Recently, the Securities Appellate Tribunal (SAT), which hears appeals against SEBI’s regulatory orders, made an important announcement saying that it can function without a technical member, after SEBI questioned its locus standi.
Securities and Exchange Board of India (SEBI) had raised objections to the absence of a technical member and contended that Tribunal should not hear appeals till such time a member is appointed by the Centre. According to SEBI, if there is no technical member, the constitution of the bench is defective and orders passed by the bench would be considered as ‘not before a judge’ or 'coram non judice'.
But SAT has said that its bench consisting of the presiding officer and a judicial member, has the powers to hear matters even in the absence of a technical member.
Only 2 members
After the retirement of CKG Nair as a technical member from March 2021, the tribunal has been functioning only with two members — a former Bombay High Court Justice MT Joshi and former Meghalaya High Court Chief Justice Tarun Agarwala, who is the presiding officer.
“We are of the confirmed opinion that the functioning of the tribunal presently comprising of a presiding officer and a judicial member is not defective on account of non-availability of technical member and that the bench constituting the presiding officer and judicial member can proceed to hear and decide the appeals, etc which are filed before the SAT,” the Tribunal Order said.
‘Amendments add confusion’
The present confusion has been created because of the amendments being made in the SEBI Act from time to time with regard to the composition of the Tribunal and the strength of the Tribunal, the bench said.
SAT said that it has resolved the issue for now, but the permanent solution is that Central government should quickly fill up the vacancy. In an unusual move, the SAT has also submitted the copy of its Order to the Supreme Court, to treat it as a PIL “so that the matter is resolved once and for all from the highest Court in India”.
Now, the ball appears to be in SEBI’s court on deciding whether to escalate the issue further to the Centre and the Supreme Court.
SEBI’s contention is justifiable as a technical member in the tribunal will definitely add strength to the verdicts especially for those that need expertise and special knowledge. Otherwise, SAT orders could be challenged in the higher courts, delaying verdicts in a manner that is neither desirable for regulator and SAT nor for investors, who look for quick resolution.
The Centre instead of dragging its feet should immediately appoint a technical member to SAT, especially given that the position has been vacant for around two years.