SEBI vs. SAT

(Securities and Exchange Board of India versus Securities Appellate Tribunal)

If you follow the Indian securities markets, you may often come across news about SEBI appealing an SAT order on some case or the other.

For example, see the following recent cases:

PNB Housing: https://www.livemint.com/news/india/sebi-moves-supreme-court-against-sat-order-on-pnb-housing-fin-s-rs-4-000-cr-preference-issue-11630603364272.html

Care Ratings: https://www.financialexpress.com/industry/rcom-ncd-rating-sc-upholds-sat-order-on-sebi-penalty-on-care-ratings/2325169/

This can seem odd at first because, as a quasi-judicial body, the SAT is superior to SEBI. So a SEBI appeal of an SAT order at the Supreme Court might seem as if a district court is appealing against the order of a high court. However, this kind of situation is a result of the multiple roles of SEBI in the Indian securities market. SEBI, through its adjudication orders, interprets, defends and applies securities law. In addition to this, though, SEBI also performs legislative functions through various regulations and circulars; and it also performs administrative duties such as supervising the activities of market participants and enforcing the law through notices, inspection of documents and initiation of legal action if it finds instances of violation of the law.

SEBI performs judicial, executive and legislative functions.

When a SEBI Member issues an adjudication order against a person, it is doing so in its quasi-judicial capacity. If this person appeals against SEBI’s order to the SAT and wins, SEBI, in its quasi-executive capacity can appeal SAT’s order at the Supreme Court, even though SAT is superior to SEBI in its quasi-judicial capacity.

It would be interesting to see data about how often SEBI in its executive function appeals to the Supreme Court against SAT’s rulings. The data may show whether it is able to make independent executive decisions not to appeal certain SAT orders that go against its judicial function.

In an important decision in 2017 (https://www.sebi.gov.in/sebi_data/attachdocs/1490176050209.pdf), the Supreme Court ruled that only quasi-judicial orders of SEBI can be appealed at the SAT by an aggrieved party. SEBI’s law-making or executive actions cannot be challenged at the SAT. For this, an aggrieved party must resort to other appropriate civil judicial procedures outside SAT’s jurisdiction.

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