory auditor of TBVEL for FY 2016-17, FY 2017-
18 and FY 2018-19. TBVFL and THCL underwent a demerger effective from
01 April 2016 pursuant to the order passed by the National Company Law

Tribunal.

Following the demerger, 80% of the revenue portion of TB VFL was transferred
to THCL. The Petitioner continued as the auditor for TBVFL for FY 2017-18
and FY 2018-19. Meanwhile, THCL appointed M/s Lakdawala and Associates
as auditors for FY 2017-2018 and Ajay Shobha & Co. for FY 2018-2019.

The present Petition challenges the adverse observations and remarks observed

by Respondent no. | in the order dated 15 September 2023 passed in the matter
of THCL.

Though THCL was incorporated on 23 April 2016, its business operations

commenced from the financial years 2017-18 only after TBVFL was demerged,
pursuant to which the gym business of TBVI'L was transferred to THCL. At
this juncture, it is significant to note that the Petitioner, being the statutory
auditor of TBVFL for FY 2016-17 to FY 2018-19, was not a party to the
proceedings initiated by the Respondent no. 1 against THCL and accordingly,
10.

ws

anil

was not enlisted as a ‘Noticee’ to the Show Cause Notice issued by Respondent

No.1 in the said proceedings.

On 13 July 2021 a letter was issued by Respondent no.1 to the Petitioner stating
alleged prima facie violations under the provisions of SEBI (Listing
Obligations and Disclosure Requirement) Regulations, 2015, SEBI Act and
Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair

Trade Practices relating to Securities Market) Regulations, 2003 by the TBVFL.

The letter contained certain adverse observations against the Petitioner in its
capacity as the statutory auditor of TBVFL for the audit period of FY 2018-19.
The Petitioner, on 28 July 2021, issued a response to Respondent no. 1’s letter
dated 13 July 2021 refuting the adverse observations contained thereunder
against the Petitioner and categorically denying averments contained therein.
The Petitioner emphatically set out that there has been no negligence in
performance of its duties as statutory auditors. The Petitioner further provided

its response in detail with necessary clarifications for each observation raised

in Respondent no.1’s letter.

Although there had been no further other interaction between the Petitioner and
Respondent no. 1, by placing reliance on such limited correspondence,
Respondent no. | prematurely arrived at its conclusions and proceeded to refer
and share the findings of its alleged investigation with Respondent no. 2 on 02
March 2022. The reference contained adverse observations against the

Petitioner and called upon Respondent no.2 to consider appropriate action

against the Petitioner.

Ultimately, on 15 September 2023, Respondent no. 1 passed the impugned order

bearing reference no. QJA/VS/CF ID/CFID/29200/2023-24 in respect of THCL

wherein observations have been made against the Petitioner.

The Petitioner only came to know of such developments when it received a

Show Cause Notice dated 19 July 2024 from Respondent no. 2 concerning the
13.

14.

15.

16.

17.

Statutory audit of TBVFL which was purportedly issued on the basis of its

communication with Respondent no. 1. The Petitioner issued a detailed

without-prejudice response to the Show Cause Notice on 05 September 2024.

The swingeing observations made by Respondent no.1 in the impugned order,

sans granting the Petitioner even a Proper opportunity of being heard, gravely

prejudices the Petitioner in the proceedings initiated by Respondent no. 2.

Moreover, in the communication dated 02 March 2022 addressed to

Respondent no. 2, Respondent no. 1 has mentioned prima facie conclusions of

negligence on part of the Petitioner. Such conclusions by

arbitrary,

Respondent no. I are

premature and passed without existence of any jurisdictional fact in

favour of Respondent no. 1.

The adverse nature of the observations passed by Respondent no. 1 in the

impugned order, which has been passed without appropriate jurisdiction and

without granting the Petitioner any opportunity to defend itself, ought to be set
aside and expunged from the impugned order at the earliest.

