Bombay High Court
Sebi Employees Association ... vs The Ssecurities And Exchange Board Of ... on 5 January, 2017
Author: S. C. Dharmadhikari
Bench: S.C. Dharmadhikari, B.P.Colabawalla
906.wp.759.16.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 759 OF 2016
SEBI Employees Association (Registered)
represented by its General Secretary,Mumbai
and Others ..Petitioners
Vs.
The Securities and Exchange Board of India ..Respondent
Mr. Shrihari Aney, Senior Counsel a/w Mr. L. S. Shetty, Mr.Abhay
Anturkar, Mr. M. M. Nair i/b M/s L. S. Shetty and Associates, for
the Petitioners.
Mr. Rafique Dada, Senior Counsel a/w Dr. Poornima Advani,
Mr. Omprakash Jha, Mr. Pulkit Sukhramani i/b M/s the Law Point,
for the Respondent.
CORAM :- S.C. DHARMADHIKARI &
B.P.COLABAWALLA , JJ.
DATE :- JANUARY 5, 2017.
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906.wp.759.16.doc
ORAL JUDGMENT (Per. S. C. Dharmadhikari, J.)
Rule. Respondent waives service. By consent, rule made returnable forthwith.
2 By this Writ Petition under Article 226 of the Constitution of India, the Petitioners seek a writ of mandamus or any other appropriate writ, order or direction in the nature thereof directing the Securities and Exchange Board of India ("SEBI" for short), not to fill up 50% of the posts of Executive Director, henceforth by direct recruitment or deputation and/or on contract basis unless there is no eligible and suitable officer available internally in SEBI. The command sought is that the mode of appointment indicated above shall not be resorted to unless there is exigency of work.
3 By prayer clause (b) and the amended prayers, what is sought is that existing and future vacancies be directed to be filled in by promoting the eligible and suitable departmental Grade-F officers of SEBI. Then, a blanket prayer to call for all the records in relation to the appointment to the posts of Executive Directors Aswale 2/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc and Chief General Managers in the SEBI and finally to quash and set aside an advertisement issued by the SEBI in the newspaper of 5th November, 2016 inviting applications for making appointments to the two posts of Executive Directors on deputation / contract basis.
4 The Petitioners had moved this Petition before a Division Bench of this Court and later on sought to amend it. A Chamber Summons (L) No. 384 of 2016 was moved. After hearing both sides on December 2, 2016, we granted leave to amend and by reserving all contentions on the merits of the amended plea. Hence, we have considered the Writ Petition as amended. 5 The Petitioners before us include the first Petitioner stated to be a registered and recognized association of the employees of SEBI. The Respondent is the SEBI established by the Central Government under Section 3 of the SEBI Act, 1992. That discharges the functions under the said Act. 6 For the present Petition, the parties proceed on the footing that a Writ Petition under Article 226 of the Constitution of Aswale 3/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc India would lie against SEBI for seeking the above reliefs. Hence, we do not decide any issue with regard to the maintainability of the Writ Petition against SEBI on the footing that it is other authority under Article 12 of the Constitution of India or that in service matters, this jurisdiction can be invoked by the Petitioners as they have no remedies available to them which are equally efficacious.
7 Petitioner No.1 seeks to represent Petitioner Nos.2 to 12, who are their members and presently working on the post of Chief General Manager, eligible for being considered to the post of Executive Directors and as that claim has not been considered and redressed, the writ jurisdiction is being invoked. 8 Their argument has to be appreciated in the light of the following facts:-
The SEBI was established to protect the interests of the investors in securities and to promote the development and to regulate the securities market and for matters connected therewith or incidental thereto. The SEBI is the only regulator for Aswale 4/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc securities market. It has its head office at Mumbai. It has over 750 officers and members of the staff working across all its offices in India.
