The court emphasized that mixed questions of law and fact, such as res judicata, should not be decided as preliminary issues but rather simultaneously with all other related issues to ensure efficient adjudication.

JUDGMENT :

M. S. Sonak, J.

1. Heard Mr Janak Dwarkadas, learned Senior Counsel, appearing for the Petitioner in Writ Petition No. 19221 of 2024, Dr Birendra Saraf, learned Advocate General, appearing for the Petitioner in Writ Petition No. 378 of 2025, and Mr Mustafa Doctor, learned Senior Counsel, appearing for Respondent-SEBI in both Petitions.

2. Rule in both these Petitions. The rule is made returnable immediately, at the request and with the consent of the learned counsel for the parties. The learned counsel for the parties agree that both these Petitions can be disposed of by a common Judgment and Order, since the issues involved are substantially similar, though not identical.

THE CHALLENGE

3. In both these Petitions, the challenges are to the impugned Show Cause Notice (“SCN”) dated 05 September 2023 and 29 August 2023, issued under the provisions of the Securities and Exchange Board of India Act, 1992 (“the SEBI Act”). The Petitioners argue that since the jurisdictional facts regarding the breach of PUFTP regulations, or the making of any disproportionate gains, or securing unfair advantage, are absent, the impugned SCNs could not have been issued. Secondly, they contend that the earlier issued SCNs concerning the same allegations were disposed of by imposing penalties of Rs 3 to 6 lakhs on the Petitioners, which were paid. Therefore, the impugned SCNs, based on the same allegations, are barred by the principles of res judicata or issue estoppel.

PETITIONERS CONTENTIONS

4. On behalf of the Petitioners, three primary contentions were raised to challenge the impugned SCN. However, in the alternative, the learned Senior Counsel for the Petitioners submitted that the Petitioners would be satisfied if they were permitted to raise their challenges before the Quasi-Judicial Authority [QJA] seized of the hearing of the impugned SCN and such authority is directed to treat the three challenges/issues as preliminary issues and decide the same before proceedings with any further hearings in the impugned SCN dated 05 September 2023.

5. The learned Senior Counsel for the Petitioners, basically urged the following three issues: -

(i) that the impugned SCN is lacking in jurisdiction.

(ii) that the impugned SCN suffers from the vice of res judicata or issue estoppel principle.

(iii) The fact that the Petitioners may have participated in the hearings on the impugned SCN, thus far, does not estop the Petitioners from challenging the validity of the impugned SCN or raising the above issues as preliminary issues on the principle that there can be no waiver of fundamental rights.

6. Learned Senior Counsel for the Petitioners submitted that the SEBI, based upon identical allegations now referred to in the impugned SCN, appointed an investigating authority in May 2017. After that, the SEBI also initiated an independent investigation into the very same allegations. In particular, the investigating authority was appointed to investigate into violations of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (“the PFUTP Regulations”). The investigating authority, in the case of Crosseas Capital Services Pvt. Ltd., i.e. the Petitioner in Writ Petition No. 19221 of 2024, [CCSP] did not recommend any action under Section 15HA of the