Securities Appellate Tribunal
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This article is written by Shubhangi Upmanya, a first-year student, pursuing BBA.LLB. from Vivekananda Institute of professional studies, Indraprastha University. She has discussed all the procedures related to filing an appeal before the SAT.

Introduction

Have you heard of stock markets? Well, the exchange of shares takes place here. In total, there are 23 stock exchanges in India but the question is who regulates such a big market? So, the answer is the Securities and Exchange Board of India. It is the principal regulator of the stock exchanges in India.

It is a statutory body, established by the SEBI Act, 1992. It basically discharges three functions to carry out its mandate, quasi-legislative, quasi-judicial, quasi-executive functions. These functions include drafting rules and regulations, prosecuting if someone violates the procedures related to it and investigating and executing the procedures and actions concerned with it, respectively. 

To carry out its judicial functions, there is a body that could hear the appeals related to the judicial proceedings. The provisions to establish such a body were provided in Section 15K of the Securities and Exchange Board Act, 1992. Under this provision, the Securities Appellate Tribunal was established in the year 1995.

We will now be discussing, when, where and how, the appeal can be placed before the Securities Appellate Tribunal.

Securities Appellate Tribunal

In 1992 the first Securities Appellate Tribunal(SAT) was established, under Section 15K in The Securities and Exchange Board of India Act, 1992 by a notification issued by the Central government. If there is a need for more SATs, then the Union Government has a right to issue notification regarding it.

This body sees to the answerability and accountability and further ensures it.

Let us now look at Section 15K of the Securities and Exchange Board of India Act, 1992.

Section 15K of the Securities and Exchange Board of India Act, 1992

  • One or more Appellate Tribunals will be established by the Central Government through notification. These Tribunals will be known as the Securities Appellate Trib­unal and will exercise the jurisdiction, powers, and authority con­ferred under this Act or any other law for the time being in force.
  • The Central Government in that notification will also refer to the matters and places in regards to which the Securities Appellate Tribunal may exercise jurisdiction.

Composition

Section 15L of the Securities and Exchange Board of India Act, 1992

Section 15L of the Securities and Exchange Board of India Act, 1992 says that,

There will be, 

  • One presiding officer, and
  • Two other members

It is further provided that if there is a Securities Appellate Tribunal that was established before the commencement of the Securities and Exchange Board of India (Amendment) Act, 2002 and if it consists of only one person then, it will continue to exercise the jurisdiction, powers, and authority conferred on it by or under this Act or any other law for the time being in force. It will be continued till the other two members of the tribunal are appointed under the provisions of this section.

Among the two members, there should be one judicial member and one technical member.

Appointment and Tenure

Section 15K of the Securities and Exchange Board of India Act, 1992

They will be appointed by the notification, issued by the Central Government. The Central Government will make these appointments in consultation with the Chief Justice of India or any person who is nominated by the CJI.

Section 15N of the Securities and Exchange Board of India Act, 1992

The Presiding Officer and each of the judicial or technical members of the Securities Appellate Tribunal will hold the office for a term of five years from the date on which he enters upon his office.

They can be reappointed for another term, for not more than five years.

It is further provided that no officer will hold the office after he attains the age of seventy years.

Qualifications

Members of the Securities Appellate Tribunal should have the following qualifications:

  • in order to be eligible to be a Presiding Officer, he should have been or should be a Judge of the Supreme Court or a Chief Justice of the High Court or a Judge of High Court for at least seven years, 
  • in order to be eligible to be a Judicial Member, he should have been a Judge of High Court for at least five years, 
  • in order to be eligible to become a Technical Member.
  1. The person should be or have been a Secretary or an Additional Secretary in the Ministry or Department of the Central Government or any equivalent post in the Central Government or a State Government; or
  2. The person should be of proven ability, integrity and standing to have a special kind of knowledge and professional experience of fifteen years or more. This knowledge should be regarding the financial sector, which should include securities market or pension funds or commodity derivatives or insurance.

Powers of SAT

For the following matters, Securities Appellate Tribunal will have the same powers that the Civil Court is vested with, under the Code of Civil Procedures, 1908.

