The Securities And Exchange Board Of India  ( SEBI) is a statutory body  established under the provisions of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market and for matters connected therewith or incidental thereto.

The contention of SEBI in Securities And Exchange Board of India V/s Ram Kishori Gupta & Anr  (Civil Appeal No. 7941 of 2019 with Civil Appeal Nos. 1649-1652 of 2022 ) was that the principle of res judicata in Section 11 of the Code of Civil Procedure, 1908, would not apply to proceedings initiated under the Act of 1992.

Turning down the contention of SEBI in the above case Supreme Court held that SEBI cannot issue a fresh/ second order  , where an earlier order on the same cause of action and based on the very same show-cause notices, remained intact and attained finality, if  neither challenged nor set aside,  supplementing it with additional directions.

“In Hope Plantations Ltd. vs. Taluk Land Board, Peermade and another (1999) 5 SCC 590  , a 3-Judge Bench of this Court affirmed that the principle of res judicata is based on public policy and justice. It was pointed out that the rule of res judicata prevents the parties to a judicial determination from litigating the same question over again, even though the determination may be demonstrably wrong. It was held that when proceedings attain finality, parties are bound by the judgment and are estopped from questioning it. They cannot litigate again on the same cause of action, nor can they litigate any issue which was necessary for decision in the earlier litigation. It was pointed out that Section 11 of the Code of Civil Procedure, 1908, contains provisions of res judicata but these are not exhaustive of the general doctrine of res judicata. It was observed that the principles of res judicata would be equally applicable in proceedings before administrative authorities. Further, in Amalgamated Coalfields Ltd. and another vs. Janapada Sabha Chhindwara and othersAIR 1964 SC 1013  , a Constitution Bench observed that constructive res judicata is an artificial form of res judicata and it postulates that if a plea could have been taken by a party in a proceeding between him and his opponent, he would not be permitted to take that plea against the same party in a subsequent proceeding which is based on the same cause of action. Affirming this view in Devilal Modi vs. State Tax Officer, Ratlam, and othersAIR 1965 SC 1150  , a Constitution Bench observed that this view is founded on the same considerations applicable to res judicata, because if the doctrine of constructive res judicata is not applied, it would be open to a party to take one proceeding after another and urge new grounds every time and that, plainly, would be inconsistent with considerations of public policy. Needless to state, these stellar principles would not only apply to the parties to a dispute but would also bind the adjudicating authorities seized of such dispute, be they judicial, quasi-judicial or administrative.

**********

In the light of these edicts, it is not open to SEBI to claim that it could pass multiple final orders on the same cause of action.”

Copy of the  judgment can be downloaded from here.