Securities Appellate Tribunal

From Justice Definitions Project

The Securities Appellate Tribunal (SAT) in India serves as a specialized quasi-judicial body tasked with adjudicating appeals against decisions made by regulatory authorities in the securities market.

Securities Appellate Tribunal is a statutory and autonomous body created as per provisions of section 15K of the Securities and Exchange Board of India (SEBI) Act, 1992.

  1. The primary legislation is the SEBI Act. Section 15K provides for the establishment of SAT. Further, Section 15U prescribes the procedure and powers of the Securities Appellate Tribunal.
  2. There also exists Securities Appellate Tribunal (Procedure) Rules, 2000 which lay out the relevant rules and procedures.
  3. Amendments
    1. A notable amendment was made in 2013 where Section 15M of the Securities and Exchange Board of India (SEBI) Act, 1992, was amended to enlarge the field of selection for the post of Presiding Officer (PO) of the Securities Appellate Tribunal (SAT), by including sitting or retired judge of a High Court with a minimum seven years of service, as a Judge of a High Court as one of the qualifications.

The jurisdiction of the SAT extends to the whole of India. There is presently only one bench which sits in Mumbai. However, there are plans to constitute another bench at Delhi.

  1. Subject Matter: Appeals against SEBI orders and enforcement actions.
  2. Jurisdiction: The whole of India. Original and appellate jurisdiction over securities market disputes.

Parent agency- Ministry of Finance Department of Economic Affairs

Historical Evolution

Chronological Sequencing

Consequent to Government Notification No.DL-33004/99 dated 27th May, 2014, SAT hears and disposes of appeals against orders passed by the Pension Fund Regulatory and Development Authority (PFRDA) under the PFRDA Act, 2013. Further, in terms of Government Notification No.DL-(N)/04/0007/2003-15 dated 23rd March, 2015, SAT hears and disposes of appeals against orders passed by the Insurance Regulatory Development Authority of India (IRDAI) under the Insurance Act, 1938, the General Insurance Business (Nationalization) Act, 1972 and the Insurance Regulatory and Development Authority Act, 1999 and the Rules and Regulations framed thereunder.

Amendments

  1. The Securities and Exchange Board of India (Amendment) Act, 2002
    1. The Securities and Exchange Board of India (Amendment) Act, 2002 brought about substantial changes with respect to SAT. It introduced various amendments pertaining to the composition of SAT, qualifications for appointment of members to SAT, tenure of members etc.

Legislative Framework

Constituting Act

  1. SEBI Act, 1992 - Governs SAT's establishment and powers.
  2. Amendments
    1. The Securities and Exchange Board of India (Amendment) Act, 2002 brought about substantial changes with respect to SAT. It introduced various amendments pertaining to the composition of SAT, qualifications for appointment of members to SAT, tenure of members etc.

Governance Structure

  1. Composition: It has Judicial and technical members.
    1. Presiding Officer: The SAT is headed by a Presiding Officer who is appointed by the central government. The Presiding Officer must be a retired judge of the Supreme Court or a retired Chief Justice of a High Court.
    2. Members: The SAT also consists of other members who are appointed by the central government. These members are required to have experience and expertise in various fields such as law, finance, economics, or accountancy.
    3. Registrar: The SAT is supported by a Registrar who is responsible for administrative and procedural matters.
  2. Powers:
    1. Adjudicatory Powers: SAT has the authority to hear and adjudicate appeals filed against orders, decisions, or directions issued by the Securities and Exchange Board of India (SEBI) or other regulatory authorities in the securities market. It can review its own orders or decisions, either suo moto or upon an application filed by a party aggrieved by the order.
    2. Interim Relief: SAT can grant interim relief, including stay orders, pending the final disposal of an appeal. This power allows SAT to prevent irreparable harm or loss to parties while the appeal is pending.
    3. Enforcement Powers: The orders and decisions of SAT are enforceable as if they were orders or decisions of a civil court. SAT can issue directions for the enforcement of its orders, including the imposition of penalties or other remedial measures.
    4. Contempt Powers: SAT has the power to punish for contempt of its authority, similar to the powers of a civil court. This ensures compliance with its orders and directions and maintains the integrity of the adjudicative process.
    5. Summoning and Examination of Witnesses: SAT can summon and enforce the attendance of witnesses, compel the production of documents, and examine witnesses under oath or affirmation. This power enables SAT to gather relevant evidence and information necessary for the resolution of disputes.
    6. Administrative Powers: SAT has administrative powers to regulate its own procedures and practices, ensuring the efficient conduct of hearings and the timely disposal of appeals. It can issue rules and regulations governing the filing, processing, and hearing of appeals before the tribunal.

