Appeal allowed; five-year restraint under Section 11B upheld, barring respondent from associating with or trading in securities.

SC allowed the appeal, quashed the Appellate Tribunal's order and upheld the Chairman of SEBI's five-year restraint preventing the respondent from associating with any corporate body in accessing the securities market and from buying, selling or dealing in securities. The Court held the Board validly invoked section 11B read with relevant provisions as amended, found no procedural infirmity in issuing the show-cause notice and considering the reply, and rejected the argument that post-enactment powers could not be applied to violations for which proceedings were initiated after the amendments.

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Issues Involved:
1. Applicability of Section 11B of the Securities and Exchange Board of India Act, 1992.
2. Retrospective application of Section 11B.
3. Procedural fairness and adherence to legal provisions.
4. Interpretation of "offence" and "penalty" under Article 20(1) of the Constitution.

Detailed Analysis:

1. Applicability of Section 11B of the Securities and Exchange Board of India Act, 1992:
The primary issue was whether Section 11B of the SEBI Act could be invoked by the SEBI Chairman to restrain the respondent from associating with any corporate body in accessing the securities market and prohibiting him from buying, selling, or dealing in securities. The factual background involves the respondent's role as Joint Managing Director of a company that allegedly misstated facts in its prospectus and misled investors. The SEBI issued a show-cause notice under Section 11B, and after due process, the Chairman directed the respondent to be restrained from accessing the securities market for five years.

2. Retrospective Application of Section 11B:
The respondent argued that Section 11B, which was introduced by an amendment effective from January 25, 1995, could not be applied to actions that occurred before its enactment. The Appellate Tribunal agreed, citing the decision in Govinddas v. ITO [1976] 103 ITR 123 (SC), which held that substantive laws cannot be applied retrospectively unless expressly stated. However, the Supreme Court clarified that Section 11B is procedural and can be applied retrospectively. The Court noted that procedural laws apply to all actions, pending and future, and emphasized that no vested right exists in any course of procedure.

3. Procedural Fairness and Adherence to Legal Provisions:
The Court observed that the SEBI followed a fair procedure by issuing a show-cause notice and providing the respondent an opportunity to respond and be heard. The SEBI's actions were in line with the amended provisions of the Act, which were in force at the time the order was passed. The Court emphasized that the amendments to the SEBI Act empowered the Board to pass such orders and that there was no procedural unfairness or violation of legal provisions.

4. Interpretation of "Offence" and "Penalty" under Article 20(1) of the Constitution:
The respondent contended that the SEBI's order violated his fundamental right under Article 20(1) of the Constitution, which protects against ex-post facto laws. The Supreme Court rejected this argument, clarifying that the respondent was neither convicted of an "offence" nor subjected to a "penalty" as defined under the General Clauses Act, 1897 and the Criminal Procedure Code. The Court explained that the SEBI's restraining order was not a punishment for an offence but a regulatory measure to protect investors and maintain market integrity.

Conclusion:
The Supreme Court quashed the Appellate Tribunal's order, holding that Section 11B of the SEBI Act, being procedural, could be applied retrospectively. The SEBI acted within its powers under the amended provisions of the Act, and the procedural fairness was maintained throughout the process. The appeal was allowed, and the SEBI Chairman's order was upheld.

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