9 After inviting our attention to the SEBI Act and particularly Section 4 thereof, so also Section-9, it is stated that the hierarchy in the SEBI is in descending order. The lowest grade is the Junior Secretarial Assistant and others and where-after Secretarial and other staff are placed in Grade-C to Grade-A and thereafter the progression is indicated in paragraph 6 of the Writ Petition. It is claimed that the post of Executive Director is the highest post up to which the SEBI officer may reach by promotion. All staff members up to the officers in the grade of Executive Director are appointed by the Respondent in accordance with the SEBI (Employees' Service) Regulations, 2001. The Petitioners rely upon Regulation-4, Regulation-5 and Regulations - 6 to 13 and 14 to 17 to submit that as far as the controversy in the present Petition is concerned, it would have to be decided on the principle that Regulation-6 (4) and 7 (3) of the Regulations states that the post in Grade-D and above can be filled in by deputation / contract or direct recruitment only in special circumstances, namely, the Aswale 5/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc suitable internal candidates are not available and / or exigencies of the work require. Then, there is a reference to the Schedule appended to these Regulations which refers to the mode of recruitment and proportion of posts to be filled up through different modes under the provisions of sub-regulation-4 of Regulation-6. Inviting our attention to paragraph 12, it is submitted that the Schedule mandates that 50% of the total posts to be filled up by promotion from the internal candidates of SEBI and remaining 50% should be filled up by deputation / contract basis and/or direct recruitment subject to the condition that internal candidates are not available. However, this Schedule is not at all applicable to Regulation-7(3) which deals with deputation / contract basis. The Schedule refers to Regulation 6 (4) which deals only with direct recruitment. It is argued that from the past several years, SEBI has filled up to 50% of posts in the grade of Executive Director routinely on deputation / contract basis in the Schedule but without adhering to the mandate thereof. That Mandate is spelled out in Regulation 7(3). Thus, outsiders can be appointed on deputation only in special circumstances. The SEBI assumes that there are no suitable and eligible internal candidates. Therefore, unmindful of this mandate, it has resorted Aswale 6/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc to this mode of appointment of Executive Directors. That defeats the legitimate right of an eligible and suitable officer of SEBI for being considered for appointment to promotional posts. That mars their promotional prospects. This is a serious violation and infraction of the mandate of equality enshrined in Articles 14 and 16 (1) of the Constitution of India. Even if one assumes that work of the Respondent is highly skilled and requires specialization, it is not as if having completed 27 years of its existence, the SEBI does not have sufficient bench strength. It has its own set of officers and they are also trained after putting in a prolonged service. It is in these circumstances that the SEBI may have taken trained officers from Income Tax, Police Department and Ministry of Finance, still, it has failed to adhere to the Regulations. The specific allegations and made from paragraph 12 up to paragraph 21 need not be referred to in great details for the gist thereof has been set out by us. The Petitioners refer to number of representations made raising the essential grievance and copies of these representations are Annexed as Annexures-B to F. Then it is contended that even when officers and persons are appointed on deputation, the process which is being followed is not in line with the policy laid down in the SEBI Regulations. The appointments Aswale 7/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc are not made in a transparent manner. The recent appointments by deputation, after merger of the forward market condition with SEBI, are not in conformity with the conditions stipulated in the Government of India Notification and also the SEBI Act and the Rules. The paragraphs 24 an 25 elaborate as to how vacancies have been filled in and by affecting adversely the chances of promotion and that is how the present Petition has been filed. 10 Paragraphs 26-A onwards have been inserted after leave to amend was obtained and in that one finds a reference to the advertisement published in the Daily Times of India and Economic Times inviting applications from Indian citizens for two posts of Executive Directors on contract / deputation basis. The challenge is raised to this advertisement on the ground that it violates the SEBI Regulations.
11 It is in the above facts and circumstances that the reliefs are sought.
12 After the Writ Petition was served on the SEBI, an affidavit in reply has been filed. In that affidavit in reply, it has Aswale 8/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc been stated that the Petition is filed on a erroneous basis and on a flawed understanding of the applicability of the provisions of law. The provisions are being misread and misinterpreted. If the Petitioners are aggrieved by an advertisement and seeking to appoint the Executive Directors, then, what that argument and challenging the same fails to notice is that by sub-section (1) of Section 9, the Board has power to appoint the Executive Directors and other officers of its choice. The Mandate of sub-section (2) makes it clear that terms and other conditions of service of officers and employees of the board appointed under sub-section-1 shall be as may be determined by the Regulations. Thus, the power to appoint