Transcript Shri J.J.Bhatt

Practice & Procedure
Before Securities Appellate Tribunal
BY
ADV. J. J. BHATT
Phone: 022 22658615
Mobile: 09820297384
e-mail : [email protected]
09.05.2013
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Disclaimer

The views expressed are personal.
 To seek appropriate legal advice upfront from the stage of first
communication, summons, recording of statement, Enquiry, SCN of
SEBI- This is because:
..You may not know the ultimate consequences.
.. You may not know the purpose of proceedings of SEBI
.. SEBI’s actions may be sudden / unpredictable / multiple.
.. SEBI passes ex- parte ad- interim orders against entities for diverse
reasons.
.. Issues may be complex, multi-dimensional having
far reaching consequences (e.g. disclosures to be
made in future in any document such as Prospectus) and directions
may be issued to key service providers such as CAs, Legal Advisors on
the Board of Companies, Independent directors etc.
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Address of SAT
Securities Appellate Tribunal
Earnest House, 14th Floor
Nariman Point, Mumbai 400 021
****************************************************
SAT’s daily Board of Hearing of Cases / Orders displayed on
SEBI’s website www.sebi.gov.in
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SAT
 Tribunal of 3 Members
 Presiding Officer
 Retired Chief Justice of High Court; or
 Retired Judge / Sitting Judge of Supreme Court
 2 Other Members
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Regulatory Framework
 Independent Regulator – SEBI Act, 1992- Latest and in
addition to existing commercial laws
Ch. VIB deals with SAT’s powers
 Securities Market Laws
-
- SEBI Act / Regulations :SEBI Act is pre-eminently a
social welfare legislation to protect the interests of
investors
- SC ( R) Act,1956 / Rules
- Depositories Act, 1996
- Certain Provisions of the Companies Act,1956
- Rules, Bye-laws & Regulations of Stock Exchanges.
- SAT Rules, 2000
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SEBI Board
 The Board is an expert body. As a legislature, it makes the
regulations, as an executive, it implements the legislation
and in case of breach it takes upon a quasi-judicial
function. While functioning in its judicial capacity, it has
wide discretion. It can initiate criminal proceedings in
terms of Section 24 of the Act, issue directions in terms of
Section 11B and Regulation 44 as also take recourse to penal
provisions as contained in Section 24 and Chapter VI-A of
the Act. Its decision is final subject ot the decision of the
Tribunal.
AIR 2004 SC 4219Civil Appeal No. 2361 of 2003 D/-25-8-2004
Swedish Match AB and Another
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Accountability
 Orders of SEBI reviewed by an Independent Tribunal
 Judicial Review of statutory provisions – HC
Writ Petition
- Price Waterhouse & co. V/s. SEBI
[2010] 6 taxmann.com 129 (Bom)
Provisions of Section 11(2) of SEBI Act would take
within its sweep a C.A. if his activities are detrimental
to the interests of investors or securities market.
(SAT’s order dated 01.06.2011 in Price Waterhouse)- Split verdictCross Examination allowed7.
- MCX- SS- Refusal to permit trading in cash / Derivative marketMatter considered by High Court
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Appeal to SAT
 Any person aggrieved- 15 T of SEBI Act
 An order of the Board [12(3), 11(4), 11B, 11D]
 An order of Adjudicating Officer [15 I ]
 23L SC( R) – order or decision of SE,
 22A SC( R) – against refusal of listing
 23A Depositories. Act- order of Board / AO
 Order – quasi judicial or adjudicatory order.
 HSBC MUTUAL FUND Order- Unit holder aggrieved
party in the event terms of MF Plan amended unilaterally.
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Appeal to SAT

