Hello Everyone!
KIIT School Of Law welcomes you to the 8th KIIT National Moot Court Competition 2021 live blog. The competition will commence on the 16th of July 2021, in collaboration with Eastern Book Company and SCC Online as Knowledge & Resource partners.
This year the competition will be conducted through the virtual mode. The number of teams participating this year is at a grand total of 40 teams.
DAY 1: 16th July 2021 (Friday)
Inauguration Ceremony: 4:00pm
4:02pm- The anchors give a warm welcome to all the participants and attendees of the Inaugural Ceremony. This is followed by a brief introduction about the university, and the previous editions of the KIIT National Moot Court Competition. The anchors are as follows: Ahona Mukherjee, Saswat Mishra and Asmita Bandyopadhyay.
4:05pm- The welcome address was given by Prof. (Dr.) Bhabani Prasad Panda, Director, School of Law. He is looking forward to not only more virtual moot court competitions, but also physical ones in the near future.
4:10pm- The address was given by Prof. (Dr.) Jyana Ranjan Mohanty, Registrar, KIIT – DU following the welcome address. He stated that in the present scenario, attributes such as strong advocacy skills, logical skills and strong drafting skills is the objectives of the moot court competition and should be nurtured.
4:17pm- The address was given by Prof. (Dr.) Sasmita Samanta, Pro-Vice Chancellor, KIIT-DU. She stated that through the moot court competitions, the participants will gain clarity and realise the various aspects of the matter effectively. This will also give them a chance to devise a solution, which will make them feel a sense of accountability in the current corporate space.
4:30pm- The address was given by Prof. (Dr.) Hrushikesha Mohanty, Vice-Chancellor, KIIT-DU. He stated how not only moot court competitions, but also the process of argumentation will transcend courts and move to the cyber space. And for the same the moot court competition can be a medium to facilitate that.
4:39pm- The inaugural address was given by Chief Guest, Hon’ble Mr. Justice Sanjeeb Kumar Panigrahi. He stated that through moot court competitions we gain many skills such as: writing and research skills, networking skills and most importantly practical knowledge. Moot court competitions help boost the morale of the students, and it helps students gain confidence and get better at articulating their points and put forward their arguments.
4:58pm- The address was given by Mr. Zerick Dastur after this. He stated the importance of regulator in the Indian legal ecosystem. And furthermore, how their are two types of lawyers: the transactional lawyers and the curative lawyers. One has to select which one they aspire to be during their careers. He ended by saying that who said the sky is the limit when there are footsteps in the moon.
5:13pm- The address was given by the Guest of Honour, Prof. N.L Mitra. He stressed on the various stages which helps a lawyer bring about justice, which are as follows: firstly there should be simulation, followed by the mooting process and lastly to go and stand before a judge in a court. If lawyers argue properly, only then can administrative justice be achieved and that can culminate to curative justice.
5:37pm- Prof. N.L Mitra continues on the various nuances of the Indian legal system, and stating how Tribunals gives us the scope for a hybrid judging system. He also showed us the comparison between the US legal system, and that of the Indian legal system. And with that he stated how courts and tribunals have different ways of analysis and arguments, and mooting helps with such skills.
5:45pm- Prof. P.C Mishra gave the Vote of Thanks. He stated a brief summary of what all the speakers stated and wished all the participants best of luck for the competition.
6:01pm- The SCC Online Team is ready to commence with the SCC Online Session for all the moot court participants. The session will be taken by Rajesh Raina Sir and Chetan Singh Gill Sir.
6:06pm- Rajesh Raina Sir started with elaborting different tabs on the SCC Online Dashboard. And also stated that if any student does not have SCC Online in their campus, they can feel free to reach out to the SCC Online Team and gave an email id for the same.
6:13pm- Rajesh Raina Sir started with the Research tab, and showed how to filter your judgements and articles in a number of ways. This way the most accurate search could be got. He then elaborated the “Search within Search” option, with up to six levels, and can be modified as per our wish.
6:20pm- Rajesh Raina Sir elaborated on the “Find by Topic” tab, and stated how one can get to know many things about any topic which they search on this tab. And then he moved to “Find by Party Name”. He shared about how famous case names which are referred in the media can also be used to get the judgements. And when that is done, one can also come to know of the actual party names.
6:32pm-The team now has started with find by citation feature and explains on how to input the right details. Then the speaker goes on to explain the find by case law selection feature.
6:35pm- The Judges Briefing has commenced, with the help of a PPT and student members of the KLSMCS of the college.
6:37pm- Vidushi Tanya, a student member of KLSMCS started the briefing by stating the facts of the problem, and use a timechart to help the judges be aware of the series of events which took place as given in the problem.
6:40pm- Dipanwita Chatterjee, another member of KLSMCS went on to explain the various issues of the problem. This was a total of four issues, and were explained by various principles and sections of the SEBI Act.
6:41pm- On the other side, the SCC online team further elaborates about the advance search options and how it’ll help the students to make their compendium. These two sessions are being carried out simultaneously.
6:45pm- Snigdha Mohapatra, took over after this to elaborate on the various rules and scoring parameters which the Judges need to abide by. Furthermore, criteria for evaluation was explained by her.
6:50pm- Shrishti Jeswani explained on the technical aspects of a virtual court room, and various guidelines which should be followed by the Judges.
7:13pm- After answering all the Judges queries, the Judges Briefing has come to an end. And with that Day One of the Competition comes to a close.
DAY 2: 17th July 2021 (Saturday)
Prelims Round 1 is just about to start!
The Court Rooms are as follows:
8:06am- Due to a slight delay, CR 1 has not been able to start. Here’s to hoping they will do so shortly.
8:09am- CR 4 has started in full swing, with the Petitioners side stating a few case laws to back up their arguments. She further broke down her argument into three parts. And stressed on the aspect of natural justice as a requirement for pre-decisional hearing. After which, the judge asked a question to the speaker regarding a case law she referred to.
