NATIONAL SECURITIES DEPOSITORY LTD. Vs. SECURITIES AND EXCHANGE BOARD OF INDIA
Supreme Court of India (Division Bench (DB)- Two Judge)
Appeal (Civil), 5173 of 2006, Judgment Date: Mar 07, 2017
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 5173 OF 2006
NATIONAL SECURITIES DEPOSITORY LTD. … Appellant
VERSUS
SECURITIES AND EXCHANGE BOARD OF INDIA … Respondent
WITH
CIVIL APPEAL NO. 186 OF 2007
SECURITIES AND EXCHANGE BOARD OF INDIA … Appellant
VERSUS
NATIONAL SECURITIES DEPOSITORY LTD. … Respondent
J U D G M E N T
R.F. Nariman, J.
1. The present appeal raises an interesting question as to whether an
administrative circular that is issued by SEBI under Section 11(1) of the
Securities Exchange Board of India Act, 1992, can be the subject matter of
appeal under Section 15T of the said Act.
2. By an administrative circular dated 9th November, 2005, SEBI under
the caption “review of dematerialization charges” issued an administrative
circular under Section 11(1) of the SEBI Act to protect the interests of
investors in securities and to promote the development of, and to regulate
the securities market. Depositories were advised by the said circular to
amend all relevant bye-laws, rules and regulations in order to see that
with effect from 9th January, 2006, no charges shall be levied by a
depository on DPs and consequently by a DP on a beneficiary owner when a
beneficiary owner transfers all securities lying in his account to another
branch of the same DP or to another DP of the same depository or another
depository, provided the BO account at transferee DP and that transferor DP
are identical in all respects.
3. A preliminary objection was raised in the appeal filed by the
respondent before the Securities Appellate Tribunal. It was urged that
under the SEBI Act, SEBI has administrative, legislative and quasi-judicial
functions. Appeals preferred to the Securities Appellate Tribunal can only
be from quasi-judicial orders and not administrative and legislative
orders. This preliminary objection was turned down by the impugned
judgment dated 29th September, 2006, by the Securities Appellate Tribunal.
According to the Tribunal, the expression “order” is extremely wide, and
there being nothing in the Act to restrict an appeal only against quasi-
judicial orders, appeals would lie against all three types of orders under
the Act i.e. administrative orders, legislative orders as well as quasi-
judicial orders. This was held purportedly following the decision in
Clariant International Ltd. & Anr. vs. Securities & Exchange Board of India
[(2004) 8 SCC 524]. The Tribunal, therefore, rejected the preliminary
objection and went into the merits of the arguments against the impugned
circular, and dismissed the same.
4. Cross appeals have been filed before us. Civil Appeal No.5173 of
2006 has been filed by the National Securities Depositories Ltd. Vs. SEBI
on the merits of the dismissal, whereas Civil Appeal No.186 of 2007 has
been filed by the SEBI against the rejection of the preliminary objection
raised before the Securities Appellate Tribunal. We will take up the
second appeal first inasmuch as if the preliminary objection were to
succeed, it is clear that the merits would not have to be gone into.
5. It was urged on behalf of the appellant in the second civil appeal
that the appeal filed under Section 15T of the SEBI Act is only restricted
to quasi-judicial orders and not administrative or legislative orders or
directions passed by SEBI under the 1992 Act. According to the learned
counsel on behalf of the appellant, the Appellate Tribunal judgment is
wrong and needs to be reversed inasmuch as it has clearly stated that even
against legislative regulations, the Appellate Tribunal would have
jurisdiction, which is contrary to two direct judgments under allied Acts
namely, PTC India Ltd. vs. Central Electricity Regulatory Commission
[(2010) 4 SCC 603] under pari materia provisions under the Electricity Act,
2003, and Bharat Sanchar Nigam Ltd. vs. Telecom Regulatory Authority of
India & Ors. [(2014) 3 SCC 222] under the Telecom Regulatory Authority of
India Act, 1997. He stated that the same fate would await administrative
orders as well and that the reasoning of these two judgments would lead us
necessarily to this conclusion.
