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TMI Blog2017 (3) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... Securities Appellate Tribunal is sustained. The judgment of the Securities Appellate Tribunal is, accordingly, set aside. - Civil Appeal No. 5173 of 2006, Civil Appeal No. 186 of 2007 - - - Dated:- 7-3-2017 - Pinaki Chandra Ghose And R. F. Nariman, JJ. JUDGMENT R.F. Nariman, J. 1. The present appeal raises an interesting question as to whether an administrative circular that is issued by SEBI under Section 11(1) of the Securities Exchange Board of India Act, 1992, can be the subject matter of appeal under Section 15T of the said Act. 2. By an administrative circular dated 9th November, 2005, SEBI under the caption review of dematerialization charges issued an administrative circular under Section 11(1) of the SEBI Act to protect the interests of investors in securities and to promote the development of, and to regulate the securities market. Depositories were advised by the said circular to amend all relevant bye-laws, rules and regulations in order to see that with effect from 9th January, 2006, no charges shall be levied by a depository on DPs and consequently by a DP on a beneficiary owner when a beneficiary owner transfers all securities lying in his accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia Ltd. vs. Central Electricity Regulatory Commission [(2010) 4 SCC 603] under pari materia provisions under the Electricity Act, 2003, and Bharat Sanchar Nigam Ltd. vs. Telecom Regulatory Authority of India Ors. [(2014) 3 SCC 222] under the Telecom Regulatory Authority of India Act, 1997. He stated that the same fate would await administrative orders as well and that the reasoning of these two judgments would lead us necessarily to this conclusion. 6. On the other hand, learned counsel for the respondent urged before us that the word order not having been defined is extremely wide and would, therefore, include all orders of the Board which, as has been pointed out, would be administrative and legislative orders as well. The controversy being in a narrow compass, it is necessary for us to lay down the law with some clarity. 7. Section 15T of the Act reads as follows : 15T. Appeal to the Securities Appellate Tribunal. (1) Save as provided in sub-section (2), any person aggrieved,- (a) by an order of the Board made, on and after the commencement of the Securities Laws (Second Amendment) Act, 1999, under this Act, or the rules or regulations made thereunder ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cating officer to hold an inquiry, give a hearing to the person concerned and thereafter impose a penalty, all of which points to only quasi-judicial functions being exercised by such officers. Under sub-section (3) of Section 15T, every appeal is to be filed within a period of 45 days from the date on which a copy of the order made by the Board or the adjudicating officer, as the case may be, is received by him. Generally administrative orders and legislative regulations made by the Board are never received personally by the person aggrieved . This is another pointer to the fact that the order spoken of in sub-section (1) of Section 15T is only a quasi-judicial order. Also, it is important to note under sub-section (4) that the Appellate Tribunal may ultimately pass orders confirming, modifying or setting aside the order appealed against. In the Clariant judgment referred to hereinabove, paragraph 74 clearly states that the jurisdiction of the appellate authority under the Act is not in any way fettered by the statute and thus it exercises all the jurisdiction as that of the Board . This being the case, it is clear that the appeal being a continuation of the proceeding before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statute to act judicially. 13. This statement of the law has been followed in Shivji Nathubhai vs. Union of India Ors. [(1960) 2 SCR 775], where the question which faced the Supreme Court was whether the Central Government s power under Rule 54 of the Mineral Concession Rules, 1949, to review administrative orders could be stated to be in a quasi-judicial capacity. After setting out Lord Justice Atkin s passage in Advani s case (supra), this Court held that three requisites were necessary in order that the act of an administrative body be characterized as quasi-judicial : (i) There must be legal authority; (ii) This authority must be to determine questions affecting the rights of subjects; and (iii) There must be a duty to act judicially. Applying the aforesaid tests, it was held that the Central Government s power of review under Rule 54 was quasi-judicial in that there is legal authority to determine questions affecting the rights of subjects and the duty to act judicially which involves a hearing and a decision on the merits of the case. 14. Similarly, in Indian National Congress (I) vs. Institute of Social Welfare Ors. [(2002) 5 SCC 685], this Court he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fuses to confer rights to property which are the subject of adjudication before the Court. One of the tests would be whether a matter which involves the exercise of discretion is left for the decision of the authority, particularly if that authority were a Court, and if the discretion has to be exercised on objective, as distinguished from a purely