under the Act is different from the power to regulate the terms and conditions by making the Regulations of 2001. Hence, notwithstanding anything contained in these Regulations, the Board's right to appoint the officers of its choice is unrestricted. Therefore, the reliance on these Regulations is misplaced. Then, the attention is invited to Regulation-6 of the Regulations to urge that Regulation 6(1) classifies an Executive Director as a whole time employee who is an officer of the Respondent along with other full time employees of Grades A to F. Thus, the Executive Director is a post under the Board but not a Aswale 9/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc Grade. Regulation 6 (4) (a) is relied upon together with other clauses of Regulation (6) (4) to submit that the recruitment when made from open market, there is no prohibition in the Regulation from considering an eligible candidate. This includes an eligible candidate employed with SEBI. He can apply and can be selected as an Executive Director on contractual basis. Once the Regulation provides an added advantage to an eligible SEBI employee and who can seek a promotional post not by a process strictly outlined in the Regulation but on contract basis, then, there is no prejudice caused at all to the Petitioners or like candidates. It is submitted in paragraph 5 of this affidavit that at present there are eight positions of Executive Directors, four positions of Executive Directors have been filled in by promoting the officers from highest grade of officers, namely, Grade-F. Out of the remaining four positions of Executive Directors two positions are currently filled-in by the Executive Directors who have been appointed on contractual basis for three years. One post is currently filled-in by one J. Ranganayakulu on contract basis for three years. The other post has been filled up by appointing Mr. S. K. Mohanty on deputation for two years. Thus, the remaining two positions of Executive Directors and currently vacant are required Aswale 10/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc to be filled in public interest. When an advertisement was issued and the last date for application was stipulated as 25 th November, 2016, but what the record reveals according to the deponent of this affidavit, is that some of the Petitioners, namely Petitioner Nos.2, 5 and 8 have submitted their applications for being considered for appointment pursuant to this advertisement. Once the applications are received and short listing is in progress, then, all the more there is no substance in the grievance of the Petitioners. Therefore, denying each and every allegation and para-wise it is submitted that the Petition be dismissed. 13 What we have in the file is also a Notice of Motion and a reply thereto. But it is not necessary to refer to the same. It is on the above pleadings that we have heard the submissions and in great detail.
14 Mr. Aney, learned Senior Counsel appearing on behalf of the Petitioners invited our attention to the allegations in the Writ Petition to submit that the Petitioners have based their case on the pleadings. The pleadings would denote as to how the whole system of appointment and promotion operates. Our attention has Aswale 11/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc been invited to some of the definitions. Mr. Aney would rely upon the definition of the term 'Board' appearing in Section- 2 (1) (a), 'prescribed' as appearing in Section- 2 (1) (g) and 'regulations' appearing in Section 2 (1) (h). Mr. Aney would submit that Chapter-II provides for 'establishment of the SEBI'. Then, 'Management of SEBI' is set out by Section 4 and it consists of the members whose designation is set out in sub-section-1 of Section-
4. By Section-5 'term of office and conditions of service of Chairman and members of the Board', is set out. Mr Aney would submit that the term of office and other conditions of service of the Chairman and members referred to in Clause-d of sub-section-1 of Section 4, is as may be prescribed and in this case by the Rules. There the power is absolutely conferred in the Central Government. Thus, upto Section 6, what is clear is that the board consisting of the members, namely, a Chairman, two members from amongst the officials of the Ministry of the Central Government dealing with Finance and administration of the Companies Act, 1956, one member from amongst the officials of the Reserve Bank and five other members of whom at-least three shall be the whole time members to be appointed by the Central Government are to be appointed by the Central Government. Aswale 12/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc There is also the prescription of their term of office and conditions of service. Sections 7, 7A and 8 need not be referred but what is relied upon by Mr. Aney is, Section 9. Mr. Aney would submit that the Board may appoint such other officers and employees as it considers necessary for the efficient discharge of its functions under this Act. The term and other conditions of service of officers and employees of the Board appointed under sub-section (1), shall be such as may be determined by Regulations. Here, Mr. Aney would submit that the Regulations come into play. He submits that the power to make Regulations is conferred by Section 30 and that is to be exercised by issuance of notification. Thus, the Regulations can be made by Notification and they ought to be consistent with the Act and Rules made thereunder. The Regulation ought to be made for carrying out the purpose of the Act. In particular and without prejudice to the generalities of this power, the Regulations may provide for the terms and other conditions of service of officers and employees of the Board under sub-section (2) of Section 9.