  • to summon and to enforce the attendance of any person; or 
  • to examine him on oath; or
  • to order the discovery and production of documents; or
  • to procure evidence on affidavits; or
  • to issue commissions for the examination of witnesses or documents; or
  • to review decisions passed by the Tribunal itself; or
  • to dismiss an application for default; or
  • to decide an application as ex-parte; or
  • set any order aside or dismiss any application for default or any order passed by it ex-parte, or
  • any other matter which may be prescribed.

Appeal to SAT

Section 15T of the Securities and Exchange Board of India Act, 1992

Under this Section, an appeal can be preferred to a Securities Appellate Tribunal having jurisdiction in the matter,

  • by an order or rules and regulations of the Board made under this Act which was made on and after the commencement of the Securities Laws (Second Amendment) Act, 1999;

or

  • by an order made under this Act, by an adjudicating officer; or
  • by an order of the Insurance Regulatory and Development Authority or the Pension Fund Regulatory and Development Authority.

Now we will be dealing with the Securities Appellate Tribunal (Procedures) Rules, 2000.

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Securities Appellate Tribunal (Procedure) Rules, 2000 

The Central Government issued the following guidelines, by exercising the powers conferred to it by Section 29 read with Sections 15T and 15U of the Securities and Exchange Board of India, 1992. 

Let us discuss all the Sections contained in Securities Appellate Tribunal (Procedure) Rules, 2000 and the procedures to file an appeal in the Securities Appellate Tribunal.

Limitation for filing the appeal 

  • The appeal should be filed before the Tribunal within a period of 45 days.
  • The 45 days will start from the day when the appellant receives a copy of the order against which the appeal is filed.
  • It is further provided that if the appeal is not filed within 45 days then the Appellate Tribunal may if it thinks that there exists a justified reason for not filing the appeal within 45 days, allow that appeal.

Form and procedure of appeal 

  • Any aggrieved person in the registry of the Appellate Tribunal can present a memorandum of appeal which shall be presented in the Form. 
  • This memorandum of appeal has to be presented in the Appellate Tribunal within whose jurisdiction the concerned case falls or shall be sent by registered post addressed to the Registrar.
  • In case, the memorandum of appeal is sent through the post by the aggrieved, then it shall be deemed to have been presented in the registry on the day it was received in the registry. 

Sittings of Appellate Tribunal 

  • The Appellate Tribunal will sit either at a place where its office is situated or at any other place where the jurisdiction of the Appellate Tribunal falls(whichever place the Appellate Tribunal finds suitable).
  • When the Presiding Officer is temporarily absent, Government of India can authorize either of the two other members to preside over the sitting of the Tribunal either at a place where its office is situated or at such other place where the jurisdiction of the Appellate Tribunal falls. 

Language of Appellate Tribunal 

  • All the proceedings in the Appellate Tribunal are to be conducted in either English or Hindi.
  • Any appeal, application, representation, document or other matters contained in any language other than English or Hindi, will not be accepted by the Appellate Tribunal unless the same is accompanied by a true copy of the translation of the following matter, which will be in English or Hindi. 

Appeal to be in writing 

  • Every appeal, application, reply, representation or any document filed before the Appellate Tribunal should be typewritten, cyclostyled or printed neatly and legibly.
  • It should be typewritten on the side of a good quality paper of foolscap size in double space and separate sheets should be stitched together. Also, every page should be consecutively numbered and filed in the manner provided in sub-rule (2).
  • The appeal under sub-rule (1) shall be presented in 5 sets in a paper book along with an empty file size envelope. This envelope should bear the full address of the particular respondent whereas the full address of each respondent, in case the respondents are more than one. It should be provided along with a sufficient number of extra paper books together with an empty file size envelope.