6. On the other hand, learned counsel for the respondent urged before us
that the word “order” not having been defined is extremely wide and would,
therefore, include all orders of the Board which, as has been pointed out,
would be administrative and legislative orders as well. The controversy
being in a narrow compass, it is necessary for us to lay down the law with
some clarity.
7. Section 15T of the Act reads as follows :
“15T. Appeal to the Securities Appellate Tribunal.
(1) Save as provided in sub-section (2), any person aggrieved,—
(a) by an order of the Board made, on and after the commencement of
the Securities Laws (Second Amendment) Act, 1999, under this Act, or
the rules or regulations made thereunder; or
(b) by an order made by an adjudicating officer under this Act, may
prefer an appeal to a Securities Appellate Tribunal having
jurisdiction in the matter.
(2) ********
(3) Every appeal under sub-section (1) shall be filed within a period
of forty-five days from the date on which a copy of the order made by
the Board or the Adjudicating Officer, as the case may be, is received
by him and it shall be in such form and be accompanied by such fee as
may be prescribed :
Provided that the Securities Appellate Tribunal may entertain an
appeal after the expiry of the said period of forty-five days if it is
satisfied that there was sufficient cause for not filing it within
that period.
(4) On receipt of an appeal under sub-section (1), the Securities
Appellate Tribunal may, after giving the parties to the appeal, an
opportunity of being heard, pass such orders thereon as it thinks fit,
confirming, modifying or setting aside the order appealed against.
(5) The Securities Appellate Tribunal shall send a copy of every order
made by it to the Board, the parties to the appeal and to the
concerned Adjudicating Officer.
(6) The appeal filed before the Securities Appellate Tribunal under
sub-section (1) shall be dealt with by it as expeditiously as possible
and endeavour shall be made by it to dispose of the appeal finally
within six months from the date of receipt of the appeal.”
This Section appears in Chapter VIB inserted by an amendment Act of
1995. It is interesting to note that under Section 15M, a person shall not
be qualified for appointment as the Presiding Officer of the three member
Appellate Tribunal unless he is a sitting or retired Judge of the Supreme
Court, or a sitting or retired Chief Justice of a High Court, or is a
sitting or retired Judge of a High Court who has completed not less than 7
years of service as a Judge in a High Court. This is one indicia of the
fact that the Appellate Tribunal, being manned by a member of the higher
judiciary, is intended to hear appeals only against quasi-judicial orders.
8. Also, appeals are to be filed by persons aggrieved not only by an
order of the Board made under the SEBI Act, Rules or Regulations, but by
orders made by an adjudicating officer under the Act. Under Section 15-I,
the Board can appoint an officer not below the rank of a Division Chief to
be an adjudicating officer to hold an inquiry, give a hearing to the person
concerned and thereafter impose a penalty, all of which points to only
quasi-judicial functions being exercised by such officers. Under sub-
section (3) of Section 15T, every appeal is to be filed within a period of
45 days from the date on which a copy of the order made by the Board or the
adjudicating officer, as the case may be, is received by him. Generally
administrative orders and legislative regulations made by the Board are
never received personally by “the person aggrieved”. This is another
pointer to the fact that the order spoken of in sub-section (1) of Section
15T is only a quasi-judicial order. Also, it is important to note under
sub-section (4) that the Appellate Tribunal may ultimately pass orders
confirming, modifying or setting aside the order appealed against. In the
Clariant judgment referred to hereinabove, paragraph 74 clearly states that
“the jurisdiction of the appellate authority under the Act is not in any
way fettered by the statute and thus it exercises all the jurisdiction as
that of the Board”. This being the case, it is clear that the appeal being
a continuation of the proceeding before the Board, the proceeding can only
be quasi-judicial in nature.