15 Mr. Aney would, therefore, rely upon the Regulations in that regard. He has by referring to the pleadings and Aswale 13/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc particularly paragraph 12 and the amended paras submitted that the Regulations, copy of which is to be found at page 53 of the paper book, apply to every whole time employee appointed by the Board under sub-section-1 of Section 9 of the Act and to every whole-time employee transferred to the Board under Clause (d) of sub-section-1 of Section 10 of the Act. It is submitted that by the proviso to Regulation 2 (1), it is indicated that the Regulations shall not apply, except as otherwise provided in these Regulations or to such extent as may be specifically or generally decided by the Board, to persons employed temporarily or on contract. After inviting our attention to the definitions appearing in these Regulations, it is submitted that the power to implement the Regulations vests in the Chairman. He is empowered to issue administrative instructions as may be necessary to give effect and carry out purpose of these Regulations or otherwise to secure effective control of the employees and decision of the Chairman is binding on the employees. There is a power but that is in the Board to relax or waive the strict application of the provisions of these Regulations. Mr. Aney would rely upon Chapter-II of these Regulations and particularly Regulation-6. He would submit that the whole time employees of the Board shall be classified as Aswale 14/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc officers (Grades -A, B, C, D, E, F and Executive Director). Thus, the Executive Director is as much an employee of the Board as other officers. It is the Board who has been empowered to specify from time to time the pay and to sanction the posts in general. Though, there may not be a vested right to be promoted but the right guaranteed by Articles 14, 16 (1) is the right to be considered for promotion. Mr. Aney would submit that the Board has only a limited power and in special circumstances where suitable candidate is not available, then, it may resort to the mode of recruitment and permissible in terms of the Regulations. However, that cannot be a general rule. It is in these circumstances, our attention is invited to Regulation (6) (4) (a) and (b) and the Schedule, copy of which is at page 97 of the paper book. Our attention is also invited to the advertisement inserted by SEBI.
16 Thus, the arguments of Mr Aney center around the fact that the 50% of total posts of the Executive Directors are to be filled in by promotion and remaining 50% are to be filled up by deputation / contract and/or by direct recruitment. Once the aforesaid entry in the Schedule is not consistent entirely with the Aswale 15/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc Mandate of the Act, then, this Court should in consonance with the object and purpose of the setting up of the Board, the expertise required for managing its functions, place an interpretation on the Sections of the Act and Regulations, which would sub-serve the above and not defeat it. He would submit that the argument of the Petitioners that the post of the Executive Director is a graded post, is supported by the Act itself. In that regard our attention is invited to the assertions in the Petition and some circulars referred to in the representations of the Petitioners. It is in these circumstances that Mr. Aney would submit the Writ Petition be allowed.
17 On the other hand, Mr. Dada, learned Senior Counsel appearing for the Respondent would consistent with the stand in the affidavit in reply of the Respondent submit that there is a basic fallacy in the arguments of Mr. Aney. His arguments presume that there is embargo or restriction on the power of the Board to appoint the Executive Director. Mr. Dada would submit that just as an Executive Director can be drawn from the cadre or the existing strength of the officers in the SEBI, there is no prohibition in bringing outsider, as is now proclaimed. While Aswale 16/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc bringing the outsider staff either on deputation or contract basis a balance is struck and even the officers of SEBI are given opportunity to apply. That is how some of the Petitioners have applied for the post in question. If the arguments of Mr. Aney are accepted, then, such of these Petitioners who have applied pursuant to the advertisement inserted on 5 th November, 2016, were clearly ineligible and not permitted to apply at all. Once they could not have applied given the argument of the Petitioners, then, the legal basis must fail. If the Petitioners are conceding that even the officers within the SEBI are eligible for being considered to the promotional posts either in the promotional exercise or otherwise, then, the right to be considered for promotion, is not defeated or frustrated but protected. Mr Dada would, therefore, submit that the Writ Petition be dismissed.
18 For appreciating these contentions, we must refer to the Securities and Exchange Board of India Act, 1992 (for short 'Act'). The Act has been enacted by the Parliament with a view to promote orderly and healthy growth of the securities market and for investors protection. SEBI was established for monitoring the activities of stock exchange, mutual funds or merchant bankers Aswale 17/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc etc. Going by the tremendous growth of the capital market and increasing participation of the public with the view to boost investors' confidence, various amendments have been made to the law. Thus, the broad purpose for establishment of a Board to protect the interest of the investors in securities and to promote the development of securities markets and for matters connected therewith have been sub-served or an attempt is made towards the same.
19 The definitions relevant for our purpose are to be found in Section 2 (1) (a) (h) . They reads thus:-
"2.(1) In this Act, unless the context otherwise requires,-
(a) "Board" means the Securities and Exchange Board of India established under section 3;
(h) "regulations" means the regulations made by the Board under this Act."
