On December 11, 2025, the Delhi High Court delivered an important decision involving the Securities and Exchange Board of India (SEBI) and Amit Jain. Let's break down what happened.
Back in October 2011, the Bombay Stock Exchange (BSE) noticed some unusual transactions related to Himalaya Granites Ltd., where Amit Jain was a shareholder. SEBI got involved because it seemed like certain rules about sharing important information might have been broken.
SEBI looked into these transactions and noticed possible violations of their rules against using secret information for trading. By June 2012, SEBI had decided to begin official proceedings against Amit Jain and others.
On November 14, 2013, SEBI sent a Show Cause Notice to Amit Jain. This was to ask why an inquiry shouldn't be held against him for not sharing the necessary information.
"You are, therefore, called upon to show cause as to why an inquiry should not be held against you..." — Show Cause Notice
Amit Jain challenged this notice in court, arguing that SEBI hadn't followed the correct process. On July 9, 2018, a Single Judge agreed with him, canceling the notice because SEBI hadn't documented a formal opinion before appointing someone to investigate.
SEBI wasn't satisfied with this decision and appealed. They argued that appointing someone to investigate is just an administrative step and doesn't require a formal opinion at that stage.
The court found that SEBI's process was indeed administrative and didn't need a detailed opinion before appointing someone to investigate. They pointed out that the initial notice was just to start the inquiry process, not to impose a penalty.
This case shows the complexities of regulatory procedures and the importance of following due process. The court's decision clarified how SEBI should handle such inquiries in the future, balancing administrative steps with regulatory oversight.