Presentation and scrutiny of the memorandum of appeal 

  • The Registrar will endorse the date on every appeal and will sign the endorsement. The date mentioned will be the one on which the appeal was presented under rule 4 or deemed to have been presented under that rule. 
  • The appeal will be duly registered and a serial number will be given provided that on scrutiny, the appeal is found to be in order.
  • The Registrar may allow the appellant to rectify the defect in his presence if on scrutiny, the appeal is found to be defective and the concerned defect is formal in nature, but if the said defect is not formal in nature, the Registrar may give the appellant some time to rectify the defect as he may deem fit. 
  • If the appeal has been sent by post and found to be defective, the Registrar may communicate the defects to the appellant and give the appellant some time to rectify the defect as he may deem suitable. 
  • If the appellant fails to rectify the defect within the time allotted by the Registrar (in sub-rule (3)), the Registrar will pass an order which will provide for reasons to be recorded in writing and may decline to register such memorandum of appeal and communicate the order to the appellant within seven days from declining. 
  • An appeal against the order of the Registrar under sub-rule (4) can be made within 15 days of receiving such order which declined the appeal. The appeal will be made to the Presiding Officer or in his temporary absence, to the Member authorized under sub-rule (2) of rule 5, whose decision will be considered as final. 

The fee to be paid

  • Each memorandum of appeal shall be accompanied by a fee. The details of fee to be paid is provided in sub-rule (2).
  • This fee has to be remitted in the form of crossed demand draft, drawn on any nationalized bank It should be drawn in favor of “the Registrar, Securities Appellate Tribunal” payable at the station where the registry is located. 
  • The amount of fee payable regarding the appeal against adjudication orders made under Chapter VIA of the Act shall be as follows: 

Amount of penalty imposed 

Amount of fees payable 

1. Less than rupees 10,000

Rs. 500. 

2. Rupees 10,000 or more 

Rs. 1,200 but less than 1 lakh. 

3. Rupees 1 lakh or more 

Rs. 1200 plus Rs. 500 for every additional 1 lakh of penalty or fraction, subject to a maximum of Rs. 1,50,000.

  • The amount of fee payable regarding any other appeal against the order passed by the Board under the Act will be rupees five thousand only. 

Contents of the memorandum of appeal 

  • Each memorandum of appeal filed under rule 4 will be put down concisely under distinct heads.
  • The grounds of such appeal will be passed without any argument or narrative. 
  • The concerned ground shall be numbered consecutively and shall be in the manner provided in sub-rule (1) of rule 7. 
  • It will not be required to present a separate memorandum of appeal to get an interim order or direction if the above-mentioned ground is prayed for in the memorandum of appeal. 

Documents to accompany memorandum of appeal 

  • The memorandum of appeal will be provided along with five copies and will be accompanied by copies of the order. Out of those copies, at least one of it will be a certified copy, against which the appeal is filed.
  • If the party is represented by an authorized representative, then the following should be added to the end of the appeal:
  1. a copy of the authorization to act as the authorized representative and, 
  2. a written consent thereto by such authorized representative. 

Plural remedies 

A memorandum of appeal shall not seek relief or reliefs against more than one order unless the reliefs which are prayed for are consequential. 

Notice of appeal to the respondent 

A copy of the memorandum of appeal and the paper book should be given by the Registrar to the respondent after they are registered in the registry. The copy can be served by hand delivery, or by Registered Post or Speed Post. 

Filing of reply to the appeal and other documents by the respondent 

  • The reply to the appeal has to be filed by the respondent in five complete sets. The reply to appeal has to be accompanied by documents in a paper book form. This has to be filed with the registry within one month of the providing of the notice on him regarding the filing of the memorandum of appeal. 
  • Every reply, application or written representation filed before the Appellate Tribunal has to be verified in the manner provided for, in the Form. 
  • A copy of all the applications, replies, documents and other written materials filed by the respondent before the Appellate Tribunal shall be right away served on the appellant, by the respondent.
  • The Appellate Tribunal can allow the filing of reply referred to in sub-rule (1) after the expiry of the period mentioned in that. This may be done after an application by the respondent is received. It will be done at the complete discretion of the Appellate Tribunal. 

Date of hearing to be notified 

  • The Appellate Tribunal will send a notification to the parties regarding the date when the appeal will be heard.
  • It will be done in a particular manner which will be provided by the Presiding Officer. 
  • The Presiding Officer will direct the manner by passing a general or special order. 