20 A bare perusal of this definition would reveal that unless the context otherwise required, the Board would have to be taken as Board (SEBI) established under Section 3. The word 'Regulations' would have to be construed as Regulations made by the Board under the Act. In Chapter-II titled "establishment of the SEBI", Sections 3 and 9 are inserted. While it is true that the Aswale 18/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc Board consists of the members appointed by the Central Government in terms of Section 4, what thereafter is material for our purpose is that the general superintendence, direction and management of the affairs of the Board shall vest in a Board of members, which may exercise all powers and do all acts and things which may be exercised or done by the Board. There are various requirements and what is essential to be borne in mind is that persons of ability, integrity and standing who have shown capacity in dealing with problems relating to the securities market or have special knowledge or experience of law, finance economics, accountancy, administration or in any other discipline and which, in the opinion of the Central Government are useful to the Board, ought to find place on the same. Sections 3 to 6, therefore, contemplate the Board as an entity and incorporated in terms of Section 3. What we have to bear in mind is Section 9. The Board, as defined above may appoint such other officers and employees as it considers necessary for efficient discharge of its functions under the Act (see Section 9 (1)). By Section 9(2), the term and other conditions of service of officers and employees of the Board appointed under sub-section-1 shall be such as may be determined by Regulations. Then, we have Chapter-III which Aswale 19/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc deals with 'transfer of assets, liabilities etc of the existing securities and exchange board to the board', and 'powers and functions of the Board'. That aspect is covered by Chapter-IV. Section-11 appearing therein reads as under:-
"POWERS AND FUNCTIONS OF THE BOARD Functions of Board.
11. (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.
(2) Without prejudice to the generality of the foregoing provisions, the measures referred to therein may provide for -
(a) regulating the business in stock exchanges and any other securities markets;
(b) registering and regulating the working of stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and such other intermediaries who may be associated with securities markets in any manner;
13[(ba) registering and regulating the working of the depositories,14 [participants,] custodians of securities, foreign institutional investors, credit rating agencies and such other intermediaries as the Board may, by notification, specify in this behalf;]
(c) registering and regulating the working of 15[venture capital funds and collective investment schemes], Aswale 20/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc including mutual funds;
(d) promoting and regulating self-regulatory organisations;
(e) prohibiting fraudulent and unfair trade practices relating to securities markets;
(f) promoting investors' education and training of intermediaries of securities markets;
(g) prohibiting insider trading in securities;
(h) regulating substantial acquisition of shares and take- over of companies;
(i) calling for information from, undertaking inspection, conducting inquiries and audits of the 16[stock exchanges, mutual funds, other persons associated with the securities market] intermediaries and self- regulatory organisations in the securities market; 17["(ia) calling for information and record from any bank or any other authority or board or corporation established or constituted by or under any Central or State Act which, in the opinion of the Board, shall be relevant to any investigation or inquiry by the Board in respect of any transaction in securities;
18(ib) calling for information from, or furnishing information to, other authorities, whether in India or outside India, having functions similar to those of the Board, in the matters relating to the prevention or detection of violations in respect of securities laws, subject to the provisions of other laws for the time being in force in this regard:
Provided that the Board, for the purpose of furnishing any information to any authority outside India, may enter into an arrangement or agreement or understanding with such authority with the prior approval of the Central Government;] Aswale 21/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc
(j) performing such functions and exercising such powers under the provisions of 19[***]the Securities Contracts (Regulation) Act, 1956(42 of 1956), as may be delegated to it by the Central Government;
(k) levying fees or other charges for carrying out the purposes of this section;
(l) conducting research for the above purposes; 20["(la) calling from or furnishing to any such agencies, as may be specified by the Board, such information as may be considered necessary by it for the efficient discharge of its functions;"]
(m) performing such other functions as may be prescribed.
21["(2A) Without prejudice to the provisions contained in sub-section (2), the Board may take measures to undertake inspection of any book, or register, or other document or record 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."] 22[(3) Notwithstanding anything contained in any other law for the time being in force while exercising the powers under 23[clause (i) or clause (ia) of sub-section (2) or subsection (2A)], the Board shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908),while trying a suit, in respect of the following matters, namely :
(i) the discovery and production of books of account and other documents, at such place and such time as may be specified by the Board;
(ii) summoning and enforcing the attendance of persons and examining them on oath;
(iii) inspection of any books, registers and other documents of any person referred to in section 12, at any place;] 24[(iv) inspection of any book, or register, or other document or record of the company referred to in sub-Aswale 22/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc section (2A);
(v) issuing commissions for the examination of witnesses or documents.] 25[(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 subsection (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 Aswale 23/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc 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.] 26(5) The amount disgorged, pursuant to a direction issued, under section 11B of this Act or Section 12A of the Securities Contracts (Regulation) Act, 1956 or section 19 of the Depositories Act, 1996, as the case may be, shall be credited to the Investor Protection and Education Fund established by the Board and such amount shall be utilized by the Board in accordance with the regulations made under this Act."