Provisions Relating to Members of Tribunals

  1. Appointment:
    1. The members are appointed by a selection committee. s.15M(1A) mandates that the appointment of the Presiding Officer is made by the Central Government in consultation with the Chief Justice of India or his nominee.
  2. Qualifications:
    1. Qualifications for appointment as the Presiding Officer or Member of the Securities Appellate Tribunal are stipulated under Section 15M of the Securities and Exchange Board of India (SEBI) Act. According to subsection (1), the Presiding Officer must be either a sitting or retired Judge of the Supreme Court, or a sitting or retired Chief Justice of a High Court. Alternatively, the candidate can be a sitting or retired Judge of a High Court who has served for a minimum of seven years in that capacity. Additionally, subsection (1A) mandates that the appointment of the Presiding Officer is made by the Central Government in consultation with the Chief Justice of India or his nominee. As for subsection (2), individuals aspiring to be members of the Securities Appellate Tribunal must demonstrate ability, integrity, and standing, along with a proven capacity in dealing with securities market issues. They should also possess qualifications and experience in corporate law, securities laws, finance, economics, or accountancy. Notably, the provision prohibits members of the SEBI Board or individuals holding senior management positions equivalent to Executive Director in the Board from being appointed as Presiding Officer or Member of the Tribunal during their tenure with the Board or within two years of ceasing to hold office.
  3. Tenure:
    1. The tenure of office for the Presiding Officer and every other Member of the Securities Appellate Tribunal is outlined in Section 15N of the Securities and Exchange Board of India (SEBI) Act. According to this provision, both the Presiding Officer and other Members shall hold office for a term of five years from the date of assuming office and are eligible for reappointment. However, there are age restrictions imposed by the Act. The first proviso states that no individual shall serve as the Presiding Officer of the Securities Appellate Tribunal after reaching the age of sixty-eight years. Similarly, the second proviso specifies that no person shall continue to hold office as a Member of the Securities Appellate Tribunal after reaching the age of sixty-two years. These provisions ensure periodic rotation of members and uphold the principle of institutional renewal within the Tribunal.
  4. Removal:
    1. Section 15Q of the Securities and Exchange Board of India (SEBI) Act governs the removal process for the Presiding Officer or any other Member of the Securities Appellate Tribunal. According to subsection (2), removal from office can only occur by an order from the Central Government on grounds of proven misbehavior or incapacity, following an inquiry conducted by a Judge of the Supreme Court. The concerned individual must be informed of the charges against them and given a reasonable opportunity to be heard. Subsection (3) empowers the Central Government to establish rules governing the procedure for investigating allegations of misbehavior or incapacity. This framework ensures accountability and procedural fairness in the removal process, safeguarding the independence and integrity of the Tribunal's members.

