SEBI can’t arrest without following due procedure: BHC

Expounding upon the powers of arrest and detention of a recovery officer of Securities & Exchange Board of India (SEBI), the High Court of Bombay ruled that a tax recovery  officer cannot arrest or detain a person without reasons to be  recorded in writing and presenting him an opportunity to present his  case.

“The absence of satisfaction as well as  recording of reasons vitiates the exercise of power of arrest”, the Court said, adding “the detention and arrest is patently illegal and arbitrary. The records further reveals that the  petitioner was not given reasonable opportunity”.

The Court said that tax recovery officer had not conducted any inquiry but on the very
day of the hearing he detained the petitioner and advised him to give a proposal for payment. On failure to give a proposal the same day, he arrested the petitioner and
committed him to civil imprisonment. The order is in total violation of principle of natural justice and is illegal and void. The Tax Recovery Officer exercised the power of arrest in total contravention of provisions.

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