24 Inserted by the SEBI (Amendment) Act, 2002 (w.e.f. 29-10-2002).
25 Inserted by the SEBI (Amendment) Act, 2002, (w.e.f. 29-10-2002).
26.Inserted by the Securities Laws (Amendment) Act, 2014 w.r.e.f.18-07-2013."
21 A bare perusal of the various clauses of sub-section 2 of Section 11 would mean that the Board's primary duty is to protect the interest of investors in securities and to promote development of the securities market by such measures as it thinks fit. It can also perform such other functions as may be prescribed. That 'prescribe' is a term traceable to the definitions and would mean 'prescribed by rules'. The Chapters are arranged in such a way so as to facilitate achievement of the object and purpose of the Act. What we have to bear in mind is that by Aswale 24/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc Chapter-IV, V and VI, the matters of administration and management of the Board are set out. The powers of the Board are to be found in Chapter VI-A and VI-B. There is an establishment of appellate tribunal to deal with the matters arising from the orders passed by the Board. The Board can adjudicate and award penalties. Thus, what we find is that members, officers and employees of the Board are public servants and discharging public functions. That is how the Board is empowered to make regulations. That power is distinct from the power to make rules and conferred in the Central Government. The power to make the Regulations is traceable to Section 30 and in so far as it is relevant, it reads thus:-
"Power to make regulation: -
30.(1) The Board may,133[***] 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 Aswale 25/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc 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 sub-section (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 is required to be, or may be, specified by regulations or in respect of which provision is to be made by regulations.] 22 A bare perusal of this section would show that Regulations governing the term and other conditions of service of officers and employees of the Board are traceable to Section 9 (2). Once Section 9 speaks of officers and employees of the Board, then, their term and other conditions of service can be determined by these Regulations. Accordingly, the Regulations have been made. The Regulations are heavily relied upon. The Regulations define the terms and conditions of service of the employees of the Board. The Regulations shall apply to every whole-time employee Aswale 26/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc appointed by the Board under sub-section-1 of Section 9 of the Act and to every whole-time employee transferred to the Board under Clause (d) of sub-section (1) of Section 10 of the Act. Section-10 of the Act though not referred to by parties, is equally relevant and that enables the Board, in terms of its powers, to enter into contracts and to continue the old contracts. The various clauses and to be found in these Regulations are then important. Those are to be found in Regulation-2. Regulation-2 reads as under:-
"Applicability
2. (1) These regulations shall apply to every whole-time employee appointed by the Board under sub-section (1) of section 9 of the Act and to every whole-time employee transferred to the Board under clause (d) of sub-section (1)of section 10 of the Act.
Provided that they shall not apply, except as otherwise provided in these regulations or to such extent as may be specifically or generally decided by the Board, to persons employed temporarily or on contracts.
(2)On and from the date of commencement of these regulations-
(a)The terms and conditions of the service of the existing whole-time employees of the Board shall stand modified in accordance with the provisions of these regulations.
(b)the Securities and Exchange Board of India Service Regulations, 1988 stand repealed. Notwithstanding such repeal, anything done or any action taken under the said Regulations, shall be deemed to have been done or taken under the corresponding provisions of these regulations." 23 Thus, the applicability of these Regulations to every whole-time employee appointed by the Board or transferred to the Aswale 27/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc Board is not in dispute.
24 The proviso to sub-regulation (1) of Regulation (2) states that the Regulations shall not apply, except as otherwise provided in these Regulations themselves or to such extent as may be specifically or generally decided by the Board to persons employed temporarily or on contract. The word "persons" is employed deliberately to distinguish those employed temporarily or on contract basis from the regular staff of the Board. Then, further sub-regulation (2) clarifies that on and from the date of commencement of these Regulations, the terms and conditions of the service of the existing whole-time employees of the Board shall stand modified in accordance therewith. Regulation (3) has several definitions and definition of the term 'Act' and 'Board' is traceable to the Act and the definition of Board is as appearing in the Act itself. The term of "Competent Authority" is defined in Regulation (3) (e) to mean the Chairman in the case of officers, which expression shall also include whole-time member of the Board or Executive Director. It shall be the Chairman who is the Competent Authority and in cases of officers other than the Chairman, the Chairman will have to be delegated the powers. In Aswale 28/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc cases of all other employees, concerned Executive Director is the Competent Authority. Then, what we have is the definition of a term "duty", which includes service as a probationer and which would indicate as to how the Regulations have to be implemented and power to implement the same vests in the Chairman. Chapter-II of these Regulations deal with appointments, probation and termination of service. Therein appears Regulation (6) which reads as under:-
"APPOINTMENTS, PROBATION AND TERMINATION OF SERVICE Classification and appointment of whole-time employees
6. (1) The whole-time employees of the Board shall be classified as follows:
(a) Officers (Grades A, B, C, D, E, F and Executive Director);
(b) Secretarial Staff, Accounts Assistants and Library Assistants (Grades A,B, C);
2[(ba) Junior Secretarial Assistant, Junior Accounts Assistant 3[Junior Library Assistant and Junior engineer]]
(c)4 [***]
(d) Messenger, Cook, Driver, Messenger-cum-Driver, Messenger-cum-General Assistant.