8:18am- CR 1 has finally started. Petitioner Speaker 1 is briefly stating the facts of the case before moving towards his arguments. Speaker 1 stated that he would contest in three parts: Firstly how the order was not in the interest of the securities or investors, then secondly the order was not remedial but rather punitive and lastly, the order based on documents cannot be the threshold of evidence.
8.20am- CR 17 the speaker is being questioned by the Judge. Where is freezing of accounts referred is asked by the judge. Then speaker answers it properly.
8:27am- In CR 3, the Judge is asking really pertinent questions to the Petitioner Speaker 1. He again stressed on the principle of natural justice, and explained it with the help of cases like the famous Canara Banks case. The Judge further asks where has SEBI mandated the need for a pre-decisional hearing, to which Speaker stated the Maneka Gandhi case.
8:29am- In CR 20, S. 186 of Companies Act was questioned by the judges and asked if the company was listed of not. The speaker referred to moot proposition para. Section 166 of companies Act was asked by the judge the speaker is unaware of section S.166. Section 166 of companies Act was asked by the judge the speaker is unaware of section S.166.
8:37am- Due to technical problems on the side of the teams, CR 2 has had a slow start but they are beginning now.
8:40am- In CR 5, the Petitioner Speaker 1 has finished with her submissions and Petitioner Speaker 2 has started. When stated the issues he would be dealing with the Judge has asked the Speaker to read out S. 12 of the SEBI Act. Then the Speaker moved on to elucidate the position of Promoters in a Company. He stated that the Promoters are acting as active shareholders, and is for the promotion and influx of new investors for the company.
8:44am- In CR 20, Satyani Case was referred by the speaker however the speaker couldn’t answer question that was asked by the judges pertaining to the position. The speaker also couldn’t answer the year of the judgement. The diff between executive director and non-executive director. The speaker somehow managed to answer.
8:51am- In CR 2, the Petitioner Speaker 1 stated that Ex parte orders cannot be passed by SEBI, as it is beyond their jurisdiction. But the Judge stressed on the 500 cr disgorgement of funds and how it has been misappropriated. The Speaker stated that these could be out of personal gains or benefits. To clarify on this point, the Judges asked more questions to the Speaker.
8:57am- In CR 1, the Petitioner Counsel Speaker 2 has finished with her submissions. And now the Respondents Speaker 1 has commenced.
8:59am- In CR 16, pecuniary liability was discussed by the judges and the speaker. The nature of securities market was spoken by the Speaker. Furthermore, the Mens rea was questioned by jugdges and it was said by the speaker that the allegations are mere suspension. Soon after the Petitioners Counsel’s Prayer started.
9:01am- In CR 17, like CR 16 the intention was questioned by the Judges. The judge also asked that which tribunal or bench gave order in their favour? Speaker failed to answer the same and then para 9 of the moot proposition was discussed by the bench. After this, the Prayer was stated.
9:05am- In CR 7, Petitioner Speaker 2 Section 22 of SEBI act id discussed with judges, cross questions. The question of representation, contention of no knowledge of diversions, thus no liability, no gains were made. Furthermore, he stated that the fundamental rights are being violated in this regard.
9:08am- In CR 15, the Respondents have started. Respondents Speaker 2 regarding issue 3 makes an argument that the executive directors were well aware of all the transactions taking place in the company. Refers to Sec 177(3) to support his argument. Mens rea is absent.The judge suggests there was a violation of principal of justice on the part of SEBI and starts questioning the speaker.
9:11am- In CR 3, since the judges are asking one question after another the Petitioner Speaker 2 continues to answer the questions to the best of his ability. Then the Judge asks the Petitioner Counsel to state the Prayer without looking at the memorial. But regardless of the issues, the Judges are not satisfied with the Prayer of the Petitioner Counsel. And the Judge goes on to state the Prayer on their behalf.
9:18am- In CR 17, facts were clarified by the judges. Understanding of Companies Act of the Speaker was checked by the Speaker. Judicial duty of the tribunal was asked by the judge. FUTP Regulation was discussed. The orders by SEBI was remedial in nature. The speaker dealt with sections 11 and 11B of SEBI Act.
9:22am- In CR 13, Petitioner Speaker 2 makes an argument that the loans were granted on a good faith in the due course of business. Explains the joint and severally liability clause. Refers to S.11 and 11 (b) of the SEBI act. The judge questions how does SEBI work in the interest of the investors and what is the difference between a MoU and a contract.
9:28am- In CR 2, Petitioner Speaker 2 stated the business judgement rule to explain the position of the directors. She stated the Indian Evidence Act with respect to the documents which are to be investigated. But this was questioned by the Judges, and they were not satisfied with reference to the Indian Evidence Act, and said that it was not applicable.
9:31am: In CR 10, Speaker 2 appellant started, black law dictionary on disgorgement. The application of this principle Of digorgement was raised by the judges. Judges cross-questioned the action if disgorgement w.r.t public interest and welfare. The essentials if unjust enrichment under section 11 is further cross-questioned.
9:38am- In CR 19, the questions from the memorial was asked and the speaker barely managed. Natural Justice was questioned. The provisions of SEBI was not clear and the judge had to proceed ahead. The Speaker couldn’t make eye contact and hence judges requisitioned the statues.
9:40am- In CR 10, Judge questioned, about the knowledge of executive directors. How do you expect the directors to know the internal matters. Was the question raised. To which companies act was referred by the counsel. Fiduciary duties of directors were done, judges were not satisfied with the answer of the Counsel.
9:45am- In CR 1, the rebuttals are going on. Both the teams are speaking really well. The Petitioner Counsel brought up many relevant points in this regard. She stated that the Respondents did not provide any cogent evidence, and their arguments are based on a misplaced understanding of the law. The Respondents in the Sur Rebuttals are defending their points well enough.
9:54am- Most of the CRs are coming to an end, the active CRs are as follows: 2,3,7,9,10,13,14,17.
