Can SAT hear appeals against circulars issued by SEBI? Supreme Court answers

The Supreme Court of India, through its judgment dated March 7, 2017 has ruled that administrative circulars issued by the Securities and Exchange Board of India (SEBI) under Section 11(1) of the SEBI Act, 1992 cannot be the subject matter of appeal under Section 15T, before the Securities Appellate Tribunal (SAT)..Or rather, only quasi-judicial orders of the SEBI can be appealed before the SAT, and not administrative or legislative ones..In the instant case, an administrative circular was issued by SEBI in January, 2006 directing depositories to amend all relevant rules & regulations, to ensure that no charges are being levied by them to the depository participants. This was done to remove any additional charges faced by the beneficial owners for transferring securities from one account to the other of the same depository participant..This order passed by the SEBI was appealed by the National Securities Depository Ltd. (NSDL) before the SAT..SEBI raised a preliminary objection that, the SAT does not have jurisdiction to entertain appeals against ‘orders’ passed by the SEBI in its administrative or legislative capacity. The SAT, however, took cognizance of the matter but refused to grant relief to NSDL on merits..Interestingly, cross appeals were filed by both parties against the said order of SAT in the Supreme Court by,.NSDL, on merits of dismissal;SEBI, against the rejection of the preliminary objection raised before the SAT..It was argued on behalf of NSDL that the term ‘order’ not being defined in the SEBI Act, is extremely wide and would, therefore, include ‘all’ orders passed by SEBI – including administrative as well as legislative orders..The Supreme Court, while interpreting the meaning of the term ‘order’ read the provisions of the SEBI Act in a wholesome manner to interpret it as only ‘quasi-judicial orders’..Here are the three key reasons why it was held that only quasi-judicial orders fall within the ambit of the term ‘order’ as envisaged in Section 15T:.1. A presiding officer under Section 15M of the SEBI Act has to be a sitting or a retired Judge of the Supreme Court, or a sitting or retired Chief Justice of a High Court, or is a sitting or retired Judge of a High Court who has completed not less than 7 years of service as a Judge in a High Court. The Court observed,.“This is one indicia of the fact that the Appellate Tribunal, being manned by a member of the higher judiciary, is intended to hear appeals only against quasi-judicial orders.”.2. Under sub section (3) of Section 15T, every appeal against an ‘order’ is to be filed within 45 days from date on which copy of the order made by SEBI or the adjudicating officer, is received by him. However,.“Generally administrative orders and legislative regulations made by the Board are never received personally by ‘the person aggrieved’ ”,.thus indicating an intention to include only quasi-judicial orders.3. Sub section (5) of section 15T requires a copy of every order made by the SAT to be sent to SEBI, parties to appeal and concerned adjudicating officer..“The concerned adjudicating officer and the parties to the appeal obviously refer only to persons involved in a quasi-judicial proceeding.”.Furthermore, two precedents of the Supreme Court itself were relied on, which dealt with laws containing pari materia provisions, ,.First one being PTC India Ltd. vs. Central Electricity Regulatory Commission where it was held by the Supreme Court that ,.“Appellate Tribunal for Electricity has no jurisdiction to decide the validity of Regulations framed under the Central Electricity Regulatory Commission under Section 178 of the Electricity Act, 2003. The validity of the Regulations may, however, be challenged by seeking judicial review under Article 226 of the Constitution of India.”.Second one being, Bharat Sanchar Nigam Ltd. vs. Telecom Regulatory Authority of India & Ors, wherein it was held by the Supreme Court that TDSAT does not have the power to entertain a challenge to the regulations framed by TRAI under Section 36 of the TRAI Act.. (Read the judgment)