Respondent no. 1 has failed to act in accordance with the principle of natural
justice and has exceeded its jurisdiction. the adverse observations in the

impugned order have eventually led the Respondent no. 2 to initiate inquiry
against the Petitioner.
The entire action of Respondent No.1 is arbitrary and unrea

soned due to which

rights and interests of the Petitioner has been hi

ghly prejudiced. There being no

cacious, alterna
Petitioners beg to invoke the extra-

under Article 226 of the Constitutj

other speedy and equally effi tive remedy available, the

ordinary jurisdiction of this Hon

on of India.

‘ble Court

Dated at Chennai this the 14% day of November 2024

COUNSEL FOR THE PETITIONER

lL

IN THE HIGH COURT OF JUDICATURE AT MADRAS

(Special Original Jurisdiction)
W. PNO. 2024

M/s MK Dandeker & Co LLP

Rep. by its authorised signatory

Mr. Poosaidurai, Partner

2nd Floor, New No 185, Old No 100,

Poonamallee High Road,

Kilpauk, Chennai — 600 010 ... Petitioner

VERSUS

1. Securities and Exchange Board of India

Plot No. C4-A, ‘G’ Block, Bandra — Kurla
Complex, Bandra (E), Mumbai — 400 051.

2. National Financial Reporting Authority

8th Floor, HT Building, KG Marg, New
Delhi — 110 003. ... Respondents

AFFIDAVIT OF MR S POOSAIDURAI
FILED ON BEHALF OF THE PETITIONER

I, Mr S Poosaidurai, son of Mr S Selvaraj, aged about 39 years, authorized

signatory of
the Petitioner herein (authorised vide Board Resolution dated 13 November 2024),
having office at 2nd Floor, New No. 185, Old No. 100, Poonamallee High Road,
Kilpauk, Chennai- 600 010, do hereby solemnly state and sincerely affirm as
follows:

_ Page No:1
Corrections:

. £ is
Va
| state that ] am the authorized signatory of the Petitioner and am competent to
affirm this affidavit on behalf of the Petitioner. Conversant with the facts, and
having acquainted myself with the relevant records, I am hereby setting out all

true and correct facts for the benign consideration of this Hon’ble Court.

I state that the instant Writ Petitioner under Article 226 of the Constitution of

India, 1950 is filed seeking for the:

2.1 issuance of a writ of certiorari to call for the records pertaining to the
impugned order dated 15 September 2023 passed by the Respondent No. |
bearing reference no. QJA/V S§/CFID/CFID/29200/2023-24 and quash the
same insofar as it pertains to the allegations and/ or observations made

against the Petitioner, and,

2.2. Pass such further other orders as this Hon’ble Court deems fit and proper
and thus render justice.

3. I state that the Petitioner abovenamed, is a Limited Liability Partnership

(“LLP”) registered under the provisions of the Limited Liability Partnership
Act, 2008 (“LLP Act”) and is a chartered accountant firm, registered with the
Institute of Chartered Accountants of India (“ICAI”) with firm registration
number 000679S/S000103, having its registered place of business at the
address mentioned in the cause title. The Petitioner is one of the oldest audit
houses of India, with the seeds of inception dating back to the year 1940. The
Petitioner firm is headquartered in Chennai, India and has branches in many
other business cities of India including Bangalore, Hyderabad and Ahmedabad.
The Petitioner has been associated with the accounting and assurance fraternity

of India for over 80 years now and has rich exposure in handling clients from

KER & CO LLP

" | ’
, / PARTNER

Page No:2
Corrections:
a

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diverse industries including manufacturing, transportation & logistics, financial

services, infrastructure among others.

