JUDGMENT :

M.S. SONAK, J.

1. Heard learned Counsel for the parties.

2. Rule. The Rule is made returnable immediately at the request of and with the consent of the learned Counsel for the parties.

3. The Petitioners challenge the show cause notice dated 20 August 2024 issued by the Securities and Exchange Board of India (“SEBI”) calling upon them to show cause why suitable directions should not be issued and/or penalty, as deemed fit, should not be imposed on them under Sections 11(1), 11(4), 11(4A), 11B(1), 11B(2) read with Section 15- HA of the Securities and Exchange Board of India Act, 1992 (“SEBI Act”) read with Rule 5 of Securities and Exchange Board of India (Procedure for holding Inquiry and Imposing Penalties) Rules, 1995. One of the noticees (Petitioner No. 5) was also called upon to show cause as to why a suitable penalty, as deemed fit, under Section 23A(a) read with Section 24 of Securities Contracts (Regulation) Act, 1956 read with Rule 5 of Securities Contracts (Regulation) (Procedure for Holding Inquiry and Imposing Penalties) Rules, 2005 be not imposed upon him.

PETITIONERS’ CONTENTIONS

4. The Petitioners challenge the impugned show cause notice mainly upon the following three grounds:

(i) Delay and laches in the issuance of impugned show cause notice.

(ii) That SEBI cannot review or revisit its earlier decisions, and such review or revisiting amounts to double jeopardy or attracts the bar of res judicata.

(iii) That the impugned show cause notice is vitiated by non-application of mind for failure to consider relevant material and non-furnish of relevant documents.

5. Mr. Dwarkadas, the learned Senior counsel for the Petitioners, elaborated that the allegations in the impugned show-cause notice pertained to the 2014 reorganisation of the group, which forms the subject matter of the notice. He submitted that all disclosures concerning this were made in the petitioner company’s annual reports/financial statements for FY 2013-14 and numerous other documents, filings, and disclosures to SEBI and stock exchanges. The reorganisation itself was effected in or around March 2014.

6. Mr. Dwarkadas submitted that issuing a show cause notice in August 2024, i.e. after almost 10 years from such reorganisation, attracts the doctrine of laches. A show cause notice of this nature should be nipped in the bud and not allowed to proceed. He submitted that even though no period of limitation may have been prescribed for issuing a show cause notice, such show cause notices must be issued within a reasonable period if there is any real cause to issue the same. On this ground, He submitted that, in this case, there was no real cause, and in any event, the impugned show cause notice was inordinately delayed. He submitted that the impugned show cause notice must be regarded as one without jurisdiction, quashed, and set aside.

7. Mr. Dwarkadas submitted that on 12 August 2014, a complaint was filed by Mr. Anil Arya and Ms Vaishali Arya concerning the same issues now sought to be belatedly raked up in the impugned show cause notice. He submitted that such a complaint was examined and closed, presumably because the same was found to be meritless. He referred to Clause 12 of SEBI’s circular dated 18 December 2014 to submit a complaint shall be treated as resolved/disposed/closed only when SEBI disposes/closes the complaint in SCORES (a web-based complaints redressal system).

8. Mr. Dwarkadas submitted that this, having been done by SEBI, it was not once again open to SEBI to rake up belated and closed issues by purporting to review or revisit its earlier decision on the same subject matter. He submitted that this would vex a person twice for the same alleged wrongs, and such an attempt could also be barred by principles of res judicata or principles analogous thereto.

9. Mr. Dwarkadas submitted that the impugned show cause notice is vitiated by non-application of mind because SEBI did not consider relevant material before issuing the impugned show cause