subjective, consideration, it would be a judicial decision. It has sometimes been said that the essence of a judicial proceeding or of a judicial order is that there should be two parties and a lis between them which is the subject of adjudication, as a result of that order or a decision on an issue between a proposal and an opposition. No doubt, it would not be possible to describe an order passed deciding a lis before the authority, that it is not a judicial order but it does not follow that the absence of a lis necessarily negatives the order being judicial. [at pages 728- 729] 16. Two other decisions give us an interesting insight into the difference between administrative and quasi-judicial orders. In Jayantilal Amrit Lal Shodhan vs. F.N. Rana Ors. [(1964) 5 SCR 294], this Court held that the report of a Collector made under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had to construe various sections of the Electricity Act, 2003, and ultimately came to the conclusion that the 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. 18. In so stating, a summary of findings is given in paragraph 92 of the said judgment. Sub-paras (iii), (iv), and (v) are important from our point of view, and it is stated as follows : (iii) A regulation under Section 178 is made under the authority of delegated legislation and consequently its validity can be tested only in judicial review proceedings before the courts and not by way of appeal before the Appellate Tribunal for Electricity under Section 111 of the said Act. (iv) Section 121 of the 2003 Act does not confer power of judicial review on the Appellate Tribunal. The words orders , instructions or directions in Section 121 do not confer power of judicial review in the Appellate Tribunal for Electricity. In this ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The only check upon exercise of such wide-ranging powers is that it must comply with the Constitution and the Act. In that view of the matter, where an expert Tribunal has been constituted, the scrutiny at its end must be held to be of wide import. The Tribunal, another expert body, must, thus, be allowed to exercise its own jurisdiction conferred on it by the statute without any limitation. 21. We have now to determine on a conspectus of the authorities as to whether Section 15T refers only to quasi-judicial orders, quite apart from the construction placed upon the Section earlier in this judgment. SEBI is an expert body created by the Act which, as has been stated earlier, has administrative, legislative and quasi-judicial functions. Some of the Sections which deal with the Board s quasi-judicial functions are set out hereinbelow:- 11. Functions of Board. (4) Without prejudice to the provisions contained in sub-sections (1), (2), (2A) and (3) and section 11B, the Board may, by an order, for reasons to be recorded in writing, in the interests of investors or securities market, take any of the following measures, either pending investigation or inquiry or on comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es market; or (ii) to prevent the affairs of any intermediary or other persons referred to in section 12 being conducted in a manner detrimental to the interest of investors or securities market; or (iii) to secure the proper management of any such intermediary or person, it may issue such directions,- (a) to any person or class of persons referred to in section 12, or associated with the securities market; or (b) to any company in respect of matters specified in section 11A, as may be appropriate in the interests of investors in securities and the securities market. Explanation.-For the removal of doubts, it is hereby declared that the power to issue directions under this section shall include and always be deemed to have been included the power to direct any person, who made profit or averted loss by indulging in any transaction or activity in contravention of the provisions of this Act or regulations made thereunder, to disgorge an amount equivalent to the wrongful gain made or loss averted by such contravention. 11D. Cease and desist proceedings. If the Board finds, after causing an inquiry to be made, that any person has violated, or is like ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess the person concerned has been given an opportunity of being heard in the matter: Provided further that nothing contained in this sub-section shall be applicable after an expiry of a period of three months from the date of the order passed by the adjudicating officer or disposal of the appeal under section 15T, whichever is earlier. 22. Administrative functions of the Board are broadly referable to Section 11(1) of the Act, which states as follows : 11. Functions of Board. (1) Subject to the provisions of this Act, it shall be the duty of the Board to protect the interests of investors in securities and to promote the development of, and to regulate the securities market, by such measures as it thinks fit. 23. Legislative functions, namely that of making of Regulations is referable to Section 30 of the Act which reads as follows : 30. Power to make regulations. (1) The Board may, by notification, make regulations consistent with this Act and the rules made thereunder to carry out the purposes of this Act. (2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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