2012 (11) TMI 1239 - HC - Companies Law

Temporary absence of the presiding officer - whether Tribunal cannot said to be validly constituted in absence of regular presiding officer? - Held that - The expression temporary absence only means that the arrangement under which one of the two members is to preside over the sitting of the tribunal is to be made on temporary basis and not on a regular basis. Accordingly when efforts are going on to select and appoint a presiding officer in accordance with the provisions of Section 15M of the Act, authorization given to one of the two members of the appellate tribunal has to be treated as a temporary arrangement and therefore, we find no merit in this contention. Even if the above contentions were to be accepted, another person who to be appointed to the post of the presiding officer of the appellate tribunal will have to possess the qualification stipulated in Section 15M of the Act. Since the selection committee constituted for the purpose is not in a position to find any eligible and willing person as per that provision, it is obvious that even under Section 15P the presiding officer cannot be appointed. The Government of India is, therefore, justified in resorting to the provisions of sub-rule (2) of Rule 5 of the Securities Appellate Tribunal (Procedure) Rules, 2000 for dealing with the present contingency. No impediment to the petitioner s appeal being heard by the Appellate Tribunal, which presently has two members and one of whom is authorized to preside over the sitting of the Appellate Tribunal.

Summary

Issues:
Challenge to adjudication order of Securities & Exchange Board of India (SEBI), Appointment of presiding officer in appellate tribunal, Validity of temporary arrangement for presiding officer, Interpretation of Securities Appellate Tribunal (Procedure) Rules, 2000.

Analysis:

1. The petitioner challenged the adjudication order of SEBI and sought a direction for the appointment of a presiding officer in the appellate tribunal. The Government authorized the senior-most member of the Securities Appellate Tribunal (SAT) to preside over sittings temporarily after the previous presiding officer relinquished charge. The relevant sections 15L and 15M of the Securities and Exchange Board of India Act, 1992 were considered in this context.

2. The contention was raised regarding the validity of the temporary arrangement for the presiding officer in the absence of a regular appointment. The petitioner relied on a Supreme Court decision to argue that the tribunal must have a validly constituted presiding officer. However, the court noted the clear provisions in the Act and Rules empowering the Government to authorize a member to preside over the tribunal temporarily.

3. The argument was made that the temporary absence provision in Rule 5(2) did not apply to a permanent vacancy, citing Section 15P of the SEBI Act. The court rejected this contention, emphasizing that the provisions must be interpreted reasonably. The term "temporary absence" was clarified to indicate a temporary arrangement until a regular presiding officer is appointed.

4. It was highlighted that even if the contention regarding the temporary arrangement was accepted, the appointment of a presiding officer must meet the qualifications specified in Section 15M of the Act. Since the selection committee could not find an eligible candidate, the Government's authorization of a member as presiding officer was deemed justified.

5. The court concluded that there was no impediment to the petitioner's appeal being heard by the Appellate Tribunal with the current arrangement. As the appeal was pending, the challenge to the adjudication order was not entertained, and the writ petition was dismissed with a clarification that the court did not delve into the merits of the challenge.