5[(2) The Board shall specify from time to time the pay of each post or group of posts and shall grant approval for sanction of posts at the level of Executive Director while the Chairman shall be the Competent Authority for sanction of posts up to Grade F.] (3) All appointments in any grade or post shall be made by the competent authority at its discretion and no person shall have a right to be appointed to any particular post or grade.
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906.wp.759.16.doc Recruitment (4) 6[(a) Recruitment shall be made at the entry level in Grade A or in Grade B or in such grade as may be specified by the competent authority by such method as the Chairman may determine, including by Campus Selection:
Provided that, in special circumstances, where no suitable candidate is available in the Board's service or the exigencies of work require, recruitment may also be made at a higher grade.]
(b)Mode of recruitment, Educational and other qualifications, age limit, experience and other incidental matters related to the recruitment and promotion in the Board's service shall be as specified in the Schedule.
(c)A competitive examination, including a written test and/or group discussion and interview, shall be conducted by the Competent Authority or by an outside agency engaged by the Board for the purpose of recruitment.
Provided that Competent Authority may relax any or all of these requirements, for reasons to be recorded in writing.
(d) Competent authority shall constitute a selection committee, comprising such number of persons and outside expert as he may determine for interviewing the candidates.
Provided that in the case of appointment to the post of Executive Director, the Selection Committee shall consist of Chairman and two other members of the Board, constituted by the Chairman and such appointment to the post of Executive Director shall be approved by the Board before an offer of appointment is issued to the selected candidate."
2Inserted by SEBI (Employees' Service) (Second amendment) Regulation, 2010, w.e.f. 12-10-2010. Aswale 30/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc 3Substituted for "and Junior Library Assistant" by SEBI (Employees' Service) (Amendment) Regulations, 2012, w.e.f. 2-5-2012.
4Omitted by SEBI (Employees' Service) (Amendment) Regulations 2010, w.r.e.f. 30-1-2008.
5Substituted by the SEBI (Employees' Service) (Amendment) Regulations, 2010, w.r.e.f. 30-1-2008. 6Substituted by SEBI (Employees' Service) (Amendment) Regulations, 2010, w.r.e.f. 17-2-2007. Prior to its substitution, clause (a) read as under:-
"(4)(a) Recruitment shall be made at the entry level in Grade A or in Grade B or such grade as may be specified by the competent authority or in special circumstances where no suitable candidate is available in the Board's service, or the exigencies of work require, at a higher grade by issuing newspaper advertisement.
Provided that the Competent Authority may recruit trainee officers and such trainee officers may be considered for regular appointment on successful completion of the training period and subject to passing a departmental test and interview."
25 A perusal of this Regulation would indicate that by sub-regulation (1) the classification of the whole-time employees of the Board is made. Though it is clear that officers are classified together with their Grades A to F and Executive Director is also classified as a whole-time employee of the Board, what it further states by sub-regulation (2) is that the Board shall specify from time to time the pay of each post or group of posts and shall grant approval for sanction of posts at the level of Executive Director. Therefore, the Board would have to sanction and grant necessary approval for the posts at the level of Executive Director. While the Aswale 31/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc Chairman shall be the Competent Authority for sanctioning of posts up to Grade-F. All appointments in any grade or post shall be made by the competent authority at its discretion and no person shall have a right to be appointed to any particular post or grade. This clarification is in accordance with the general right which can be claimed by any employee whether employed by the Board or otherwise in the matter of promotion. It is too well settled to require any reference to any judicial precedent that the right conferred and guaranteed by Articles 14, 16 (1) is of being considered and not promoted or appointed. What we have under a separate subheading is a matter of recruitment and that is to be found under Regulation-6 (4). This sub-regulation was substituted with retrospective effect from 17th February, 2007. Prior to its substitution, Regulation (6) (4) (a) read as under:-
"(4)(a) Recruitment shall be made at the entry level in Grade A or in Grade B or such grade as may be specified by the competent authority or in special circumstances where no suitable candidate is available in the Board's service, or the exigencies of work require, at a higher grade by issuing newspaper advertisement.