10:00am- In CR 3, the Respondents Speaker 2 has started with his arguments just now. Before starting, the Judges questioned the Speaker on what is the definition of disgorgement. He stated the Black Laws dictionary with this respect. But the Judges wanted the conceptual meaning of the same, from his knowledge.
10:03am- In CR 7, the grounds to believe were asked to which Counsels interestingly answered that all the procedure has been followed and the there are no subjective grounds. And with that, the Prayer was stated by the Respondents.
10:10am- In CR 2, the Judges are asking about the applicability of the case. To which the Speaker referred to the case w.r.t to S 11 of the SEBI Act. To which the Judge asked about the principles of the case, and how is it relevant to the facts of the moot problem.
10:20am- In CR 3, the Judges questioned the arguments of the Speaker. The Speaker referred to the duties and the integrity of SEBI. The Judge asked about the role of SEBI and whether it is has been uniform or has been continuously evolving, the Speaker stated that SEBI has been uniform. For the same, the Judge has asked the Speaker to cite a judgement.
10:27am- In CR 7,the Respondents Speaker 2 is summing up her arguments. The judge asks if there’s anything else to add on to issue 3. The speaker now proceeds to issue 4.
10:30am- In CR 10, Speaker 2 appellant, the factual mistakes of pre-decisional hearing stating by respondents. The judge questioned the supreme court order referred by the appellants. The appellants also contended that respondents failed to establish the liability of directors and imposed the liability on promoters. Blaming the promoters it was said the funds were diverted by promoters of the company only. No response of the teams to the judges on the questions of rebuttals.
10:36am- With that Prelims Round 1 is coming to a close.
Prelims Round 2 will start sharp at 11am.
11:00am- CR 1 has started with the Round right on time. Petitioner Speaker 1 is laying out the structure of her submissions and then briefly states the facts of the moot problem. She stated that the order passed by SEBI is arbitrary, and such post decisional hearing cannot suffice for a pre-decisional hearing.
11:07am- In CR 4, Petitioner Speaker 1 has referred to the Clarifications of the moot problem to answer a question of the judge. And he has stressed the fact that there has been no conclusive proof for the order of SEBI. And freezing of accounts would lead to loss of livelihood and violation of fundamental rights.
11:14am- In CR 7, Issue 4 Section 11 B of SEBI Act stating that the appellants can be held liable but only if they were involved in the diversion of funds. The judge clarified the allegations on the appellants, to which counsel clearly mentioned the awareness of modus operandi. The judge asked to read the allegations again!
11:15am- In CR 16, the Necessity of the case is discussed. The time lag has been questioned the bench and the speaker argued the contention of time lag. Urgent requirements of this case. The speaker contended that the action of the SEBI makes the hearing urgent. Violation of natural justice is questioned by the judges and concept of Livelihood is discussed and the nature of the Stock Market is discussed.
11:16am- In CR 18, How the disgorgement took place in sec 73(1) of Companies Act, 2008 is discussed. The judge negated as the Companies act 2013 is prevailing. How special resolution is passed by the BOD. Sec 149 of the general clauses Act was referred by the speakers. The judges stated that the speakers are referring to the old acts. The judge also stated that the old act is removed for a reason. The speakers couldn’t answer the question.
11:21am- In CR 6, the principles of natural justice were discussed, and stated that it is important to follow in the judicial or quasi-judicial body. Passing an order without hearing is a gross violation. The counsel contended that if the hearing was provided the appellants would have proved their innocence. A post decisional hearing is not a solution.
11:25am- In CR 17, para 9 of the moot problem was discussed and promoters and executive directors roles were discussed. The question asked was whether Executive directors are defined in the law book? The Speaker took some time to answer the question.
11:30am- In CR 10, The judge asked that whether the principles of natural justice will override the statutory position. Further, it was clarified that natural justice here cannot be involved, SEBI has its specific purpose. He further said that the tribunal has also upheld the SEBI’s decision. It was questioned that whether there are substantive question facts that can say that interim order was no unjustified, as contentions of natural justice cannot be relied upon.
11:36am- In CR 5, Petitioner Speaker 2 stated about the vicarious liability of directors. And stated case laws about it being reasonably inculcated that the directors are liable. The case law referred to was Soumen Chatterjee vs SEBI in this regard, along with more case laws to back it up.
11:40am- In CR 14, Petitioner Speaker 1 moves on to the issue regarding the documents collected. SEBI violates the law of natural justice. The judge corrected that the SEBI wants to disclose only certain documents and nothing wrong with that. It should not be based on assumption. The speaker states that the statements recorded by the employees might be pertinent.
11:42am- In CR 8, the Counsel stated that as NBFC they can lend intercorporate loans. To which the judges clarified the appellants that a listed company can also advance loans. To which judges stated that it seems that you are representing the prompters, the counsel defended that the promoters are indeed liable for the fraud committed. The counsel further stated that the company should be held liable and not the executive directors. The counsel further contended that the violation was not proved so the question of disgorgement does not arise.
11:47am- In CR 3, the Judge stated that the Speaker answered the question well. And the Speaker went on to state many more case laws. The Counsel submits that a hearing must be granted, and due compliance of principles of Natural Justice. He also quoted Justice Sikri, about the importance of the principle of hearing before any order is passed by an authority.
11:52am- In CR 6, the speaker contended that even after all the investigations, the SEBI could not prove the violation and liabilities of the directors. The directors cannot be made liable only on the principle of the corporate veil. The has to be seen the practical realities of the economy. The essentials of disgorgement are not fulfilled. W.r.t. to issue 4, Section 11 & 11B are coextensive it is important to establish that there was a harm to the investors which was not established by SEBI. The counsel analysed the role of the executive directors and the liability of the director w.r.t the facts of the case.