What is an Order ?
[SAT’s Order in NSDL case.
Deepak Mehra V/s SEBI
Informal guidance / interpretative letter does not
constitute an ‘order’]
Who can appear and argue before SAT ?
1. Appellant in person
2. Lawyer
3. CA / CS / Cost Accountant
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Persons Aggrieved
 If order is materially adverse to them
 They have been denied or deprived of something to which
they are legally entitled or they have to show that a legal
burden is imposed on them
 If adverse findings are recorded, through no monetary
penalty involved
 Order prejudicially affect their interest / legal rights.
 Supreme Court order in Jasbhai Motibhai Desai Vs Rohan
Kumar
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Procedure
 Not bound by procedure in CPC
 Guided by PNJ - Institute of CA- AIR 1987SC 71
 Power to regulate own procedure
 Same powers as vested in Civil court
 Judicial Proceedings
 Appeal to be filed within 45 days from the date of receipt of
the Order
 Application for condonation of delay containing reasons of
delay to be filed. Delay can be condoned with / without
costs.
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Powers of SAT
 Power to impose costs?
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Yes
Interim Orders or injunction or stay in the interest of
justice.
Summoning and enforcing the attendance of any persons
and examining him on oath.
Requiring the discovery and production of documents.
If appeal is say against order of BSE, SAT can make SEBI a
party and seek its views.
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Powers of SAT (Contd.)
 Receiving evidence on affidavits.
 Issuing commissions for examination of witness or
documents.
 Reviewing its decisions - 30 days from the date of order.
 Where there is a glaring omission or patent mistake, or when
a grave error has crept in the judgement.
 A review petition has a limited purpose and can not be
allowed to be an appeal in disguise.
 Limitation Act applies- Section 15w of SEBI Act.
 Dismissing an application for default or deciding it
ex-parte.
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Powers of SAT (Contd.)
 Setting aside any order of dismissal of any application for
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defaults or any order passed by it ex-parte.
Intervener’s Application may be considered
Any other matter which may be prescribed
SAT (Procedure) Rules, 2000
Appeal can be disposed off at admission stage itself
Appeal tied to other similar appeals or to be taken up
separately.
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Powers of SAT (Contd.)
 Pass such orders thereon as SAT thinks fit
 Confirming (Upholding on other grounds)
 Modifying
 Remand back *
 Set Aside / Quash
 Rule 21 – may make such orders or such directions as may
be necessary or expedient to give effect to its orders or to
prevent abuse of its process or to seek ends of justice.
 Passing orders in terms of consent terms mutually agreed
upon.
* e.g. If the impugned order did not consider certain material aspects,
findings not recorded on vital issues etc.
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Powers of SAT (Contd.)
 Can reduce monetary penalty / debarment period.
 SAT considers among other factors Legal principles.
 Facts and circumstances of each case.
 Delay in passing orders.
 Errors on facts and law on the part of SEBI.
 SEBI’s powers.
 Nature of transaction considered as objectionable.
 Substance of dispute- Nature of wrong doing.
 Multiple proceedings in sequence against the same entity
 SAT will assess, appraise and evaluate the evidence / material
relied upon by SEBI.
 Can SAT reduce penalty even though findings upheld- Yes
 Company in Financial Doldrums – Can Reduce penalty.
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Whether Appeal lies against
 Non- redressal of Complaints by SEBI
 Right of cross-examination where sole material was
statement of some person
 Observations on offer documents ?
 Procedural order not affecting rights ?
 Letters issued by SEBI under IGS ?
 Though no penalty imposed, but adverse findings recorded
against any entity.
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Discretionary Powers of SAT
 The Tribunal has been constituted u/s 15K of the Act and is
thus a creation of the said Statute and as such the Tribunal
is to exercise the jurisdiction, powers and authority
conferred on it by or under the Act or any other law for the
time being in force.
 No power is conferred on the Tribunal to travel beyond the
areas covered by Section 12 and Rule 3. When something is
to be done statutorily in a particular way, it can only be
done that way. There is no scope for taking shelter under
discretionary power.
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Appeal to Supreme Court
 Under Section 15Z of the SEBI Act
 On Question of Law
 Within 60 + 60 days to Supreme Court
 Whether if a finding of fact is perverse and is based on no
evidence, it can be set aside in appeal even though appeal is
permissible only on question of law.(2004) 54 SCL 601 (SC)
Dale & V/s. P.K. Prathapan.
 Does SEBI challenge orders of SAT to Supreme Court ?
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Allowed Appeals
Where adverse findings are recorded by SAT on SEBI’s Powers.
Remanded Matters
Where costs are imposed
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THANK YOU
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