9. Yet another indicator can be found under sub-section (5) of Section
15T by which a copy of every order made by the Appellate Tribunal is to be
sent to the Board, the parties to the appeal and to the concerned
adjudicating officer. The concerned adjudicating officer and the parties
to the appeal obviously refer only to persons involved in a quasi-judicial
proceeding.
10. Under Section 15Z of the Act, an appeal lies from any “decision or
order” of the Securities Appellate Tribunal to the Supreme Court on
questions of law arising out of such orders. Obviously, these orders are
also quasi-judicial in nature. All this leads to distinctions between
quasi judicial and administrative orders that have to be made on first
principles.
11. For this we have to hearken back to the classic case of The King vs.
Electricity Commissioners [(1924) 1 KB 171]. In a celebrated judgment
given by Lord Justice Atkin, the definition of a quasi-judicial order is
“Whenever any body of persons having legal authority to determine
questions affecting rights of subjects, and having the duty to act
judicially, act in excess of their legal authority, they are subject
to the controlling jurisdiction of the King’s Bench Division exercised
in these writs.”
12. This celebrated passage has been referred to time and again in the
Supreme Court’s judgments. Thus in Province of Bombay vs. Kushaldas S.
Advani [(1950) SCR 621], it was held
“(i) That, if a statute empowers an authority, not being a Court in
the ordinary sense, to decide disputes arising out of a claim made by
any party under the statute which claim is opposed by another party
and to determine the respective rights of the contesting parties who
are opposed to each other, there is a lis and prima facie, and in the
absence of anything in the statute to the contrary it is the duty of
the authority to act judicially and the decision of the authority is a
quasi-judicial act; and
(ii) that if a statutory authority has power to do any act which will
prejudicially affect the subject, then, although there are not two
parties apart from the authority and the contest is between the
authority proposing to do the act and the subject opposing it, the
final determination of the authority will yet be a quasi-judicial act
provided the authority is required by the statute to act judicially.”
13. This statement of the law has been followed in Shivji Nathubhai vs.
Union of India & Ors. [(1960) 2 SCR 775], where the question which faced
the Supreme Court was whether the Central Government’s power under Rule 54
of the Mineral Concession Rules, 1949, to review administrative orders
could be stated to be in a quasi-judicial capacity. After setting out Lord
Justice Atkin’s passage in Advani’s case (supra), this Court held that
three requisites were necessary in order that the act of an administrative
body be characterized as quasi-judicial :
(i) There must be legal authority;
(ii) This authority must be to determine questions affecting the rights of
subjects; and
(iii) There must be a duty to act judicially.
Applying the aforesaid tests, it was held that the Central
Government’s power of review under Rule 54 was quasi-judicial in that there
is legal authority to determine questions affecting the rights of subjects
and the duty to act judicially which involves a hearing and a decision on
the merits of the case.
14. Similarly, in Indian National Congress (I) vs. Institute of Social
Welfare & Ors. [(2002) 5 SCC 685], this Court held that the exercise of
powers under Section 29A of the Representation of the People Act, 1951 by
the Election Commission is a quasi-judicial power. After referring to R.
vs. Electricity Commissioner (supra) and Province of Bombay vs. Kushaldas
S. Advani (supra), this Court laid down :
“The legal principles laying down when an act of a statutory
authority would be a quasi-judicial act, which emerge from the
aforestated decisions are these:
Where (a) a statutory authority empowered under a statute to do any
act (b) which would prejudicially affect the subject (c) although
there is no lis or two contending parties and the contest is between
the authority and the subject and (d) the statutory authority is
required to act judicially under the statute, the decision of the said
authority is quasi-judicial.
Applying the aforesaid principle, we are of the view that the presence
of a lis or contest between the contending parties before a statutory
authority, in the absence of any other attributes of a quasi-judicial
authority is sufficient to hold that such a statutory authority is
quasi-judicial authority. However, in the absence of a lis before a
statutory authority, the authority would be quasi-judicial authority
if it is required to act judicially.” [paras 24 and 25]
It can be seen from the aforesaid decision that in addition to the
tests already laid down, the absence of a lis between the parties would not
necessarily lead to the conclusion that the power conferred on an
administrative body would not be quasi-judicial – so long as the aforesaid
three tests are followed, the power is quasi-judicial.