11:57am- In CR 16, The appellants were whole-time director is contented by the speaker. The Show Cause Notice is the pre-decisional hearing and this is not a violation of Natural Justice. What is the confidential documents that SEBI is not provided to the parties. The speaker couldn’t satisfy the judges with their contention. The judge asked that Why is your action not arbitrary in nature? The precedents were referred to by the speakers and the memorial was referred by the speaker to establish and answer the question.
12:00pm- In CR 9, the judges asked that why should we interfere in the SEBI’s discretion. To which the counsel asked that SEBI’s power cannot be extended to a point where the rights are violated. The appellants proceeded with the prayer. The judges question the jurisdiction under which the appeal has been involved. To which the counsel answered that section15z of SEBI gives the jurisdiction to Supreme Court.
12:08pm- In CR 17, Art 226 was discussed virus of the interim order was explained by the judge to the speaker. The judge also explained how important a writ petition is. Why the documents were not provided to the parties? Who is SEBI to decide what document should be provided AND what document should not be provided? Natvar Singh case was discussed and Shruti Bora case was also referred by the Speaker.
12:12pm- In CR 2, the Counsel stated that the order was not remedial in nature, but the Judge stated that one cannot bypass the laws, and hence should be looked into section by section. The judge reiterated the role of SEBI, and the nature of the case was prima facie made. The judge asked the kind of steps that a company should undertake thereafter.
12:20pm- In CR 1, the Rebuttals have started. He stressed on disgorgement is an equitable remedy and the need for substantial evidence for the same. And he stated that the directors did not make any unlawful gain. The Respondents defended points well and discussed the meaning of the role of SEBI and their functions.
12:25pm- In CR 19, the judge asked why SEBI should provide them with the investigation report. Natwar Singh case is referred by the speaker. Hence, violation of Natural Justice was argued. Art 136 OF COI was argued and said that the opposition party should not be heard in the 1st place.
12:30pm- In CR 5, the Respondents are summing up all their arguments and moving towards the Prayer. The Rebuttals followed soon after. And the Petitioner Counsel asserted their points once again, with the help of case laws. And stated the liability of promoters and the importance of hearsay evidence with respect to the facts of the case.
12:34pm- In CR 20, the judges asked that what is discretionary power? The judges asked for the proves of fraudulent activates with SEBI? S. 93 of SEBI Act was discussed. The judges questioned the Laws related to the diversion of funds? Vijay Malaya case was referred and judges asked several questions on it.
12:39pm- In CR 3, the Judges referred to the Compendium of the teams. And with respect to that asked about the facts of the case. The Speaker was not aware of the facts of the case. After which, the Judge went on to explain the question with the help of an analogy. Based on that analogy, the judges asked the Speakers to form arguments right there.
12:45pm- In CR 12, the Rebuttals have started. The speaker states that in this case the principle of joint and several liability would not be fair and instead be pro-rata. Respondents Speaker 2 strongly argues that the entire contention of the SEBI is that the executive directors and the promoters is liable, which is justified.
12:50pm- The Prelims Round 2 is coming to an end, the active CRs are as follows: 2,3 & 14.
1:00pm- All CRs are over except for CR 2 & 3. In both the CRs the judges are asking questions to the speakers, and the speakers are trying their best to answer. The judges are further seeking clarifications on many points which are brought forward by the speakers through their answers.
2:08pm- Finally with CR 3 coming to a close the Prelims Round 2 comes to an end.
The Quarter-Final Rounds will begin sharp at 3pm.
3:06pm- The Qualifiers for the Quarter-Final Rounds was announced. They are as follows: TC 840, TC 823, TC 809, TC 816, TC 825, TC 828, TC 805, TC 802. As a result, the Quarter Final Rounds are delayed just a little. The fixtures have been released after this.
3:54pm- CR 4 has started with the Quarter-Final Rounds.
4:00pm- In CR 1, Petitioner Speaker 1 has started with their submissions. She will be dealing with Issue 1 in a two-fold argument which is: firstly SEBI exercised unriddled power, and secondly post decisional hearing cannot substitute pre-decisional hearing.
4:03pm- In CR 3, Petitioner Speaker 1 has started speaking. The speaker proceeds to the narrate the facts in brief covering all the important points including the parties, legislations, issues etc.PS1 proceeds to issue 1. SEBI is a statutory body however, according to the speaker there must be a prima facie conclusion in order to pass an ex parte order.The speaker goes on to state that there must be some form of evidence and not just assumptions.
4:05pm- In CR 2, Facts were explained and started with issue 1. Section 11 (4) of the SEBI Act is argued. The nature of interim order is discussed. The discretionary power of the SEBI is argued. Aim of SEBI act is correlated with the present case. The pre-decisional hearing is being discussed. The investigation report and forensic report validity was discussed. The allegations are circumstantial nature.
4:07pm- Continuing in CR 2, the speaker stated that equal opportunity to be heard S. 4 of SEBI Act. The pre-dicsional hearing is dismissed by SEBI. Mere 3 weeks’ time was given to file objection. The absence of remedial order is there in the present. Section 11(4). The evidence was not shown by SEBI. The post decisional hearing was also not granted by SEBI. Hence, it shows SEBI is in the wrong side of the Law. The judges are satisfied with the argument.
4:09pm- In CR 3, the speaker continues to state that respondent have misused the power vested in the section 11 and 11(B) of the SEBI act. These sections do not rule out the principle of natural justice. The judge questions how was there a violation of natural justice on the part of SEBI.The judge states that sometimes it is a need to pass such orders in order to avoid future issues. He goes on to ask what does the Companies Act state about the responsibility of the executive directors.
4:15pm- In CR 1, the Judges stated that opportunity has been given to the Petitioners and for the same the principle of hearing has been fulfilled. And asked how has SEBI used unriddled power, when they are using their innate powers being a special body who fulfils a special purpose. The speaker backed this up by stating that there was no substantial evidence that opportunity fulfilled the principles of natural justice.
