SEBI recently invoked its power to issue back-to-back interim or ex-parte orders.

In an order passed against NuTek India on October 26, SEBI whole-time member Madhabi Puri Buch said passing of more than one interim order is permissible, when circumstances exist and more than one ex-parte interim orders will also be permissible in conformity with the principles of natural justice.

Legal experts say, usually, back-to-back interim orders are avoided unless the proceedings of the first order are complete and the new show-cause notice is issued after conformity of the first order.

The SEBI order could also have implications on future proceedings, experts say. Ex-parte matters are usually temporary orders pending a formal hearing or an emergency request for continuance. Most jurisdictions may not pass back-to-back two ex-parte or interim orders on new findings without a show-cause notice.

But SEBI has said that it does not have to follow any rigid procedure.

“The quasi-judicial proceedings being part of one of the stages of enquiry, the powers available while conducting enquiry continue to be available for exercise at the stage of quasi-judicial proceedings. There is no rigid, hide-bound, pre-determined procedure envisaged under the SEBI Act for conducting an enquiry. The procedure so designed has to suit the requirements of the case and has to be so designed which embodies the principles of natural justice, whenever action is taken affecting the rights of parties. If the procedure adopted is fair, it matters not who and when the information was gathered or at what stage the evidence was collected,” the SEBI order said.

SEBI is of the view that in the interest of investors and securities market, adverse material can be relied upon in the post decisional proceedings with an opportunity of being heard on those findings.

This will prevent a needless protraction of the interim order proceedings if the adverse material is considered through the alternative way mentioned above.

“I am also conscious of the view, that in the interest of finality to the findings, the principles governing the passing of ex-parte interim order should equally guide the exercise of such power of using adverse material sparingly in the interest of investors and urgency,” Buch said in her order.

The SEBI order said NuTek was given several opportunities of hearing but it did not take it but alleged violation of principal of natural justice. “While the facts may have required SEBI to confirm its earlier directions, this specific order is verbose and it will be interesting to see how things will shape up with regard to this order in future, specifically on autogenous processes and its precedence value,” said Sumit Agrawal, former SEBI official & founder, RegStreet Law Advisors.

Buch in her order further said that in quasi-judicial proceedings, while conducting enquiry, there is no legal bar on the Competent Authority to seek and rely on the information given by the Noticee for passing possible directions, subject to an opportunity for post decisional hearing being made available to the Noticee. “Thus, I am of the view there is no violation of Principles of Natural Justice. Therefore, I do not find any merit in the said contention of NeuTeck,” said.