15. In Shankarlal Aggarwala vs. Shankarlal Poddar [(1964) 1 SCR 717], the
question posed before this Court was whether an order of a Company Judge
which confirms a sale is administrative or judicial. This Court held -
“It is perhaps not possible to formulate a definition which would
satisfactorily distinguish, in this context, between an administrative
and a judicial order. That the power is entrusted to or wielded by a
person who functions as a Court is not decisive of the question
whether the act or decision is administrative or judicial. But we
conceive that an administrative order would be one which is directed
to the regulation or supervision of matters as distinguished from an
order which decides the rights of parties or confers or refuses to
confer rights to property which are the subject of adjudication before
the Court. One of the tests would be whether a matter which involves
the exercise of discretion is left for the decision of the authority,
particularly if that authority were a Court, and if the discretion has
to be exercised on objective, as distinguished from a purely
subjective, consideration, it would be a judicial decision. It has
sometimes been said that the essence of a judicial proceeding or of a
judicial order is that there should be two parties and a lis between
them which is the subject of adjudication, as a result of that order
or a decision on an issue between a proposal and an opposition. No
doubt, it would not be possible to describe an order passed deciding a
lis before the authority, that it is not a judicial order but it does
not follow that the absence of a lis necessarily negatives the order
being judicial.” [at pages 728- 729]
16. Two other decisions give us an interesting insight into the
difference between administrative and quasi-judicial orders. In
Jayantilal Amrit Lal Shodhan vs. F.N. Rana & Ors. [(1964) 5 SCR 294], this
Court held that the report of a Collector made under Section 5A of the Land
Acquisition Act is an administrative decision despite the fact that the
Collector has to give the objector an opportunity of being heard. This was
held because the Collector is not required to arrive at any decision on the
lis presented to him. He has to submit the case for the decision of the
appropriate Government together with a report containing recommendations on
objections. It is thus clear that the Collector’s report would not
determine any question that affects rights even though there may be a duty
to act judicially in the sense that the Collector has to hear objectors
before him before making his report. Similar is the case in Govindbhai
Gordhanbhai Patel & Ors. vs. Gulam Abbas Mulla Allibhai & Ors.[(1977) 2
SCR 511]. This judgment decided that the function of a Collector under
Section 63(1) proviso of the Bombay Tenancy and Agricultural Lands Act is
administrative and not quasi-judicial. In arriving at this conclusion this
Court referred to various earlier decisions of this Court, which had held
that an Advocate General granting or refusing sanction under Section 92 of
the Civil Procedure Code was an administrative decision, just as granting
or withholding sanction to file a suit under Section 55(2) of the Muslim
Wakfs Act, 1954, is also an administrative decision. An order made in a
reference under Section 10 of the Industrial Disputes Act is similarly an
administrative order. In each of these three cases no lis is decided on
merits affecting the rights of the subject, and this is the reason why
these decisions have been held to be administrative and not quasi-judicial
in nature. One other judgment may be referred to. In N. Misra vs. Dr.
H.K. Paintal [(1990) 2 SCR 84] this Court held following a passage in
Wade’s Administrative Law that a judicial decision is made according to
law, whereas an administrative decision is made according to administrative
policy. A quasi-judicial function lying somewhere in between is an
administrative function which the law requires to be exercised in some
respects as if it were judicial. A quasi-judicial decision is, therefore,
a decision which is subject to a certain measure of judicial procedure.
17. We now come to two judgments of this Court under Acts which deal with
expert bodies like SEBI. In PTC India Ltd. vs. Central Electricity
Regulatory Commission [(2010) 4 SCC 603], this Court had to construe
various sections of the Electricity Act, 2003, and ultimately came to the
conclusion that the Appellate Tribunal for Electricity has no jurisdiction
to decide the validity of Regulations framed under the Central Electricity
Regulatory Commission under Section 178 of the Electricity Act, 2003. The
validity of the Regulations may, however, be challenged by seeking judicial
review under Article 226 of the Constitution of India.