The Respondent No. | is the Securities and Exchange Board of India (““SEBI”),
a statutory body established under the Securities and Exchange Board of India
Act, 1992 (“SEBI Act”), having its head office at the address mentioned in the
cause title. The Respondent No. 1 is the securities market regulator in India and
is vested with various powers to protect the interests of investors in securities
and to promote the development of, and to regulate the securities market and
for matters connected therewith or incidental thereto. As such, Respondent No.
1 being a statutory body, falls within the purview of “State” under Article 12 of
the Constitution of India, 1950 and is amenable to the Writ Jurisdiction of this
Hon’ble Court.

The Respondent No. 2 is the National Financial Reporting Authority

(“NFRA”), constituted by the Central Government on 01 October 2018 under
Section 132(1) of the Companies Act, 2013 (“Companies Act”). Under Section
132(4) of the Companies Act, which was enforced with effect from 24 October
2018, pursuant to which, the Respondent No. 2 has inter alia been authorized
to investigate the matters of professional or other misconduct committed by any
member or firm of chartered accountant, registered under the Chartered
Accountants Act, 1949 (“Chartered Accountants Act”). Further, under the
National Financial Reporting Authority Rules, 2018 (“NERA Rules 2018”),
which were brought into effect from 14 November 2018, the Respondent No. 2
has for the purposes of monitoring and enforcing compliance with auditing
standards under the Companies Act been authorised to inter alia review working
papers and communications related to the audit; evaluate the sufficiency of the

quality control system of the auditor and the manner of documentation of the

Page No:3
Corrections:

CER & CO LLP

Fe aNEe
system by the auditor; and perform such other testing of the audit, supervisory,
and quality control procedures of an auditor. As such, Respondent No. 2 also
being a statutory body, falls within the purview of “State” under Article 12 of
the Constitution of India, 1950 and is amenable to the Writ Jurisdiction of this

Hon’ble Court.

6. I state that the present Writ Petition is necessitated on account of the

Respondent No.1’s actions which are ex-facie arbitrary and in gross violation
of the sacrosanct principles of natural justice as well as due process. Respondent
No. 1 passed two orders on 15 September 2023 with the first order being in the
matter of Talwalkars Better Value Fitness Limited (“TBVFL”) and the second
order being in the matter of Talwalkars Healthclubs Limited (“THCL”), both
passed under the provisions of Sections 11(1), 11(4), 11(4A), 11B (1), 11B (2)
read with Section 15HA and Section 15HB of the SEBI Act.

7. I state that the Petitioner was the Statutory Auditor of TBVFL for the FYs 2016-
17, 2017-18 and 2018-19. In December 2017, TBVFL and THCL underwent a
demerger, effective from | April 2016, as per the order issued by the National
Company Law Tribunal in December 2017. Following the demerger, 80% of
the revenue portion of TBVFL was transferred to THCL. The Petitioner
continued as the auditor for TBVFL for FY 2017-18 and FY 2018-19.
Meanwhile, THCL appointed M/s Lakdawala and Associates as auditors for FY
2017-2018 and Ajay Shobha & Co. for FY 2018-2019.

8. The present Petition challenges adverse observations and remarks observed by

the Respondent no. 1 in the order dated 15 September 2023 passed in the matter
of THCL (“impugned order”). Though THCL was incorporated on 23 April
2016, its business operations commenced from the financial years 2017-18 only

after TBVFL was demerged, pursuant to which the gym business of TBVFL

Page No:4
Corrections:

ass For M.K. DANDEKER & ('O LLP

was transferred to THCL. At this juncture, it is significant to note that the
Petitioner, being the statutory auditor of TBVFL for FY 2016-17 to FY 2018-
19, was not a party to the proceedings initiated by the Respondent no. 1 against
THCL and accordingly, was not enlisted as a ‘Noticee’ to the Show Cause

Notice issued by the Respondent in the said proceedings.

I state that despite the Petitioner not being a party to the quasi-judicial
proceeding resulting in the impugned order, the Respondent in a high-handed,
arbitrary and grossly ignorant manner has proceeded to make swingeing
observations sans granting the Petitioner even a proper opportunity of being
heard or adequately respond to any allegations whatsoever. Being so, the
Petitioner is severely prejudiced by the observations qua the Petitioner in the

impugned order which have been passed without following the basic tenets of
law and procedure.