4:18pm- In CR 2, the question of pre-decisional hearing, it was contended that it is mandatory and the post decisional hearing will fill the shoes. Section 11 A of SEBI Ac t along with Regulation 10, After giving reasonable opportunity has to be given. While issuing an interim order the principles of natural justice has to be observed. There are indeed powers with SEBI but should be exercised on reasonable grounds.
4:20pm- In CR 3, the judge questions the speaker as to why cannot the executive directors be held liable as they are expected to be aware of the transactions going on in the company. Petitioner Speaker 1, the promoters are the advisers to the executive directors and there is a certain sense of trust. It was a breach of trust in this case, says the speaker.
4:22pm- In CR 1, the Petitioner Speaker 2 started speaking. She divided her argument into three parts. They are as follows: the Appellants have not made any unlawful gains, secondly, the directors have not violated any provisions of the SEBI Act and lastly, the directors cannot be made vicariously liable for the acts of for the promoters.
4:25pm- In CR 2, the speaker SEBI is required to provide all the documents and in the absence of that there will be a violation of natural justice. The principle of natural justice will be applied on every matter civil or criminal. The appellants under Regulation. If the documents are relevant, the SEBI has to be provided rather than on the basis that the documents will not be relied upon.
4:28pm- In CR 4, the aspect of Audi alter Partum was discussed. The opportunity to be heard was not fulfilled. The opportunity to file a reply on merits is not natural justice. They didn’t get chance to present nor rebut their case. SEBI is quasi-judicial Authority. The authority must keep both parties are equally treated. The SEBI ignored the following which is not good in Law. There is no urgency hence beyond the principle of Natural Justice. Therefore, void in nature. A case was stated which drew a parallel to the present case. The fair process of law was violated.
4:32pm- In CR 1, the Judges asked the role of the Executive Directors. And for the same, the Speaker referred to S2(51) which stated that they are key managerial persons in a company. To which the Judge asked that if so, how were the executive directors not aware of the key decisions of the company. The Speaker stated that only that if the executive directors were in active participation only then would they have knowledge of it and be a sufficient reason for their liability.
4:40pm- In CR 3, the speaker again goes on to emphasize the fact that there is a breach of trust. The speaker argues that apart from the forensic report, other important documents like the recordings are also substantial for their defence.The speaker refers to a case law judgement. The speaker argues there was no contention on the part of executive directors to commit fraud. The judge also asks about the provisions that have been referred by the council in order to conclude the principle of good faith.
4:42pm- In CR 4, they stated that SEBI didn’t show the direct advantage to the non-promoter’s executive director. In the present case there is no cause and connection there cannot be joint and several liabilities. The Speaker also argued on the mismanagement of Funds. The primary principle of disgorgement was discussed by the speaker. Various regulations of SEBI is discussed by the speaker. 2019 report of the security exchange commission was discussed and referred by the speaker. The equitable remedy was enforced in their argument was relied by the Speaker. Many british cases and Indian cases were referred by the speaker to draw a parallel. Disgorgement is an individual liability.
4:45pm- In CR 2, The judge further asked that whether the loans were provided in one whole transaction or the period and then questioned that how the executive directors were not liable? To this counsel submitted that it is the audit committee giving the permission and not the director. It was further submitted that it is the company who are responsible and not the directors and further highlighting that no evidences were provided.
4:56pm- In CR 4, Issue 1&2 and denied the violation of natural justice. The speaker stated that it’s a quasi-judicial body and not an investigation authority. The speaker discussed the various precedents to establish the power of SEBI. The provision of 11 and 11(B) was stated as the core of SEBI. The wide power of SEBI is discussed. Exceptional circumstances can ignore natural Justice. There is an extreme circumstance and the doctrine of necessity was contended by the speaker. Various HCs Judgement was stated to justify freezing of accounts by SEBI and stated that freezing of accounts is just an investigating measure.
5:00pm- In CR 3, the speaker suggests that the bank statement of the GCL has been fabricated and hence SEBI is authorised to freeze their accounts. The speaker mentions the principle of vicarious liability of the executive directors. It is not possible for the executive directors to be unaware of these transactions.
5:05pm- In CR 1, the Respondents Speaker 2 has now started to speak. She stated that the directors in the present case were reasonably liable based on the irregularities. She justified it saying: Directors can be jointly liable even if they do not provide direct evidence. This is based on the fact that SEBI can make them liable on factual evidence, and because of the role they play in the company.
5:12pm- In CR 2, Petitioner Speaker 2 stated that Stating the regulation, the counsel submitted that sebi is not imposed with the duty to provide all the documents. The fact that the opportunity was given and it cannot say that there was a violation of Audi Alteram Partem. The fact if the appellants know that what are the allegation that is the initiation of fair hearing. Moreover, the show cause notice was part of fair proceeding.
5:21pm- In CR 4, the interest of non-promoting executive directors was argued by the speaker. The actions of SEBI was merely the actions that a regulating authority should take. There was various judgements of the supreme court referred to justify the action of SEBI in the present case of the moot proposition.
5:30pm- In CR 1, the Speaker stated that the directors are liable under fraud and under 3 & 4 of FUTP Regulations. The Judges then questioned the position of intent, and what role it plays in fraud. The Speaker stated that the directors were indirectly involved in the mismanagement of funds.
5:40pm- CR 4 has ended. And in CR 1, the Sur Rebuttlas have started. During the Rebuttals, the Petitioner Counsel stated that no person or authority is above the rule of law. And the relationship between the directors has not been stated in the moot problem. Similarly, the Rebuttals have started in CR 2 and CR 3.
5:54pm- The Quarter-Final Rounds have come to an end.
7:32pm- The Qualifiers for the Semi-Final Rounds was announced. They are as follows: TC 816, 823, 825 & 802. The fixtures were also released immediately.
DAY 3: 18th July 2021 (Sunday)
The Semi-Finals Rounds are just about to begin at 9am!
9:00am- CR 1 is in session now. Petitioner Speaker 1 starts off by briefly stating the facts of the case.
