Securities Appellate Tribunal holds that it can hear appeals even if Technical Member is not available on Bench [Read Order]

The Securities Appellate Tribunal (SAT) has ruled that it is empowered to hear and decide appeals even if a technical member is not available on the Bench (Axis Bank Limited v. National Stock Exchange of India Ltd)..Thus, the functioning of SAT will not be rendered defective on account of absence of a technical member if the coram is otherwise complete..A Bench of Presiding Officer Justice Tarun Agarwala and judicial member Justice MT Joshi said that even if a vacancy of a member arises, whether it is a judicial member or a technical member, the SAT can proceed and hear the matters provided the coram is complete. ."We are of the confirmed opinion that the functioning of the Tribunal presently comprising of a Presiding Officer and a Judicial Member is not defective on account of non-availability of Technical Member and that the Bench constituting the Presiding Officer and Judicial member can proceed to hear and decide the appeals, etc which are filed before the SAT," the Tribunal said. .It was noted after a technical member demitted office on March 31 this year, the SAT presently comprises two members - the Presiding Officer and a judicial member..The question as to whether the SAT could function in the absence of technical members was raised by the Securities and Exchange Board of India (SEBI). The markets regulator argued that in terms of the proviso to Section 15L(2)(b) of the Securities and Exchange Board of India Act, 1992, the SAT Bench should include at least one technical member. In light of this provision, it was contended that the Tribunal should not hear appeals until at technical member is appointed by the Central government..In its order, the SAT noted that the proviso to Section 15L(2)(b) was "creating a mischief" and had to be interpreted harmoniously with other provisions of the SEBI Act. .The Bench found SEBI's contention to be incorrect in view of Section 15-PA, which provides that in the event of a vacancy occurring in the office of the Presiding Officer, then the senior most judicial member will act as the Presiding Officer until a new Presiding Officer is appointed. Thus, the tribunal would continue to function even if there is a vacancy in the office of the Presiding Officer..It was also highlighted that Section 15R provides that any proceedings before the Tribunal cannot be questioned in any manner on the ground of any defect in the constitution of the SAT. This provision protects the legality and validity of the orders passed by the Tribunal even if it is found that there was a defect in the constitution of the Tribunal, the order states."To put it differently, Section 15R would have the effect of qualifying and treating the word “shall” in the proviso to Section 15L to mean “ may” that is to say, that there shall be at least one Judicial Member and one Technical Member in every Bench and where such members are available and, where such members are not available it would not be a mandatory requirement to be met with and by law the Presiding Officer is required to constitute a bench as he deems fit from the members available," the Bench held..The SAT also observed that it is mandatory for the SAT to be manned by judicial members. It is an essential requirement under the SEBI Act that the Presiding Officer is a judicial member, it added."Where the Presiding Officer is functional he along with the other Member/Members shall conduct the proceedings and where a vacancy occurs in the office of the Presiding Officer, then the senior most Judicial Member shall act as a Presiding Officer till the date on which a new Presiding Officer is appointed," the Bench further said. .The Bench further opined that inclusion of a technical member is only to bring specialised knowledge, but that does not mean that it can substitute a judicial member. Further, a technical member is an aid to assist the Bench on an issue and thus, it cannot be said that if a technical member is not available, the Bench comprising two judicial members cannot function. "At best this can never be the intention of the legislature otherwise it would dilute and encroach upon the independence of judiciary," the order states..Pertinently, the Bench also lamented the fact that the Central government has not taken any measures to fill up the vacancies of the SAT. The Tribunal stated,"Can this Tribunal face such crisis of non-functioning due to non filling up of the vacancies by the Central Government?...We have interpreted the provisions of the Act and have resolved the issue but the permanent solution is that Central Government should expedite and fill up the vacancy. A fourth post of Technical Member was created vide notification dated 16 May 2019. No steps have been taken by the Central Government to fill up this vacancy, even though two years have elapsed. Further, the government knew that the only Technical Member was going to retire on 31st March, 2021. Till date no steps have been taken to fill up the post whereas such steps should have been taken at least a couple of months before the retirement of the Technical Member.".The SAT thus called upon the Centre to to fill the vacancies at the earliest and also to make necessary amendments and resolve the discrepancy created by the proviso under Section 15L(2)(b)..The Bench further asked that a copy of this order be sent to the Registrar General of the Supreme Court so that the issued is resolved once and for all on the judicial side..Senior Advocates Rafique Dada, Fredun De Vitre, Pesi Mody and Gaurav Joshi, along with Advocates Somasekhar Sundaresan and Suraj Chaudhary appeared for various parties..[Read Order]