10. I state that the Executive Director of Respondent No. 1 presiding over the

proceedings resulting in the impugned order has made the following statement
in the impugned order which is reproduced below for facility:

“30. In this context, I also note from the record that regarding the role of
the statutory auditors of the Company, SEBI found the same as
questionable and has written a letter to National Financial Reporting
Authority (“NFRA”) and MCA for considering appropriate action
against them in accordance with law. Considering the same, the Noticees

cannot be allowed to rely on the absence of any adverse comments by the

auditors.”

11. I state that the letter referred to in the impugned order was written by the

Respondent No. | to the Respondent No. 2 on 02 March 2022 recording certain

Page No:5
Corrections: \
observations of Respondent No. 1 during the course of investigation against

TBVFL and also alleging certain lapses on the part of the Petitioner, which are

as follows:

11.1. Non-reporting of reversal of reconciliation entries as on 31 March 2018

in subsequent limited audit reviews dated June 2018, September 2018 and
December 2018 leading to inflation of bank balance;

11.2. Non qualification of capitalisation of revenue expenses to Capital Work

in Progress during FY 2016-17 and FY 2017-18;

11.3. Non qualification of revenue booked to revaluation of investments in

Talwalkar Club Systems Private Limited during FY 2018-19.

12. I state that it is relevant to note that the alleged prima facie observations
of
Respondent No. 1 were reached in course of investigation conducted by

Respondent No. 1 in the matter of TBVFL and THCL where financial

irregularities were observed against the company and its directors.

13. I submit that in this context, prior to above conclusion being reached, there
was
mere one round of communication between Respondent No. 1 and the
Petitioner, whereby Respondent No. 1 issued a letter dated 13 July 2021 to the
Petitioner (“SEBI Letter”) stating that prima facie, violations have been
observed under various provisions of SEBI (Listing Obligations and Disclosure
Requirement) Regulations, 2015 (“LODR Regulations”), SEBI Act, and
Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair
Trade Practices relating to Securities Market) Regulations, 2003 (“PFUTP

Regulations”) by the company.

14. I state that the Respondent No. 1 then set out the following 5 (five)
observations

with respect to non-compliance of accounting principles by the company

Page No:6
Corrections:

ER & CO LLP

AVA AVAL CLS

NER
15.

16.

17.

including instances of misrepresentation of books of account by the company,

which as per Respondent No, 1 revealed that the Petitioner as a Statutory auditor

had been negligent in performance of its duties and had not reported findings
in its audit reports:

14.1. Inflation of bank balance disclosed in financial statements;

14.2. Capital Work in Progress account used to inflate profits;
14.3, Revaluation of investments for inflation of revenue;

14.4. Unclear nature of advances paid to Mickey Keki Mehta;

14.5. Potential non-recoverability of advance.

I state that thereafter, the Petitioner responded to the SEBI Letter vide its
letter
dated 28 July 2021 (“Response”) categorically denying averments contained in
the SEBI Letter and stating that there has been no negligence in performance
of duties by the Petitioner as statutory auditors. The Petitioner further provided

its response in detail with necessary clarifications for each observation raised
in the SEBI Letter.

I state that it merits consideration that following the abovementioned

correspondence, which allegedly comprised of Respondent No. 1’s
investigation process qua the Petitioner, there has been no other interaction
between the Petitioner and Respondent No. 1. However, by placing reliance on
such limited correspondence, Respondent No. 1 prematurely arrived at its
conclusions and proceeded to refer and share the findings of its alleged
investigation with Respondent No. 2 on 02 March 2022.

