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Issues Involved:
1. Double jeopardy under Article 20 of the Constitution of India. 2. Applicability of Section 11B of the SEBI Act to investors. 3. Delay in initiating and completing disgorgement proceedings. 4. Merits of the case regarding the consideration for shares. 5. Charging of interest from January 2000. Summary: Issue (i): Double Jeopardy The appellants argued that the Board's direction for disgorgement amounts to double jeopardy as they were already restrained from accessing the securities market for two years u/s 11B of the SEBI Act. The Tribunal held that the principle of double jeopardy is not applicable as these are civil actions for regulatory violations, not criminal proceedings. Disgorgement is not a penal action but a monetary equitable remedy to prevent unjust enrichment from unlawful conduct. The Tribunal cited previous cases to support this view and rejected the argument. Issue (ii): Applicability of Section 11B to Investors The appellants contended that they are merely investors and not intermediaries or persons associated with the securities market as defined u/s 12 of the SEBI Act. The Tribunal referred to the High Court of Gujarat's decision in Karnavati Fincap Ltd. v. SEBI, which held that "persons associated with the securities market" includes all who have dealings in the securities market, including investors. Therefore, the Tribunal rejected this argument. Issue (iii): Delay in Disgorgement Proceedings The appellants argued that the delay of 8 years in issuing the show-cause notice for disgorgement was unreasonable and barred by limitation. The Tribunal acknowledged the importance of expeditious proceedings but noted that the disgorgement order could only be passed after establishing the violation of the regulatory framework. The Tribunal found that the delay was not fatal given the seriousness of the charge and rejected the argument. Issue (iv): Merits of the Case The appellants claimed that they had borrowed money for the investment and that the transaction was complete with consideration. They also argued that they only earned Rs. 69,393 each from the sale of shares. The Tribunal held that in disgorgement proceedings, the merits of the case cannot be reexamined as the earlier order under Section 11B had acquired finality. The Tribunal found no fault with the Board's finding that the appellants had made unlawful gains of Rs. 60,72,000 each. Issue (v): Charging of Interest The appellants argued that charging interest from January 2000 was arbitrary since the show-cause notice was issued in February 2008. The Tribunal agreed, stating that interest should only be charged from the date the disgorgement amount became payable, i.e., after the expiry of 45 days from the date of the impugned order. The Tribunal modified the order to this extent. Conclusion: The appeal was partly allowed, modifying the interest charge to commence 45 days after the impugned order, with no order as to costs.
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