Procedural Framework

  1. The procedural framework of SAT is governed by the Securities Appellate Tribunal (Procedure) Rules, 2000, which provide detailed guidelines for the conduct of proceedings before the tribunal.
    1. Filing of Appeals: Appeals are filed with SAT in accordance with the provisions of the Securities Appellate Tribunal (Procedure) Rules, 2000. Rule 3 outlines the procedure for filing appeals, including the format, contents, and documents required to be submitted along with the appeal petition.
    2. Admission and Scrutiny: Upon receipt of an appeal, SAT conducts an initial scrutiny to ensure compliance with procedural requirements. Rule 4 specifies the procedure for admission and scrutiny of appeals, including the grounds for rejection and the opportunity for the appellant to rectify deficiencies.
    3. Service of Notices and Documents: SAT serves notices and documents related to the appeal on the parties involved in accordance with the rules. Rule 5 prescribes the manner of service of notices, summons, and other documents, ensuring that parties are duly informed of the proceedings.
    4. Hearing of Appeals: SAT conducts hearings on appeals in accordance with the principles of natural justice, providing parties with an opportunity to present their case and evidence. Rule 6 outlines the procedure for the hearing of appeals, including the conduct of proceedings, submission of written arguments, examination of witnesses, and oral arguments.
    5. Interim Relief: SAT has the power to grant interim relief, including stay orders, pending the final disposal of an appeal. Rule 7 provides for the grant of interim relief and the procedure for making applications for interim orders.
    6. Orders and Judgments: SAT delivers orders and judgments based on the evidence and arguments presented during the hearing of the appeal. Rule 8 specifies the form and contents of orders and judgments issued by SAT, ensuring clarity and comprehensibility.
    7. Review of Orders: SAT may review its own orders or decisions, either suo moto or upon an application filed by a party aggrieved by the order. Rule 9 outlines the procedure for review of orders, including the grounds and process for seeking review.
    8. Enforcement of Orders: The orders and decisions of SAT are enforceable as if they were orders or decisions of a civil court. Rule 10 provides for the enforcement of orders and directions issued by SAT, including the recovery of penalties and other remedies.
    9. Contempt Proceedings: SAT has the power to initiate contempt proceedings against parties who fail to comply with its orders or directions. Rule 11 governs contempt proceedings before SAT, ensuring adherence to principles of natural justice and procedural fairness.
    10. Miscellaneous Provisions: The Securities Appellate Tribunal (Procedure) Rules, 2000 also contain miscellaneous provisions related to matters such as costs, representation by advocates, and other procedural aspects not covered elsewhere

Distribution of Benches

  1. Benches
    1. SAT currently has only one bench which is located in Mumbai. However, there are plans to constitute another bench at Delhi.
  2. Sanctioned Strength
    1. Section 15L lays down that SAT shall consist of a Presiding Officer and two other Members.

Digitization Checklist

A. E-filing and E-service

E-filing and E-service are not available on the website.

B. E-hearing

The tribunal carries out E-hearing via video conferencing and the required specifics are updated in the E-causelist.

C. E-orders and E-archives

D. E-evidence

E. E-causelist

  1. The E-causelist is updated daily under the latest updates column. It contains case number, case type, hearing time, and names of parties and advocates.
  2. It is segregated on the basis of the stage of the case such as admission, remittance hearing or disposal.

A sample cause list can be seen below:

SAT Sample Cause list available here at bottom right of the website.

F. E-payment

No details regarding E-payment is provided on the website.

G. Video Conferencing

The tribunal carries out E-hearing via video conferencing and the required specifics are updated in the E-causelist.

SEBI Judgements available here.

H. Availability of Case Information

The website provides information on cases and provides access to judgments and orders. It divides the portal into 3 sections i.e., SEBI, PFRDA and IRDAI.

For Example the SEBI information is available here as follows:

I. Disposal Standards

  1. Transparent Disposal Data: Maintaining institutional integrity.
  2. Integration with Departments: Exploring API linkages.

Research Engagement

A. Government Reports

  1. Law Commission Reports.
  2. Empowered Committee Reports.

B. Research Publications

  1. CSOs and Think Tanks: Contributing to Policy Discussions.
  2. Editorials: Reflecting on regulatory effectiveness.

Issues and Challenges

  1. Non-appointment of Members: Potential Impact on Tribunal Functioning.
  2. Addressing technological gaps.

Way Forward

  1. Strengthening tribunal efficiency and transparency.
  2. Adaptation to emerging market dynamics.
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