I state that to the Petitioner’s surprise, it only came to know of such

developments when it received a Show Cause Notice dated 19 July 2024 from

Page No:7

Corrections: /) A 4. 1) / 4.4 AM wy

RIVER

20
18.

19.

20.

Page No:8
Corrections:

Respondent No. 2 which was purportedly issued on the basis of its

communication with Respondent No. 1.

I state that the Petitioner has on 05 September 2024 issued a detailed without
prejudice response to the Show Cause Notice dated 19 July 2024 and set out
responses substantiating the fact that the Petitioner has complied will all
applicable rules, laws and regulations. In particular the Petitioner herein has
explained its interpretation of the applicable accountancy rules. The
Respondent No. 2 is yet to reply to the response issued by the Petitioner. I state
that the response was issued by the Petitioner so as not to be prejudice by a lack
of a response. However, the swingeing observations made by Respondent No.1
in the impugned order, sans granting the Petitioner even a proper opportunity
of being heard, gravely prejudices the Petitioner in the proceedings initiated by
Respondent No. 2

I moreover state that in the communication dated 02 March 2022 addressed to

Respondent No. 2, Respondent No. 1 has mentioned prima facie conclusions
of negligence on part of the Petitioner. Such conclusions by Respondent No. 1
are arbitrary, premature and passed without existence of any jurisdictional fact
in favour of Respondent No. 1. Given the adverse nature of the observations
passed by Respondent No. 1 in the impugned order, which has been passed
without appropriate jurisdiction and without granting the Petitioner any
opportunity to defend itself, ought to be set aside and expunged from the
impugned order at the earliest.

I state that in the context of the impugned order, certain adverse observations
of Respondent No. 1 against the Petitioner as contained in the impugned order

in respect of TBVFL are reproduced below for facility:

For M.K. DANDRKER & CO LLP

186, (14 Ho, 100), Kd

A vo ' and FLOOR,

cy MANAG UF
6 WAAANLLO OR aa
Page No:9
Corrections:

NANO 0 WVANQALG 3

29. Regarding inflation of bank balance disclosed in the financial

Statements, Gawandes (Noticee No. 4, 5 and 6) have submitted that all the
Jinancial statements of the company (Le., TBVFL) were audited by the
same Statutory Auditor since the FY. 2011-12 and no adverse remarks as
alleged in the SCN were made out by the said Auditor. In this regard, [I
note that that SCN has alleged that there was misrepresentation in the
Financial statements of the Company and the financial statements of
TBVFL and THL as at March 31, 2018 highlighted a cumulative bank
balance of = 95.98 Crores. In the key bank account (Axis bank Account
No. 004010200059343) constituting 98% of the bank balance, the balance
as per accounting records was %94.72 Crores, whereas the bank
statements highlighted only 25.65 Crores. In this regard, the Noticees
(Gawandes), without providing any justification for the alleged
misrepresentation of financial statements, have merely made an
unsubstantiated statement that the books of accounts were duly audited
and certified and there were no adverse comments by the auditor. In
absence of any rationale / Justification in respect of the allegations noted
above and because of lack of any documents / material to substantiate
their submission, I am unable to agree with the submissions made by the
Noticees (Gawandes).

30. In this context, I also note Jrom the record that regarding the role of
the: statutory auditors of the Company, SEBI found the same as
questionable and has written a letter to National Financial Reporting
Authority (“NFRA”) and MCA Sor considering appropriate action against
them in accordance with law. Considering the same, the Noticees cannot

be allowed to rely on the absence of any adverse comments by the

auditors,

PEPROEKER & Oo For M.K. DANDBKER & CO LLP

, (Old Ho. 100), “S40

OE LOR \\ ;

oe
33. Regarding the inflation of. profits by mis-utilisation of Capital Work in
ndes (Noticee No. 4, 5 and 6)
mnasium

t only in Us &Y
apportioned

Progress account, it is stated by the Gawa

sion no

ices. The company

ethodically and to the co

that THL was ina state of healthy expan

business, but also in connected allied serv

mplete

the business costs and running expenses Mm

satisfaction of the auditors. T he company

lar
alified remarks on the alleged

had also submitted its detailed

justification to the statutory auditor regularly in each financial year. The

auditor did not have any adverse or qu
transaction. It is further claimed that the company capitalised the
expenses to the satisfaction of the auditors and there was no alleged
inflation of the CWIP account balance.