18. In so stating, a summary of findings is given in paragraph 92 of the
said judgment. Sub-paras (iii), (iv), and (v) are important from our point
of view, and it is stated as follows :
“(iii) A regulation under Section 178 is made under the authority of
delegated legislation and consequently its validity can be tested only
in judicial review proceedings before the courts and not by way of
appeal before the Appellate Tribunal for Electricity under Section 111
of the said Act.
(iv) Section 121 of the 2003 Act does not confer power of judicial
review on the Appellate Tribunal. The words “orders”, “instructions”
or “directions” in Section 121 do not confer power of judicial review
in the Appellate Tribunal for Electricity. In this judgment, we do not
wish to analyse the English authorities as we find from those
authorities that in certain cases in England the power of judicial
review is expressly conferred on the tribunals constituted under the
Act. In the present 2003 Act, the power of judicial review of the
validity of the regulations made under Section 178 is not conferred on
the Appellate Tribunal for Electricity.
(v) If a dispute arises in adjudication on interpretation of a
regulation made under Section 178, an appeal would certainly lie
before the Appellate Tribunal under Section 111, however, no appeal to
the Appellate Tribunal shall lie on the validity of a regulation made
under Section 178.” [para 92]
19. This judgment was followed in Bharat Sanchar Nigam Ltd. vs. Telecom
Regulatory Authority of India & Ors. [(2014) 3 SCC 222]. The Telecom
Authority of India Act, 1997 had been amended in the year 2000 to take away
from the expert body under the Act, viz. TRAI, all quasi-judicial
functions. Post amendment, the question posed before this Court was
whether TDSAT, viz. the Appellate Tribunal had in exercise of powers under
Section 14(b) of the TRAI Act, the jurisdiction to entertain a challenge to
regulations framed by TRAI under Section 36 of the TRAI Act. This Court
referred in detail to the PTC India judgment (supra) and ultimately held
that TDSAT does not have such jurisdiction, regulations being framed by
TRAI under Section 36 of the TRAI Act being legislative in nature.
20. A judgment of this Court dealing with the very Act we are dealing
with is reported as Clariant International Ltd. & Anr. vs. Securities &
Exchange Board of India [(2004) 8 SCC 524]. In our view certain
observations made in this judgment almost conclude the matters raised in
this appeal. While discussing the effect of the Board being an expert
body, this Court in paragraph 71 stated -
“The Board is indisputably an expert body. But when it exercises its
quasi-judicial functions, its decisions are subject to appeal. The
Appellate Tribunal is also an expert Tribunal.”
In paragraph 77 this Court further went on to state -
“The Board exercises its legislative power by making regulations,
executive power by administering the regulations framed by it and
taking action against any entity violating these regulations and
judicial power by adjudicating disputes in the implementation thereof.
The only check upon exercise of such wide-ranging powers is that it
must comply with the Constitution and the Act. In that view of the
matter, where an expert Tribunal has been constituted, the scrutiny at
its end must be held to be of wide import. The Tribunal, another
expert body, must, thus, be allowed to exercise its own jurisdiction
conferred on it by the statute without any limitation.”
21. We have now to determine on a conspectus of the authorities as to
whether Section 15T refers only to quasi-judicial orders, quite apart from
the construction placed upon the Section earlier in this judgment. SEBI is
an expert body created by the Act which, as has been stated earlier, has
administrative, legislative and quasi-judicial functions. Some of the
Sections which deal with the Board’s quasi-judicial functions are set out
hereinbelow:-
“11. Functions of Board.