Hearing of appeal 

  • The appellant will be heard in support of the appeal filed, on the day fixed or on any other day to which the hearing may be adjourned.
  • After this, the Securities Appellate Tribunal will, then, if it thinks necessary, hear the Board or representative authorized by the Board, against the appeal.
  • During, hearing the Board or its authorized representative presenting arguments against the appeal, the appellant will be entitled to reply. 
  • The written arguments could be supplemented by time-bound oral arguments, during the proceedings of the hearing of the appeal.

[Provided that in the case when the Presiding Officer or of the Member authorized by the Government under sub-rule (2) of rule 5 is temporarily absent, then the Presiding Officer can authorize the other Member present on that day to hear Board or authorized representative by the appellant, against the appeal.] 

  • In case the appellant is not present in person or through an authorized representative when the appeal is set for hearing, the Securities Appellate Tribunal may dispose of the appeal on the merits.

[Provided that where an appeal has been disposed of as provided above and the appellant presents himself afterwards and is able to satisfy the Securities Appellate Tribunal that there were sufficient and justified reasons for his nonappearance when the appeal was called for hearing, the Securities Appellate Tribunal can pass an order setting aside the ex parte order and restore the appeal.] 

Order to be signed and dated 

  • The Presiding Officer and the two other members will sign and date each and every order of the Appellate Tribunal. 
  • The Presiding Officer will possess the authority and power to pass interim orders or injunctions. 
  • The interim orders or injunctions will be subject to reasons, to be recorded in writing, which it considers necessary in the interest of justice.
  • The interim orders or injunctions will be pronounced during the sitting of the Appellate Tribunal, presided by the Presiding Officer or by the Member authorized under sub-rule (2) of rule 5 (in the case of the temporary absence of the Presiding Officer).

Publication of orders 

  • The orders of the Appellate Tribunal will be released for publication if the Appellate Tribunal thinks that it is fit for publication in any authoritative report or the press. 
  • It will be released for such publication on some terms and conditions which the Presiding Officer will lay down. 

Communication of orders 

A certified copy of each and every order passed by the Appellate Tribunal shall be communicated to the following members(according to what the case is):

  • to the Board, 
  • to the Adjudicating Officer, and 
  • to the parties. 

Orders and directions in certain cases 

The Appellate Tribunal may make such orders or give such directions which it thinks are necessary or expedient to give effect to the orders passed by it previously or to prevent exploitation of its process, or to make it certain that justice is provided. 

Fee for inspection of records and obtaining copies 

  • A fee for every hour or every part of that inspection will be charged; 
  • It will amount to rupees twenty;
  • It will be subjected to a minimum of rupees one hundred charged for inspecting the records of a pending appeal by a party;
  • A fee of rupees five will be charged, for a folio or part of that which do not involve typing;
  • A fee of rupees ten will be charged for a folio or part of that which do not involve typing of statement;
  • Figures shall be charged for providing copies of the records of an appeal, to a party in the concerned case. 

Functions of the Registrar

Let us look at some important functions of the Registrar:

  • The Registrar will discharge his functions under the supervision of the Presiding Officer. 
  • If the Presiding Officer is absent temporarily, then the Registrar will be supervised by the member authorized under sub-rule (2) of rule 5.
  • He shall discharge other functions which are assigned to him under these rules, by the Presiding Officer or by the Member authorized under sub-rule (2) of rule 5(when the Presiding Officer is absent for a temporary period). This has to be performed when a separate order in writing is provided.
  • He shall have the custody of all the records in the possession of the Appellate Tribunal.
  • The official seal of the Appellate Tribunal will be kept in the custody of the Registrar.
  • The official seal of the Appellate Tribunal will be affixed to any order, summons or other processes save under the authority in writing from the Registrar.
  • It is subject to any general order or special direction by the Presiding Officer, or by the Member authorized under sub-rule (2) of rule 5(when the Presiding Officer is absent for a temporary period).
  • The official seal of the Appellate Tribunal shall not be affixed to any certified copy issued by the Appellate Tribunal until the Registrar under his authority provides for it in writing. 

Additional functions and duties of the Registrar 

In addition to the functions and duties assigned in the rules, the Registrar will also have some other functions and duties to perform. Such functions and duties will be subject to any general order or special directive passed by the Presiding Officer or the Member authorized under sub-rule (2) of rule 5(when the Presiding Officer is absent for a temporary period).