ized the

34. ...As regards their submission that the company capital.

o alleged

on of the auditors and there was n

expenses to the satisfacti

nd the auditor did not have any

inflation of the CWIP account balance a

marks, I find the same to be without a
like professional fees,

ought to have been

adverse or qualified re ny substance

since the expenses such as administrative expenses

rent of gym equipment being revenue expenses,

expressed in profit and loss account and should not have been capitalised

accounting standards. The said Noticees have not

n to dispute how the accounting standards such as
atment of CWIP

ing to show that

as per the relevant

offered any explanatio

Ind-AS 38 and IndAS 23 were not applicable to the tre

entries noted in the SCN nor have they submitted anyth

with some other

the accounting treatment was done in accordance

accounting standard. A
absolve the liability of th

ny lapses on part of the statutory auditor do not

xs and moreover,

e Company for the wrongdoing

phs, the role of the auditor has also been

as stated in preceding paragra

rving certain lapses on the

examined by SEBI and on obse ir part reference

24

has been made to MCA and NFRA also for taking appropriate measures
as per the law. Thus, the contention of the Noticees (Gawandes) in this

regard are devoid of merit and accordingly rejected. ”

In view of the above, the Petitioner begs to prefer the present Writ Petition on
the following amongst other grounds, each of which are without prejudice to

each other:

GROUNDS

The observations against the Petitioner in the order dated 15 September

2023 passed by the Respondent no. 1 is entirely without jurisdiction.

The Petitioner is merely an accounting firm performing statutory audits,

internal and management audits etc. and is regulated and governed by ICAI and
NFRA. The Petitioner is not an entity concerned with the securities market.
Though the Respondent No. 1 initiated inquiry and took action against TBVFL
for violations of securities laws, however, it had no jurisdiction to level
allegations and observe adverse remarks / observations against the Petitioner in
the impugned order.

The Petitioner had no involvement in the alleged violations by TBVFL and it

has no control over the management of the companies. The Petitioner only
conducted audits based on documents provided by the management of the
companies. The role of the Petitioner is limited to diligently perform its duties
with reasonable care which the Petitioner did observe in the matter.

The Respondent No. | has assumed and exceeded its jurisdiction in as much as
arriving at conclusive findings of irregularities, without verifying the veracity
the facts and without there being any conclusive proof of any wrongdoings on

Page No:11
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S

Page No:12
Corrections:

the part of the Petitioner. The adverse observations in the impugned order are
merits as it lacks requisite facts and
d facts, which did not exist and no

erify such facts and in the

completely baseless and de hors of any

evidence. Respondent No. | thus has assume
attempt has been made by Respondent No. 1 tov

process and further, proceeded to record adverse observations against the

Petitioner, without even affording an opportunity of a hearing to the Petitioner.

Itis submitted that the action of the Respondent No. | in issuing communication
to the Respondent No. 2 and Ministry of Corporate Affairs is arbitrary and
illegal. The Respondent No. 1 has far exceeded its jurisdiction and arrived at
conclusive findings against the Petitioner without any evidence to that effect, it
ought not have directed the Respondent No. 2 to investigate and initiate inquiry
against the Petitioner. The alleged adverse findings in the impugned order
causes grave prejudice to the Petitioner, which has ultimately resulted in
initiation of an enquiry against the Petitioner. There is a reasonable
apprehension that the Respondent No. 2 will strongly rely on the alleged
observations in the impugned order which are unsupported by cogent evidence
and may penalise the Petitioner. Therefore, the adverse observations in the
impugned order against the Petitioner are required to be expunged and set aside

as the same are baseless and lacks merits.

