SC: SEBI Can’t Issue Fresh Orders on Same Cause Once Final Order Passed
Last Updated on April 14, 2025 by Shianjany Pradhan
The Supreme Court has ruled that SEBI cannot pass a second order demanding disgorgement (repayment of unlawful gains) after issuing a final order without including such a direction in the same case.
A bench of Justices Sanjay Kumar and K.V. Viswanathan upheld the Securities Appellate Tribunal’s decision that barred SEBI from issuing a fresh disgorgement order against Vital Communications Limited (VCL), a company found to have misled investors through fraudulent advertisements.
SEBI had initially penalized VCL in 2014 but did not order disgorgement. Years later, in 2018, SEBI reopened the matter and issued a disgorgement order. VCL challenged it, arguing that the issue was already settled, and the Tribunal agreed, citing the doctrine of res judicata, which prevents the same matter from being re-litigated once it is decided.
The Supreme Court confirmed this view, emphasizing the principle of constructive res judicata. If SEBI had passed the disgorgement order in 2014, it could not have revisited the same issue years later. Since the 2014 order was final and unchallenged, the 2018 order was legally unsustainable.
Quoting earlier rulings, the Court reinforced that even quasi-judicial bodies like SEBI must follow the principles of finality in legal proceedings.