9:05am-In CR 1, Petitioner Speaker 1 structured her arguments under issue one in a two-fold argument. That was as follows: firstly SEBI did not appropriately use its power, and secondly SEBI used speculative inferences to come to that conclusion. She stated Liberty Oil Mills vs UOI, and many more to understand the element of urgency, and the use of exceptional power by SEBI.
9:12am- A Judge asked the Speaker a question regarding the position of Executive Director. And to which the Speaker answered that to refer to S. 27 of SEBI Act. And how management functions would be delegated based on expertise. Furthermore, there were more Executive Authority other than the Executive Directors.
9:19am- In CR 1, the Speaker stressed on the Risk Management Committee. And their reports would assist the company in taking loans. So with respect to that the Executive Directors should be questioned, as they take the decision in the end as said by the Judge. To which the Speaker stated that the Executive Director had no knowledge of the same, and all they did was with due diligence and due care.
9:24am- In CR 1, moving to the second issue the Speaker stated that there should have been fair disclosure based on facts and circumstances of the case. She also stated the evidence which was used to frame the charges may not be the same as that put forward by the defence.
9:30am- CR 2 is in session now. The speaker commenced with the arguments. Issue 1&2 is dealt with the speaker. The speaker started by the ex parte order. The urgency and forced circumstances was established by the speaker by explaining various landmark cases and stated that in the present case there is no urgency or forced circumstances. Gautam Thaper v. SEBI was referred and 11 and 11 (B) was referred. Udayant Malhotra case was referred by the speaker and the Judge questioned the relation of that case with the present moot proposition.
9:34am- In CR 2, the judge pointed out that it’s not a criminal appeal. When the speaker spoke about the arrest of the promoters. The speaker stated by saying the executive directors are not directly liable and SEBI should not have been arrested. The judges asked the speakers pertaining to the power and authority of SEBI. The judges emphasized how the public welfare is at stake and the speaker kept emphasizing that there the chance of being heard was not given to them.
9:42am- In CR 2, denial of documents was argued by stating that the ends of natural justice were not meet the speaker referred to the case of Smita Ben Shah v. SEBI. The operative mode of judgements was asked to be referred by the judges. There is a procedural lapse that was contented by the speaker. The judge questions if the council was aware of the judgement passed in the case-law of Anant R.Sathe Vs SEBI, 17th July 2020. The council refers to the landmark case law of Price water house to support the argument as a precedent. Finally, the speaker stated that SEBI has acted upon assumptions and not credible evidence.
9:48am- In CR 1, Petitioner Speaker 2 stated how liability depends on the role the directors played and not just their designation. That is to say just because they hold that position does not mean liability can be accrued by them.
9:50am- In CR 2, the speaker proceeds to the Issue 3 regarding the principle of joint and several liability and suggests that the promoters and executive directors are not jointly and severally liable. The case of Ganan Rastogi v. SEBI the ingredients of disgorgement was established and related with the Moot proposition para 6 and 14. The judges questioned the awareness of the non-promoter executive directors about the disgorgement. The jurisdiction of SEBI was discussed by the Judges and the speaker. The failure of SEBI in proving disgorgement was argued by the speaker.
9:53am- In CR 1, the Speaker said that the crime should be proved by admitted facts. And after which, she stated that the order should be based on an increased probability of the occurrence of the crime. And then moves to the last issue. She stated that the order was neither remedial nor preventive, but serves as a penalty instead. And referred to a case, where she said that appropriately barring someone for something which was done over a year ago would not be just.
10:00am- In CR 2, it was stated that Section 11 and 11(B) are correlated with each other and it is explained by the speaker and the aim of these sections was explained and the power of these sections contended. The extra care examining case was not taken by SEBI before holding the director liable and should look beyond the designation.
10:07am- In CR 1, the Respondents have started with their submissions. Before starting with the issues, Respondents Speaker 1 clarified certain facts which apparently had been erroneously interpreted by the Petitioner Counsel. He stated that all documents which SEBI has been relied on, as been given to the executive directors.
10:15am- In CR 2, The speaker laid down its contention by stating that she will be dealing with Issue 1 and issue 2. The statement of jurisdiction was questioned by the judges and asked if it was an SLP or not. The speaker answered the question and also referred to the moot proposition and explained the timeline. The limitation period is not ground to invoke the wrong jurisdiction. Art 136 is the wrong jurisdiction. Predecisional order was argued and the powers of SEBI was discussed.
10:22am- In CR 1, Respondents Counsel stated when the judge questioned the investigation and asked that whether in particular evidence was found against the directors. The counsel to this submitted that the role is not the sole basis, and in this the other Hon’ble Judge, the validity if show-cause notice. Relying on sections 173 and 13 of the Companies Act, the counsel submitted that executive directors were indeed part of the meeting. Therefore, it was submitted that in a period of 1 year the directors would have noticed these transactions. The counsel submitted that the role in the company is not submitted but other circumstances as well.
10:30am- In CR 2, the Counsel stated the order for SAT was highlighted by SAT and stated that the SEBI trans graced the jurisdiction. Why are they freezing the personal account of the directors? The speaker tried to establish the chain of circumstances the judges rejected the argument and asked to justify why they passed the final order and held directors guilty. The powers of the director were questioned and asked why the bank account was frozen.
10:36am- In CR 2, the speaker elaborates on the prima facie findings of the case. The judge’s questions why the documents were not supplied and not if they have the authority to pass the order or not is SEBI allowed to pick and choose the document. The judges said the relevancy of the documents should be checked by law not relevant by SEBI. The judge stated that the interim order has been passed in nature of the show cause notice. The speaker responds by referring to the fact sheet and elaborates on the prima facie findings. The judge points out the principles of equity, justice and fairness and asked how it is practised by SEBI.