Petitioner was not a party to the proceedings before the Respondent No. 1.

It is submitted that the Petitioner was never a party to the proceedings before
the Respondent No. 1. Moreover, inquiry was initiated by the Respondent No.
1 only against TBVFL and its directors, promoters and management for alleged
violations of securities laws and misrepresentation of its financial status. The
Petitioner had no role to play in such alleged violations by the companies. No

show cause notice was issued to the Petitioner and despite the above, the

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Respondent No. 1 proceeded in observing adverse remarks

against it in the
impugned order, which is wholly arbitrary,

It is submitted that the Respondent No. 1 issued a communication dated 13 July

2021 to the Petitioner regarding prima facie violation observed by it. The
Petitioner responded to the said communication on 28 July 2021 denying all the
allegations. Apart from the above referred correspondence, there was no other
communication between the Petitioner and the Respondent No. 1. Moreover,
the Petitioner was not even informed by the Respondent No. 1 about passing of
the impugned order and the adverse observations against it. It is only when the

Respondent No. 2 issued show cause notice to the Petitioner, it came to know
about the impugned orders.

Violations of principles of natural justice and no opportunity of hearing

granted.

The adverse observations and remarks in the impugned order dated 15

September 2023 passed by the Respondent No. 1 are in absolute violations of

principles of natural justice, Notably, in the communication dated 13 July 2021

issued by the Respondent No. 1 to the Petitioner, the Respondent No. 1 did not

apprise the Petitioner that it may remark adverse observations against the

Petitioner in the final order and may write to the Respondent No. 2 directing it
to initiate appropriate action against the Petitioner for alleged violations of
accounting standards.

The Respondent No. 1 failed to consider the response dated 28 July 2021
submitted by the Petitioner to the communication dated 13 July 2021. In fact,
the Petitioner in its response had categorically denied violations of accounting
Standards and other relevant provisions alleged by the Respondent No. 1. The

Page No:13
Corrections:

26
Petitioner did not only deny the allegations but also clarified the reasons for

providing qualified audit report to TBVFL.

1. It was obligatory on part of the Respondent No. 1 to investigate and enquire

about the veracity of the alleged violations by the Petitioner before arriving at
any conclusion. The Respondent No. 1 without any further communication
proceeded to observe adverse remarks against the Petitioner in the impugned
order. In fact, as already stated above, the Respondent No. 1 was never a party

to the proceeding nor any show cause notice was issued to the Petitioner.

J. A mere round of written communication is not conclusive enough to for the

Respondent No. 1 to take a stance that the Petitioner has allegedly violated
accounting standards. The action of the Respondent No. 1 is based on pre-

determined conclusion which impeaches principles of natural justice.

K. In this regard, it is a settled proposition of law that in such enquiry

proceedings,
opportunity of hearing is required to be granted to a party before passing any
adverse order. In the present case, the Respondent No. 1 at no point in time
afforded an opportunity of hearing to the Petitioner and therefore, the adverse

observations in the impugned order against the Petitioner are arbitrary and

patently illegal.

L, The impugned order observing adverse allegations against the Petitioner is

irrational, unlawful and in absolute violation of principles of nature justice.

22.

I submit that the Petitioner has approached this Hon’ble Court at the earliest

and this Petition does not suffer from delay or laches.

23. I submit that this Hon’ ble Court has the jurisdiction to entertain the present
writ
petition. I submit that the Petitioner has not filed any other proceedings in

Page No:14
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24.

25.

26.

27.

respect of this subject matter either in this Hon’ble Court or the Hon’ble

Supreme Court of India.

The Petitioner craves leave to, add to, amend, alter and/or modify all or any of
the aforesaid grounds and the Petitioner craves leave of this Hon’ble Court to
produce additional documents, as may be necessary during the course of the

hearing.

