Securities Appellate Tribunal

The Securities and Exchange Board of India (SEBI) is responsible for protecting the interests of investors in securities and to promote the development of, and to regulate the securities market and for all other connected matters. To protect and be responsive to the needs of three groups of people (issuer of securities, investors and market intermediaries), SEBI has been invested with three necessary functions rolled-in to enable it to carry out its mandate:

  • Quasi-legislative function = drafts regulations
  • Quasi-judicial = passes rulings and judgments; prosecute and judge directly certain violations
  • Quasi-executive = investigation and enforcement actions.

Since these powers make SEBI a very powerful body, an appeal process has been created to ensure accountability. For the quasi judicial functions, there is a Securities Appellate Tribunal, which is a three-member tribunal. A second appeal lies directly to the Supreme Court.

The first SAT was formed in 1995, through a notification issued by the Central Government and therefore, is a statutory body established under the provisions of Section 15K of the Securities and Exchange Board of India Act, 1992 to:

  • Hear and dispose of appeals against orders passed by the Securities and Exchange Board of India or by an adjudicating officer under the Act and,
    Exercise jurisdiction, powers and authority conferred on the Tribunal by or under this Act or any other law for the time being in force.

The Tribunal is a three-member body composed of a Presiding Officer and two other members who are to be nominated via a notification by the Central Government. The Union Government also reserves the right to notify as many SAT’s as is needed.

  • The Securities Appellate Tribunal has only one bench that sits at Mumbai and has jurisdiction over all of India.
  • The Securities Appellate Tribunal is not be bound by the procedure laid down by the Code of Civil Procedure, 1908, but is be guided by the principles of natural justice and, subject to the other provisions of Depositories Act, 1996.
  • The Securities Appellate Tribunal has powers to regulate its own procedure including the places at which it shall have its sittings.

Every proceeding before the Securities Appellate Tribunal is deemed to be a judicial proceeding and the tribunal has all the powers of a Civil Court.

Notable cases

Sahara-SEBI case

In early February this year, SAT disposed off an appeal by the Sahara group saying that the matter was already pending before the Supreme Court. Two Sahara Group firms have been accused of raising money without regulatory approvals by the SEBI. The appeal related to the case involving two Sahara group firms raising money without regulatory approvals. The legal battle with market regulator SEBI is continuing in the Supreme Court over the refund of over Rs 20,000 crore to investors.

 Reliance Industries-SEBI

An insider trading case is being heard by the SAT for the past seven years.

 The Spice Telecom IPO case

The Tribunal barred one Dipti Kirit Parekh from accessing the capital market for two years for cornering shares issued in the initial public offer (IPO) of Spice Communications back in 2007.