(4) Without prejudice to the provisions contained in sub-sections (1),
(2), (2A) and (3) and section 11B, the Board may, by an order, for
reasons to be recorded in writing, in the interests of investors or
securities market, take any of the following measures, either pending
investigation or inquiry or on completion of such investigation or
inquiry, namely:—
(a) suspend the trading of any security in a recognised stock
exchange;
(b) restrain persons from accessing the securities market and prohibit
any person associated with securities market to buy, sell or deal in
securities;
(c) suspend any office-bearer of any stock exchange or self-regulatory
organisation from holding such position;
(d) impound and retain the proceeds or securities in respect of any
transaction which is under investigation;
(e) attach, after passing of an order on an application made for
approval by the Judicial Magistrate of the first class having
jurisdiction, for a period not exceeding one month, one or more bank
account or accounts of any intermediary or any person associated with
the securities market in any manner involved in violation of any of
the provisions of this Act, or the rules or the regulations made
thereunder :
Provided that only the bank account or accounts or any transaction
entered therein, so far as it relates to the proceeds actually
involved in violation of any of the provisions of this Act, or the
rules or the regulations made thereunder shall be allowed to be
attached;
(f) direct any intermediary or any person associated with the
securities market in any manner not to dispose of or alienate an asset
forming part of any transaction which is under investigation :
Provided that the Board may, without prejudice to the provisions
contained in sub-section (2) or sub-section (2A), take any of the
measures specified in clause (d) or clause (e) or clause (f), in
respect of any listed public company or a public company (not being
intermediaries referred to in Section 12) which intends to get its
securities listed on any recognised stock exchange where the Board has
reasonable grounds to believe that such company has been indulging in
insider trading or fraudulent and unfair trade practices relating to
securities market :
Provided further that the Board shall, either before or after passing
such orders, give an opportunity of hearing to such intermediaries or
persons concerned.
11B. Power to issue directions. Save as otherwise provided in section
11, if after making or causing to be made an enquiry, the Board is
satisfied that it is necessary,—
(i) in the interest of investors, or orderly development of securities
market; or
(ii) to prevent the affairs of any intermediary or other persons
referred to in section 12 being conducted in a manner detrimental to
the interest of investors or securities market; or
(iii) to secure the proper management of any such intermediary or
person, it may issue such directions,—
(a) to any person or class of persons referred to in section 12, or
associated with the securities market; or
(b) to any company in respect of matters specified in section 11A, as
may be appropriate in the interests of investors in securities and the
securities market.
Explanation.—For the removal of doubts, it is hereby declared that the
power to issue directions under this section shall include and always
be deemed to have been included the power to direct any person, who
made profit or averted loss by indulging in any transaction or
activity in contravention of the provisions of this Act or regulations
made thereunder, to disgorge an amount equivalent to the wrongful gain
made or loss averted by such contravention.
11D. Cease and desist proceedings. If the Board finds, after causing
an inquiry to be made, that any person has violated, or is likely to
violate, any provisions of this Act, or any rules or regulations made
thereunder, it may pass an order requiring such person to cease and
desist from committing or causing such violation: Provided that the
Board shall not pass such order in respect of any listed public
company or a public company (other than the intermediaries specified
under section 12) which intends to get its securities listed on any
recognised stock exchange unless the Board has reasonable grounds to
believe that such company has indulged in insider trading or market
manipulation.
12. Registration of stock brokers, sub-brokers, share transfer agents,
etc.
(3) The Board may, by order, suspend or cancel a certificate of
registration in such manner as may be determined by regulations:
Provided that no order under this sub-section shall be made unless the
person concerned has been given a reasonable opportunity of being
heard.
15-I. Power to adjudicate. (1) For the purpose of adjudging under
sections 15A, 15B, 15C, 15D, 15E, 15F, 15G 87[,15H, 15HA and 15HB, the
Board shall appoint any officer not below the rank of a Division Chief
to be an adjudicating officer for holding an inquiry in the prescribed
manner after giving any person concerned a reasonable opportunity of
being heard for the purpose of imposing any penalty.
