Appointment of technical member to help SAT expedite case resolution: legal experts

The Securities Appellate Tribunal has finally got a third member, Meera Swarup. The post was vacant for close to a year now.

A 1988-batch officer of the Indian Audit and Accounts Service(IAAS), and a high-ranking Finance Ministry official, Swarup has been appointed as the new ‘technical’ member of the Securities Appellate Tribunal (SAT) on Friday.

Before the appointment of Swarup, the bench comprised judicial member Justice Tarun Agarwala and Justice M.T. Joshi, presiding on the bench.

The earlier technical member, CKG Nair, retired on 31 March 2021, since then the post has been vacant.

Sandeep Parekh, founder and managing partner at Finsec Law Advisors said that Sebi and SAT had a spat last year about the lack of a technical member in the Securities Appellate Tribunal. This has been put to rest, which essentially will expedite the resolution of the pending cases before the SAT.

Chirag Shah, a securities lawyer with Mansukhlal Hiralal & Co said that with the strength of the members going higher the speed of passing judgements will improve. The move will also help in giving technical aspects in various cases.

Citing the PNB Housing judgement of 2021, where SAT gave a split verdict in the matter, Shah, said that one of the important changes will be that the chances of such a split verdict will be limited.

During 2020-21, 545 appeals were filed before the Securities Appellate Tribunal. A total of 236 appeals were dismissed (ruled in favour of Sebi) while 69 were allowed (ruled against Sebi). As of March 31, 2021, 632 appeals were pending before the SAT, a Sebi annual report showed.

On the other hand, Sumit Agrawal, founder and partner, Regstreet Law Advisors, said a technical member will help in providing a technical view, however, the functioning of SAT was carried out even when there was a two-member bench and will continue to do so, he said.

Agrawal cited a 2016 proposal by former finance minister Arun Jaitley wherein the minister had proposed to amend the Sebi Act in order to increase benches in the Securities Appellate Tribunal (SAT).

“Mainly, the case burden will reduce only if the number of securities appellate tribunals are increased”, Agrawal said.

In March 2021, Sebi had taken the position that SAT couldn’t pass orders without a technical member being appointed. This position the regulator had been taken in multiple appeals in the apex court.

However, SAT rejected the stock market regulator’s argument that it cannot pass orders without a technical member on the tribunal.

Recently, SAT had pulled up Sebi’s adjudicating officer and imposed a fine on the regulator for “inordinate delay” in initiating a quasi-judicial process against Shriram Insight Share Brokers Ltd, after the brokerage moved SAT. In its order passed on 4 January, SAT imposed a penalty on Sebi as the officer took nearly 7.5 years to issue a show-cause notice to the brokerage.

Consequent to this, Sebi moved the Supreme Court against SAT’s remarks in the matter. These comments and directions were withdrawn last month. This and many such similar instances have led to a widening gap between SAT and the market regulator.

In terms of the widening gap between SAT and Sebi, Shah believes that there will always be differing opinion, and that is the reason we have the stages of adjudication process. 

“Certain amount of friction should always be there, which proves that both SAT and Sebi are trying to do an honest job in their opinion”, Shah said.

In a contrasting opinion, Sumit Agrawal said, there is no gap between Sebi and SAT, each of them are serving their roles purposefully.