Sanchayita Lahkar

The High Court of Bombay Single Bench of Justice N.J. Jamadar set aside the Special Court’s directive requiring the accused, Ketan Parekh, a former stockbroker facing prosecution for alleged extensive securities-market manipulation in the late 1990s and early 2000s, to deposit Rs.27.06 crore before travelling abroad. The Court observed that the monetary condition, rooted in an ex-parte regulatory order, bore no reasonable connection to securing the accused’s presence at trial and therefore could not be sustained. The dispute concerned ongoing criminal proceedings arising from alleged market-abuse activities, during which the accused had consistently complied with prior travel permissions. The Court replaced the quashed condition with a security deposit of Rs.5 lakh in each case to ensure return.

The petitions arose from orders of the Special Judge directing the accused, who was facing prosecution initiated by the securities regulator for alleged offences under Sections 24(1) and 27 of the Securities and Exchange Board of India Act, 1992, to deposit Rs.27,06,73,574 as a condition for foreign travel. The prosecution stemmed from investigations in which the regulator claimed to have uncovered large-scale market manipulation, including violations of Regulations 4(a) and 4(d) of the PFUTP Regulations, 1995. The accused had earlier been released on bail with a condition requiring prior permission for travel outside India, and such permissions had been granted on earlier occasions.

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The accused sought permission to travel to Thailand and the UAE. The regulator opposed the request, alleging that the accused had abused bail by again engaging in market manipulation and by participating in front-running activities. The regulator referred to an ex-parte interim order-cum-show cause notice dated 2 January 2025 directing disgorgement of Rs.65,77,11,547 jointly and severally, and it submitted that other noticees had already deposited a substantial portion of the amount. The Special Judge allowed travel but conditioned it on deposit of the unpaid balance. The petitions challenged this requirement on grounds of proportionality, nexus to trial, and reliance on an interim regulatory order that had not attained finality.

The Court recorded that “the learned Special Judge did not find that the circumstances of the case were such that the grant of permission to travel abroad was fraught with the risk of the Petitioner not being available for the trial.” It noted that “the list of travel details… indicates that the Petitioner has travelled abroad on multiple occasions.” The Court stated that only the legality and propriety of the deposit condition required examination.

It observed that “the right to travel abroad has been considered to be a facet of right to life and personal liberty, and, thus, cannot be subjected to unreasonable and arbitrary restrictions, even when a person is facing a prosecution.” It stated that while conditions may be imposed, “the conditions ought not be so onerous that the right to travel abroad itself is defeated.”

The Court recorded that the Special Judge’s condition had been based on an “ex-parte interim order passed by the Respondent No.1.” It examined the statutory framework under the SEBI Act and noted that the interim order treated its findings as “prima facie” and expressly operated as a show cause notice, requiring further proceedings before final directions could follow.

The Court stated that the regulator had neither passed a final order nor initiated recovery proceedings or prosecution under Section 24(2). It observed that it “does not appear that the learned Special Judge found it necessary to impose the said condition to secure the presence of the Petitioner at the trial.” It recorded that the direction instead appeared to function “as a measure towards the enforcing the interim order and show cause notice.” The Court further stated that “the deposit of the said amount cannot be made a condition precedent for travel abroad in connection with the prosecutions which were initiated a decade ago.”

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The Court concluded that the challenged condition “falls foul of reasonability, proportionality and nexus with the object tests.”

The Court ordered that the petitions stand allowed. “The impugned orders to the extent of the direction to deposit a sum of Rs.27,06,73,574/-… stands quashed and set aside.” The accused “shall instead deposit a sum of Rs.5,00,000/- in each case by way of security deposit, which would be liable to be forfeited in the event of failure… to return to India on 29 November 2025.” It stated that the remaining conditions imposed by the Special Judge would continue unchanged. It further directed that any amounts already deposited toward compliance be “adjusted against the amounts to be deposited… under this order.” The rule was made absolute and that there would be no costs.

Advocates Representing the Parties

For the Petitioners: Mr. Amit Desai, Senior Advocate; Mr. Nilesh Tribhuvann; Mr. Burzin Bharucha; Ms. Jhanavi Shah; Mr. Kaushal Popat; Mr. Mohan Rao; Ms. Sulabha Rane; Ms. Sakshi B.; Mr. Sangramsingh Parab

For the Respondents: Mr. Chetan Kapadia, Senior Advocate; Ms. Anubha Rastogi; Ms. Pooja Gera

Case Title: Ketan V. Parekh v. Securities and Exchange Board of India and Anr.
Neutral Citation: 2025: BHC-AS:49369
Case Number: Writ Petition No. 5854 of 2025 (and connected petitions)
Bench: Justice N.J. Jamadar