(2) While holding an inquiry the adjudicating officer shall have power
to summon and enforce the attendance of any person acquainted with the
facts and circumstances of the case to give evidence or to produce any
document which in the opinion of the adjudicating officer, may be
useful for or relevant to the subject-matter of the inquiry and if, on
such inquiry, he is satisfied that the person has failed to comply
with the provisions of any of the sections specified in subsection
(1), he may impose such penalty as he thinks fit in accordance with
the provisions of any of those sections.
(3) The Board may call for and examine the record of any proceedings
under this section and if it considers that the order passed by the
adjudicating officer is erroneous to the extent it is not in the
interests of the securities market, it may, after making or causing to
be made such inquiry as it deems necessary, pass an order enhancing
the quantum of penalty, if the circumstances of the case so justify:
Provided that no such order shall be passed unless the person
concerned has been given an opportunity of being heard in the matter:
Provided further that nothing contained in this sub-section shall be
applicable after an expiry of a period of three months from the date
of the order passed by the adjudicating officer or disposal of the
appeal under section 15T, whichever is earlier.”
22. Administrative functions of the Board are broadly referable to
Section 11(1) of the Act, which states as follows :
“11. Functions of Board. (1) Subject to the provisions of this Act, it
shall be the duty of the Board to protect the interests of investors
in securities and to promote the development of, and to regulate the
securities market, by such measures as it thinks fit.”
23. Legislative functions, namely that of making of Regulations is
referable to Section 30 of the Act which reads as follows :
“30. Power to make regulations. (1) The Board may, by notification,
make regulations consistent with this Act and the rules made
thereunder to carry out the purposes of this Act.
(2) In particular, and without prejudice to the generality of the
foregoing power, such regulations may provide for all or any of the
following matters, namely :—
(a) the times and places of meetings of the Board and the procedure to
be followed at such meetings under sub-section (1) of section 7
including quorum necessary for the transaction of business;
(b) the terms and other conditions of service of officers and
employees of the Board under sub-section (2) of section 9;
(c) the matters relating to issue of capital, transfer of securities
and other matters incidental thereto and the manner in which such
matters shall be disclosed by the companies under section 11A;
(ca) the utilisation of the amount credited under sub-section (5) of
section 11;
(cb) the fulfilment of other conditions relating to collective
investment scheme under subsection (2A) of section 11AA;
(d) the conditions subject to which certificate of registration is to
be issued, the amount of fee to be paid for certificate of
registration and the manner of suspension or cancellation of
certificate of registration under section 12;
(da) the terms determined by the Board for settlement of proceedings
under sub-section (2) and the procedure for conducting of settlement
proceedings under sub-section (3) of section 15JB;
(db) any other matter which is required to be, or may be, specified by
regulations or in respect of which provision is to be made by
regulations.”
24. It may be stated that both Rules made under Section 29 as well as
Regulations made under Section 30 have to be placed before Parliament under
Section 31 of the Act. It is clear on a conspectus of the authorities that
it is orders referable to Sections 11(4), 11(b), 11(d), 12(3) and 15-I of
the Act, being quasi-judicial orders, and quasi judicial orders made under
the Rules and Regulations that are the subject matter of appeal under
Section 15T. Administrative orders such as circulars issued under the
present case referable to Section 11(1) of the Act are obviously outside
the appellate jurisdiction of the Tribunal for the reasons given by us
above. Civil Appeal No.186 of 2007 is, therefore, allowed and the
preliminary objection taken before the Securities Appellate Tribunal is
sustained. The judgment of the Securities Appellate Tribunal is,
accordingly, set aside.
25. In this view of the matter, Civil Appeal No.5173 of 2006 being a
challenge to the merits of the impugned circular, has necessarily to be
dismissed. We make it clear that liberty is granted to take appropriate
steps in judicial review proceedings to challenge the aforesaid circular in
accordance with law. Civil Appeal No.5173 of 2006 is disposed of
accordingly.
............................................... J.
(PINAKI CHANDRA GHOSE)
…............................................. J.
(R. F. NARIMAN)
New Delhi;
March 7, 2017.
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