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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

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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 9 th 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

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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

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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

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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

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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

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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.   

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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 respect- ive  rights  of  the  contesting  parties  who  are  opposed  to each other, there is a lis and prima facie, and in the ab- sence of anything in the statute to the contrary it is the duty of the authority to act judicially and the decision of the au- thority 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 author- ity is required by the statute to act judicially.”

13. This statement of the law has been followed in Shivji Nathubhai

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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

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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 stat- utory 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

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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

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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

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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 :

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“(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

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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 ex- ercises 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

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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

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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,—  

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(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

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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

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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)

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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

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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.