SAT left with just one member; hearings in over 400 appeals on halt

At present, SAT has just one member CKG Nair, who is not a judicial member. As a result, functioning of SAT will remain virtually grounded until a new presiding officer takes charge.

The Securities and Appellate Tribunal (SAT), a quasi-judicial body that hears appeals pertaining to the securities, insurance and pension markets, has not taken up a single case in the last fortnight, due to lack of quorum. With Presiding Officer J P Devadhar demitting office early this month, the appellate tribunal is effectively out of commission.  

This has halted hearings in over 400 appeals against orders issued by the Securities and Exchange Board of India (Sebi). Other than this, the tribunal also appeals against orders by the Insurance Regulatory and Development Authority (Irdai) and the Pension Fund Regulatory and Development Authority (PFRDA).

According to rules, a three-member panel is required to hear appeals on orders passed by these regulatory bodies. A judicial member’s presence is must for interim relief and admission of appeals.

The tribunal’s last order was on July 10.  At present, it has just one member, CKG Nair, who is not a judicial member. As a result, the functioning of SAT will remain virtually grounded until a new presiding officer takes charge.

According to legal experts, companies are left with little options when it comes to seeking emergency relief against the regulatory order. Their woes could compound as the government was yet to start the appointment process for the position.

In absence of a quorum, the tribunal has been passing temporary rulings in the last few months in case of urgent matters. These orders were subject to review by a new bench. The situation was created after SAT member Jog Singh retired on February 12. For instance, on February 16, SAT allowed Price Waterhouse to continue servicing existing clients until March 2019. It said a new bench could review this relaxation, since the bench was set to be reconstituted. The matter will now be heard after the constitution of a new bench.

“The retirement of a presiding officer or a member is pre-scheduled and well known, but never backed up with proper succession planning,” according to Somasekhar Sundaresan, an independent counsel.  

Given the wide-ranging scope of powers conferred on regulators whose orders can be appealed against, SAT has been at the receiving end of apathy in terms of how vacancies are filled up, he added.

According to industry experts, with Lok Sabha election approaching, the appointment could get further delayed.

During 2016-17, around 470 appeals came up before the tribunal. Further, 185 appeals were dismissed (ruled in favour of Sebi), while seven were allowed (ruled against Sebi). As of March 31, 2017, 411 appeals were pending with SAT.

This is not the first time the functioning of the tribunal has been hit. In the past, the judicial member position was kept vacant for two years before Devadhar, a former judge of the Bombay High Court, joined the tribunal as presiding officer, in 2013.  

The appointment criteria discourages former justices from joining the tribunal, according to ex-members of SAT.

For instance, the pension the government official gets is deducted from the salary paid for the new job. Despite being one of the significant roles, such conditions refrain people from joining the tribunal. Several representations were made to amend these rules to attract the right talent. In his 2015-16 Budget speech, the then finance minister Arun Jaitley had announced new benches and new members for SAT. But no new benches were notified in the last three years. The appointment of a SAT member is done by the Appointments Committee of the Cabinet, which has representations from the Reserve Bank of India (RBI) and the finance ministry. SAT’s presiding officer is also part of the committee. A SAT member is appointed on contract for five years or till the age of 62 years, whichever is earlier.

Appeals halt at SAT 

• Tribunal lacking full quorum since February 
• Judicial member Jog Singh retired on February 12
• Presiding officer J P Devadhar quit office on July 12 
• Tribunal now left with one member, C K G Nair
• As per rules, three-member panel is required to hear appeals 
• Also, a presiding officer is must for admission of appeals
• Government yet to start appointment process for presiding officer’s post