10:44am- In CR 1, Respondent Speaker 2 have started speaking. They start their submissions by retorting the submissions of the Petitioner Counsel. Furthermore, she stated that the principles of disgorgement would not be abrogated in this case. She stated that the principles of disgorgement would be correlated by the principle of liability. The liability cannot be based only on the specific amount. The Hon’ble Judge stated the counsel to narrow the contention on Indian Jurisdiction only. The counsel submitted that there are three legislative expressions that lured the distinction between the penalty and disgorgement. Under Section 15J of the SEBI Act, it was submitted that it is related to Section 11 of the SEBI Act.
10:52am- In CR 2, the speaker goes on to cite the case laws and various judgements such as SEBI vs Gaurav Varshney. The speaker very gracefully explained section 27 of the SEBI Act and related it to the present case. The speaker also proceeds to the next argument and states that the executive directors can be held vicariously liable under section 179 of the Companies Act.
11:00am- In CR 1, the Hon’ble judge distinguished between RBI & SEBI and further questioned that whether only executive directors were liable or what s the responsibility of other directors. Counsel two the counsel relied upon the facts and held that there are three executive directors and one of the promoters. The other two are independent directors, To this, the judge questioned the knowledge of the executive directors.
11:05am- CR 2 has come to an end.
11:10am- Although CR 1 is still in session. The speaker stated that the order was justified to protect the interest of the investors and the term measure under Section 11 is quite broad. Fraud would also include the active concealment of facts. Section 3 & 2C, 4 was also discussed. The FUTP Regulations can also be invoked as they were much board. Since the executive directors were the member of Board and thus had the knowledge of the fraud done by the promoters. The judge further questioned that whether under Section 166 these executive directors can be stretched to make them liable.
11:22am- The appellants contended that the responded have failed to establish that whether the executive directors were involved in the fraud and submitted that all the documents have to be given due to the vagueness of the show cause notice. The principle of natural justice, Audi Alteram Partem was indeed violated. The reliance of section 177 of the respondent is the sole basis of the argument. The respondents failed to establish the liability of the executive directors individually. Further, they contended that this is not a Related Party Transaction and a gross misunderstanding by the Respondents.
11:30am- The respondents submitted that the appellants have themselves agreed that principles of natural justice are not absolute. Their Respondents only have to prove the urgency of the situation. The fact that Rs.500 Crores is diverted is enough urgent in the interest of the investor’s. The vagueness of SCN is also maintained because it precisely mentioned the allegations along with the documents. The joint reading of Para 3 and para 4 established that there is no vagueness in the show cause notice. The fact the bank statements were fabricated was enough to show the active role of the executive directors. The other submission was related to independent directors and it was submitted that factual circumstances does not say anything about the knowledge of the independent directors.
11:32am- CR 1 has come to an end. And with that, the Semi-Final Round came to a close.
12:55pm- The Qualifiers for the Grand Finale was announced. They are as follows: TC 823 & 825. The teams are eagerly gearing up for the Finale which is to be held at 1:30pm.
1:37pm- The Final Round is about to start shortly.
1:46pm- The Appellant Speaker 1 has started with her submissions. She submitted issue one under two grounds. She stated that the ex parte order needs to have an exceptional nature. And then she states how the power was exercised outside the purview of the power of SEBI.
1:55pm- The Judges asked questions as to how would there be an abuse of power on the part of SEBI if they were vested with the power and within their jurisdiction to do so. To this, the Speaker repeated her point on urgency, and how urgency can form a prima facie case. She then went on to stated 11(4)(f) of the SEBI Act to back up the extent of powers of SEBI.
2:00pm- The Judge asked a question regarding which provision of law is being referred to in her arguments. To which the Speaker stated Section 27 of the SEBI Act. And then she went on to prove the applicability of the particular section. And how two executive directors cannot be made liable for all the actions of the company. Especially since it is a listed lending company and has a huge magnitude of business.
2:10pm- The Speaker stressed the role of the Risk Management Committee. To which the judges asked that the decisions of the board committee would be made by the Executive Directors. To which she answered that to the face of it, due to the bank statements being forged, the Executive Director was not aware of the mishappenings.
2:15pm- The Speaker stated the Sahara Case for the two essentials for the principle of hearing. She stated that the essentials have not been met as a vague shwo-cause notice was given. Within the show cause notice the violation was not mentioned and indeed done so in the final order. To say non-disclosure can lead to specific prejudice against the appellants.
2:20pm- The Judges are asking as to what is the basis of disclosure since SEBI has provided all the documents on which SEBI has relied on. To which the Speaker stated that one has to see SEBI’s action more than their words, and that has been understood after looking at the facts of the moot problem. And she was asked a follow-up question of what is the nature of SEBI. To which she stated that it is a Quasi-Judicial body.
2:25pm- The Appellant Speaker 2 has now started speaking. She went on to define disgorgement and the various components which are involved. To which she stated that within the equitable principle, the appellants are not liable. Not just in the USA, but even in the Indian scenario the punitive nature of disgorgement cannot be attracted.
2:30pm- The liability for disgorgement was explained by Counsel. Rule 5 of FUTP was discussed and compensation was also argued by the council The conclusive nature of fraud by SEBI. And she then moved to the change of jurisprudence in the company law. Where she stated that there is no magic in the word “director”, but what should be looked into is the role played by that person.
2:35pm- The Judges asked about the role of the Executive Director. And the Judge repeated their question with respect to the duties and role of the Executive Directors. To which the Speaker stated that the Directors did abide by due diligence and due care. To which the Judges stated that there are enough commentaries to show that w.r.t to knowledge, where the normal assumption of duties is held, the Directors cannot absolve their duties in such a manner.
2:40pm- The Judges proposed an analogy to make their question more clear. To which the Speaker stated that the expert opinion is required, and hence the Committee comes to the limelight in this case. She stated just because a loan was approved does not mean that they are complicit with the fraud-doers.