Let us look at them:

  • The Registrar will receive all appeals, replies and other documents;
  • The Registrar will decide all questions which will arise out of the scrutiny of the appeal before the appeal are registered; 
  • The Registrar can order to have any appeal (presented to the Appellate Tribunal) amended in accordance with the rule; 
  • Subject to the directions of the Presiding Officer, or the member authorized under sub-rule (2) of rule 5(when the Presiding Officer is absent for a temporary period), the Registrar can order to fix the date of hearing of the appeal or other proceedings and issue notices from that point; 
  • The Registrar can pass an order to direct any formal amendment of records; 
  • The Registrar can pass an order to be presented with copies of documents to parties to proceedings; 
  • The Registrar can ask to be granted leave so that he can inspect the record of the Appellate Tribunal; 
  • The Registrar can issue an order regarding:
  1. All matters relating to the serving of notices or other processes,
  2. application for the issue of new or fresh notice, or 
  3. for extending the time for the notice or ordering a particular method by which the notice will be served on the respondent. 

It also includes a substituted serving of the notice by the publication of the notice through the way of advertisement in the newspapers.

  • The Registrar can also call for the records from the custody of any court or other authority concerned.

Cases concerning the Securities Appellate Tribunal

Satyam scandal of 2009

In this case, in September 2019, the Securities Appellate Tribunal (SAT) turned down the ban which SEBI put on PwC for the global audit firm’s role in the decade-old Satyam scandal.

Let us first quickly look at the facts of the Satyam Scandal:

On 7th January 2009, the then Chairman of Satyam Computer Service, resigned confessing that he had manipulated the various accounts in different forms.

The global corporate company was also part of the scandal. The auditor of Satyam Computer Service, PricewaterhouseCoopers(PWC) was also served as an independent auditor when the news of this scandal spread. The Indian arm of PWC in US was also sanctioned with a fine of $6 million by the US Securities and Exchange Commission for not obeying the Code of Conduct.

Now, what happened was that the SEBI put a ban on PWC as it provided a helping hand in this scandal. But the Securities Appellate Tribunal ordered SEBI to remove it because it had no authority or jurisdiction to ban Pwc from practicing and the authority regarding it rests with the ICAI.

SEBI v. Sahara India Real estate

In this case, in July 2015, SEBI canceled Sahara MF’s registration with the reasoning that it was not “fit and proper” to carry out the business. Further SEBI ordered the operations to be transferred to another fund house. It also directed to cancel the registration of Sahara MF’s when the six-month period had expired.

Sebi had also canceled the portfolio management license of a Sahara, sometime before.

In pursuance of the following order issued by SEBI, Sahara MF approached the Securities Appellate Tribunal. The appellants were, the Sahara Asset Management Co, Sahara Mutual Fund and Sahara India Financial Corporation.

SAT granted six weeks to the appellants to approach the Supreme Court. 

After this, the Sahara MF filed an appeal in the Supreme Court which was dismissed in October 2017 by the apex court. Thereafter, Sebi directed Sahara MF to strictly obey the timelines specified in the order passed in July 2015. But the SAT allowed Sahara to withdraw its appeal and to file a fresh appeal as it has the liberty to do so.

Conclusion 

SEBI is the prime regulator of the Securities market. And through its regulations, if it fails to satisfy the company or organization then the person can file an appeal in the Securities Appellate Tribunal. SAT works to mitigate the problems arising out of the orders of SEBI since 1995. And in many cases such as the cases which are mentioned above, SAT has proved to check for the accountability and answerability of the SEBI.

References

  1. https://indiacode.nic.in/show-data?actid=AC_CEN_2_11_00014_199215_1517807319932&orderno=41
  2. https://indiacode.nic.in/show-data?actid=AC_CEN_2_11_00014_199215_1517807319932&orderno=42
  3. https://indiacode.nic.in/handle/123456789/1890?view_type=browse&sam_handle=123456789/1362
  4. https://taxguru.in/sebi/securities-appellate-tribunal-sat-overview.html
  5. https://www.sebi.gov.in/sebi_data/attachdocs/apr-2017/1492086931711.pdf
  6. https://www.gktoday.in/gk/securities-appellate-tribunal/

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