Under the Securities and Exchange Board of India Act, 1992, can SEBI pass a fresh Section 11B order on the same cause of action once an earlier order has attained finality?

No. Once the earlier order attained finality and was fully given effect to, passing of a fresh order once again on the very same cause of action trampled upon and reversed the finality that had already attached to it. Imposition of the penalty of disgorgement was very much within the ambit and scope of SEBI even at the time the initial order was passed, but the Whole-Time Member did not choose to resort to it; permitting SEBI to revisit that final order without just cause would be violative of public policy, which attaches great value and sanctity to the finality of judicial determinations and the principle of res judicata.

Securities and Exchange Board of India Act, 1992 — ss.11, 11B and 15U(1) — Code of Civil Procedure, 1908 — s.11 — Res judicata and constructive res judicata — Finality of orders — Disgorgement — Restitution — Securities and Exchange Board of India Act, 1992 — s.11B — Fresh order on the same cause of action — Finality — Held: Once an order under Section 11B on the same show-cause notices has attained finality and been fully given effect to, SEBI cannot pass a fresh order on the very same cause of action. Disgorgement was within its ambit and scope at the first instance and, not resorted to then, cannot be revisited without just cause. (¶25, 29) Securities and Exchange Board of India Act, 1992 — s.15U(1) — Applicability of res judicata to SEBI — Held further: Section 15U(1) deals only with the procedure and powers of the Tribunal and does not cover proceedings before SEBI, which cannot claim exemption from the principle of res judicata. These principles bind not merely the parties but the adjudicating authorities, judicial, quasi-judicial or administrative. (¶27, 28) Code of Civil Procedure, 1908 — s.11 — Inherent lack of jurisdiction — Entities which did not appeal — Held further: An order barred by res judicata suffers from an inherent lack of jurisdiction, and cannot be sustained even against entities which did not file any appeal against it. (¶31) Securities and Exchange Board of India Act, 1992 — s.11B — Restitution to investors — Finality of the Tribunal's order — Held further: The compensation claim against SEBI having been negated by an order that attained finality, it was not for the Tribunal to give its own earlier order a different colour contrary to its plain meaning. Disgorgement and restitution directions set aside, as are the exorbitant costs mulcted on SEBI. Appeals allowed in part. (¶31, 33)

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