I state that the aforesaid facts and submissions clearly set out that the
Respondent No. 1 has failed to act in accordance with the principle of natural
justice and has exceeded its jurisdiction. It is submitted that the adverse
observations in the impugned order have eventually led the Respondent No. 2

to initiate inquiry against the Petitioner.

I state and submit that the entire action of Respondent No.1 is arbitrary and
unreasoned due to which rights and interests of the Petitioner has been highly
prejudiced. That there being no other speedy and equally efficacious, alternative
remedy available, the Petitioners beg to invoke the extra-ordinary jurisdiction
of this Hon'ble Court under Article 226 of the Constitution of India. It is further
submitted that alternative remedy is no bar to invoke writ jurisdiction of this
Court on ground of arbitrary, illegal, contemptuous and high-handed action of
the Respondents.

I state that the Petitioner has a strong prima facie case on facts. The balance of
convenience is entirely in favour of the Petitioner. Irreparable harm, loss, injury
and prejudice will be caused to the Petitioner if reliefs sought in the present
Writ Petition, including interim and ad-interims reliefs, are not granted. On the
other hand, no grave or irreparable harm will be caused to the Respondents if
the reliefs prayed for herein are granted by the Hon’ble Court.

Page No:15

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ye VA

28
24

28.

29.

i ings in which
I state that since the Petitioner is not even a party to the proceeding
quently, is not in possession of

mbly prayed that

on of the original impugned

der has been passed, and conse

the impugned or
= this Hon’ble

gned order. Therefore, it is hu

the original impu

ducti

Court may be pleased to dispense with the pro

order.
¢ facts and circumstances of the present case, it is just and

I submit that in th
pending hearing an

rotective interim order, d final decision

ition. It is submitted that Respondent No. 2 is

ersarial proceedings against the Petitioner relying

necessary to pass p
of the present Writ Pet
to proceed with the adv

now likely

on the

the impugned order. In the circumstances, it is just and

alleged observations in
this

necessary that, pending hearing and final disposal of the present petition,
Hon’ble Court be pleased to stay the proceeding initiated by the Respondent
No. 2 on the basis of a communication dated 22 March 2022 issued by the
Respondent No. 1 to the Respondent No. 2, and the show cause notice dated 19
July 2024 issued by the Respondent No. 2 to the Petitioner.

For the aforesaid reasons, it is humbly prayed that this Hon’ble Court may be
pleased
to dispense with the production of the original impugned order dated 15 September
2023 passed by Respondent No. 1 bearing Reference No QJA / VS / CFID / CFID /
29200/2023-24 and thereby render justice.
For the aforesaid reasons, it is humbly prayed that this Hon’ble Court may be
pleased

to stay the inquiry initiated by the Respondent No. 2 against the Petitioner in
proceeding

no. NF-23/10/2022 pursuant to show cause notice dated 19 July 2024 in furtherance
of

the impugned order dated 15 September 2023 passed by Respondent Nol bearing
Reference No QJA/VS/CFID/CFID/29200/2023-24 pending disposal of this Writ

Petition and thereby render justice.

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‘$0

For the aforesaid reasons, it is humbly prayed that this Hon’ble Court may be
pleased
to issue any writ or order or directions, more particularly in the nature of a Writ
of
Certiorari to call for the records pertaining to the impugned order dated 15
September
2023 passed by the Respondent No. 1 bearing Reference No QJA/VS /CFID /CFID
/29200 /2023-24 and quash the same insofar as it pertains to the allegations and/
or

observations made against the Petitioner and pass such further other orders as this

KILPAUK,
CHENNAI - 600 010.

Solemnly affirmed at Chennai

Onthis 13 day of November 2024 CVARSHA «SJ
And signed his name in my presence He /123¢/oo2
ah ADVOCATE
Vivekononda an,
Nerepakkam, h-+
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