2:45pm- The liability of non-promotors contended and various FUTP was referred and the burden of proof was answered by the speaker brilliantly. The nature of the transaction was dealt with by the bench the judges explicitly questioned various defaults of the company. The Judge asked how 500 cr could be given to a related party, and if it is totally an unsecured loan then how can the Appellants plead that due diligence was followed.
2:50pm- The aspect was due diligence was thoroughly questioned by all the Judges. And the Speaker struggled to answer this question and tried their best to justify their stance. And when she stated that the company will get back all their loans timely. The Judges then asked which lending company does she know where such a huge sum of money was involved, and it was unsecured. The Judges stated that the facts speak for themselves, to which the Appellant Speaker politely disagreed to that point.
2:55pm- The Appellant Speaker 2 started with her last and final issue. Due to paucity of time, she was asked to summarise her issue within two minutes. She then moved to show how the order cannot be remedial in nature, because for a remedy a wrong had to be done. And neither is it a preventive one, as it is a recurring transaction. So in the end, it was of a punitive nature.
3:00pm- Respondent Speaker 1 has started with her submissions. And she stated that the Appellants have been indulging prima facie in fraudulent activities. The Judge asked that for the freezing of bank accounts isn’t the approval of a Magistrate Authority required. To which Respondents Speaker 1 said that proviso 11 clauses d,e,f that SEBI thinks if it an urgent matter relating to frauds. To which the Judges stated that the Counsel had erroneously stated the same.
3:05pm- The Respondents stated certain judgements to show that SEBI can pass Ex parte order. And to which the Judge interfered that he is asking her a question of law and the interplay between proviso 4 and 2a. And the Speaker stated that the matter is urgent enough, and the nature of the order. And that the order is just a safety measure. And due to the fabrication of the documents, an immediate measure was required.
3:15pm- The Judges are asking many questions about the 500 cr and to show that the Executive Directors gained from the same. And that there was an unjustifiable use of power on the part of SEBI. To which the speaker said that it’s under the power of safety measures. And the judge clarified that the power of SEBI is not disputed. What is questioned is if the decision of SEBI was an informed one.
3:20pm- The speaker refers to section 134(1) of the Companies Act. The judge questions as to why the personal accounts of the executive directors were frozen. After which the Speaker moved to the second issue. And the Judge asked about exculpatory evidence. The Speaker stated that the evidence should have a link to the case, and be relevant. to which the Judges asked relevant to what- whether to the charge or the truth? The Speaker then stated the rule of confidentiality.
3:30pm- The Counsel stated Malak Singh vs State of Punjab. In this, the question of confidentiality arose. Over here SEBI has to keep in mind their interests. And then Respondents Speaker 2 started to speak. She would be dealing with the last two issues. And her argument was in a two-fold manner. Firstly establish the relationship. And stated that as GCL comes under the Companies Act, so the Executive Directors fall under the Act and have violated the same.
3:35pm- The Counsel is requested to read the section w.r.t to disgorgement. And the Judge asked the ingredients of disgorgement. And the Judges are not satisfied with the arguments of the Respondents. And the Judges try to explain the section to the Respondents.
3:40pm- The Judges asked what is the meaning of being jointly and severally liable. And if it is regarding equity, then how can it be individually liable. To which the Speaker stated a fact, and how the facts are silent on this matter. And w.r.t to profits, the Counsel is imploring to see the factual matrix of the case.
3:50pm- The Counsel stressed on the responsibilities of the Executive Directors of the Company. And questioned their demeanour of the Directors. And then the Judges said that they agree with that and questioned the time period, and why not any other time period. And if it is not punishment, and rather it is remedial then why such a long period of 2 years. The Judges asked the reasonability of the time period.
4:00pm- The Judge asked a question of whether the reaction of the SEBI is disproportionate to the action of the Executive Directors. And what is disputed is the exercise of the power of the SEBI and the magnitude of the same. To which Respondent Speaker 2 stated that the reaction is proportionate as it is not extreme and in conformity with the stature. And the Judge disagrees with the same and states that SEBI is acting arbitrarily with respect to Article 14 of COI.
4:05pm- The Rebuttals have started by the Appellants Counsel. And thereby they stated that the arguments of the Respondents were based on doubts and assumptions. And then moved to state that the investigation report is relevant and hence should be referred to by the Appellants. And stated the procedure for holding inquiry by the Board. And about the liability of the Executive Directors, it was not explained by the Respondents as to how a gain has been made.
4:08pm- The Sur Rebuttals have been started by the Respondents. To which they have referred to the Moot problem numerous times. And the aspect of vicarious liability was brought about by the Appellants and not by Respondents. and with that concludes her sur rebuttals.
4:15pm- The Final Rounds have ended. Now everyone is waiting for the declaration of the Winners of the 8th KIIT National Moot Court Competition 2021, which would be announced in the Valedictory Ceremony at 5pm.
5:02pm- The Valedictory Ceremony has started.
5:05pm The Welcome Address was given by Prof. (Dr.) Bhabani Prasad Panda, Director, School of Law. Furthermore, he thanked all the hon’ble guests, the chief guest, KLSMCS and all the students who volunteered to make this competition a grand success.
5:10pm The Address was given by Prof.(Dr.) Jyana Ranjan Mohanty, Registrar, KIIT – DU.
5:17pm-The Address was given by Prof.(Dr.) Hrushikesha Mohanty, Vice-Chancellor, KIIT – DU.
5:30pm- The Address was given by Prof.(Dr.) R. Venkata Rao, Former Vice Chancellor, NLSIU Bangalore.
5:48pm- The Convenor of KLSMCS, Pragya Banerjee gave the event report.
6:15pm- The Winners of the 8th KIIT National Moot Court Competition 2021 is M.S Ramaiah Law College and the Runners-up is Praveen Gandhi College of Law. The Best Memorial was given to the Army Institute Of Law, and the Runners-up for Best Memorial was given to Christ University.
6:30pm- And with that the 8th KIIT National Moot Court Competition 2021 comes to an end.
