'Securities Appellate Tribunal has no powers to pass judgements'

Securities Appellate Tribunal (SAT) — a quasi-judicial body — which hears pleas of entities aggrieved by market regulator Securities and Exchange Board of India ( Sebi )’s orders, is grappling with a new question Can it pass orders in the absence of a presiding officer?The issue was recently raised by senior lawyer Janak Dwarkadas , who on behalf of his client, questioned the tribunal’s authority to hear and decide the case without a presiding officer. Appeals that reach SAT are heard by the presiding officer and two members.The post of the presiding officer, who has to be either a sitting or retired judge of the Supreme Court or a High Court, has been lying vacant since November 2011 following NK Sodhi's retirement.In the absence of a presiding officer, the government, in an order on December 5, directed PK Malhotra — one of the two members — to preside over the sittings of the tribunal.Dwarakadas raised the issue while appearing for IP Holdings Asia, a subsidiary of the US-based International Paper Company, last week.The case is an appeal against a Sebi order directing IP Holdings to include the non-compete fees, which it paid to the promoters of and hra Pradesh Paper Mills for acquiring the company, to the offer price.Dwarakadas informed the two SAT members—Malhotra and SSN Moorthy — that a tribunal without a presiding officer did not have the jurisdiction to hear and decide the case.Dwarakadas declined to comment on the story as the matter is sub-judice. Lawyers said a tribunal without a presiding officer would be an ‘unconstitutional body’.“It is doubtful whether a government order can confer jurisdiction in light of statutory powers which require a quorum of all members,” said a former Sebi official. Another senior lawyer said, “Temporary absence cannot be given the same meaning as vacancy. If SAT being a specialised body has to function as an alternative to a court, it needs to have a judicial member.”Malhotra held senior positions in the government before joining SAT and his last assignment was as additional secretary, ministry of law and justice.“Retirement of Mr NK Sodhi statutorily is not a temporary absence, as the central government has been treating it to be but is the creation of a vacancy,” said Amit Agrawal, a Supreme Court lawyer.“Ideally, the central government should have been vigilant and started the process of appointment much in advance. The Standing Committee on Finance in its 10th Report for the 15th Lok Sabha had also commented adversely on the delay in the appointment process for SAT.”This is perhaps the first time that SAT in its 14-year history is in a spot as the two-member bench will now have to figure out whether the tribunal can exercise power and prove its position to the appellant.The matter on jurisdiction will be heard on February 14. The Bench will decide on the composition of SAT and whether it can function in the absence of a presiding officer and whether the two officers have the power or jurisdiction.