SAT has imposed costs in nearly half a dozen cases on SEBI - usually against the adjudicating officer or whole time member's quasi judicial order. Ironically, the costs are imposed in cases where SAT's poor understanding of law and finance is betrayed e.g. the Mathew Easow case or where the facts are gross and the persons involved are routine violators of securities laws e.g. Top Telemedia.
Be that as it may, the key legal question is whether a statutory tribunal has powers to impose costs on another statutorily created body (or its officers acting in good faith) even though no such powers are given. The settled position is that a tribunal may use incidental powers while using their main powers e.g. stay an action in the interim - even though no power to stay has been granted. To me it seems like a clear excess of authority, particularly where the orders are bona fide. Even assuming such powers did implicitly exist in the tribunal, this appears a perverse exercise of the powers - by analogy High Courts and the Supreme Court would also begin to impost costs on the benches of the lower court they disagree with so that reputational compensation may make the party aggrieved whole.
This problem is exhibited in an order where the tribunal itself overruled its previous order on such costs and admitted that two views were possible in the interpretation and therefore the view taken by the adjudicating officer was a fair and possible view.
All the cases where the tribunal itself has not itself overruled itself in review, have been stayed by the Supreme Court - which will eventually take a final view on the subject both from a power perspective and its exercise in specific cases.
4 comments:
Sir, I feel that another unanswered issue involved here is that can (or rather “Should”) Supreme Court impose a cost on Tribunals/High Courts when Supreme Court differ with the judgement of High Courts/Tribunals).
Isn’t it exceeding jurisdiction of SAT by imposing cost on a quasi judicial authority (I believe, Adjudicating Office is a quasi-judicial authority under SEBI Act. So is Chairman/WTM’s office when it passes quasi-judicial orders under section 11). In absence of express provisions to SAT’s such power, whether SAT has implicit power to impost cost is itself a bone of contention. Assuming that SAT can impose cost on another quasi-judicial authority, generally such imposition of cost is justifiable only when there is proved mala fide by the authority whose decision is under question.
Across the globe, under administrative law jurisprudence, Financial Regulators are created by the legislature and are placed in the executive branch, combining the three functions of executive, legislature and judiciary in that particular agency to tackle a problem and get the job done most efficiently. If argument of bias/ mala fide is accepted against them while carrying on their statutory obligations, then entire edifice of administrative law shall fall because administrative adjudication is that branch of law which has been carved out as an exception to the strict applicability of doctrine of “separation of powers”.
Sumit
SEBI makes regulations and also interprets it - so strictly speaking the analogy to SAT imposing a fine on SEBI to HC imposing a fine on the lower courts is not correct. SEBI has been vested with various potentially conflicting powers and in light of this, it is only fair that such an entity is also accountable, however bonafide their intention is
To provide accountability only, Law provides for appeals against SEBI's order before SAT. Imposing a fine on quasi-judicial body or remarks on officials may not be 'right means' to keep accountability.
In many of the cases, SAT has virtually established abuse of power or monumental arrogance/ incompetence (take your pick) by SEBI officials.
Are we saying that a body that regulates and interprets laws and still cannot stop any scam/manipulation/market mischief should get away with it all by some convoluted logic?
In many of the cases, the costs imposed on SEBI were well deserved. In some cases, SAT clearly didn't understand isuses (but what do you expect when the government makes no attempt to choose the right people).
Only if SAT imposes cost on a rich regulator like SEBI, which is collecting vast amounts of fees from intermediaries, will there be some check on how it conducts itself.
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