Provided that the Competent Authority may recruit trainee officers and such trainee officers may be considered for regular appointment on successful completion of the training period and subject to passing a departmental test and interview."
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906.wp.759.16.doc 26 After substitution, it reads as under:-
"Recruitment: (4) [(a) Recruitment shall be made at the entry level in Grade A or in Grade B or in such grade as may be specified by the competent authority by such method as the Chairman may determine, including by Campus Selection:
Provided that, in special circumstances, where no suitable candidate is available in the Board's service or the exigencies of work require, recruitment may also be made at a higher grade.]"
Therefore, recruitment can be made at entry level in Grade-A or in Grade-B or in such grade as may be specified by the competent authority by such method as the Chairman may determine, including by Campus Selection and proviso to Regulation (6) (4) (a) states that in special circumstances where no suitable candidate is available in the Board's service or the exigencies of work requires, recruitment may also be made at a higher grade. Thus, the mode of recruitment, Educational and other qualifications, age limit, experience and other incidental matters related to recruitment and promotion in the Board's service shall be as specified in the Schedule. Therefore, recruitment can be made in terms of the substituted Regulations. In the case before us the Schedule that is referred to by the parties Aswale 33/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc would be referred to a little later but what one finds from the further sub-regulations of Regulation (6) is that it is entirely the domain of the Board and when it comes to the appointment to the post of the Executive Director, the Selection Committee consisting of the Chairman and two other members of the Board constituted by the Chairman, will make appointment to the post of Executive Director. That appointment has to be approved by the Board before an offer of appointment is issued to the selected candidate. The temporary / contract employee is a matter governed by Regulation (7), that reads as under:-
"Temporary/Contract employees
7. (1)(a) Notwithstanding anything contained in these Regulations, the competent authority may appoint persons on a temporary basis due to exigencies of work, on suitable terms and conditions, subject to such general or special directions, if any issued by the Board from time to time.
(b) The terms and conditions of service of the temporary employees shall be specified by the competent authority but in no case shall the terms and conditions so specified be more favourable than those laid down in these regulations for an appointment carrying equivalent status or responsibility.
(2) Notwithstanding anything contained in these regulations, Competent authority may appoint persons on contract basis due to exigencies of work on suitable terms and conditions.Aswale 34/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc (3) Competent authority may, due to exigencies of work and/or non-availability of suitable candidates within the Board's service, take on deputation such employees in Grade D and above from Govt. or any other Organisations for a specified period and their terms and conditions of deputation, shall be specified by the competent authority in consultation with the lending organisation. (4) In the case of appointment to the post of Executive Director by deputation or on contract, the appointment shall be approved by the Board before an offer of appointment is issued to the person to be appointed on deputation or on contract."
27 A perusal of this Regulation would mean that by sub- regulation (1), a power is conferred in competent authority notwithstanding anything contained in these Regulations to appoint persons on a temporary basis depending upon the exigencies of work and on suitable terms and conditions. However, this power is to be exercised by the competent authorities subject to general or special directions, if any, issued by the Board. By Clause (b) of sub-regulation (1) of Regulation (7), the competent authority is empowered to specify the terms and conditions of service of the temporary employees. They cannot be more favourable than those laid down in these regulations for an appointment carrying equivalent status or responsibilities. Then comes a power to appoint on a contract basis and that is distinct from a power to make a temporary Aswale 35/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc appointment conferred by sub-regulation-1 and contractual employment equally can be made by resorting to the overriding powers and to be found in sub-regulation (2) of Regulation-7. Then, by sub-regulation (3), competent authority, depending upon exigencies of work and/or non-availability of suitable candidates within the Board's service, take on deputation such employees in Grade-D and above from the Government or any other organizations for a specified period and their terms and conditions of deputation shall be specified by the competent authority in consultation with the lending organization. Therefore, we have noticed that there is a power to make temporary appointment, to make contractual appointment or appointment on contract or to take on deputation an employee in Grade-D and above from Government or any other organizations. Sub-regulation (4) of Regulation-7 deals with appointment to the post of Executive Director by deputation or contract. Therefore, it is not in dispute that appointment to the post of Executive Director by deputation and/or contract can be made and that has to be approved by the Board before an offer of appointment is issued. Equally, the Board is conferred with some other powers. As far as promotions are concerned, they are governed by Regulation (16). Regulation (16) Aswale 36/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc read thus:-
"Promotion
16. (1) All promotions shall be made at the discretion of the Board and notwithstanding his seniority in a grade no employee shall have a right to be promoted to any particular post or grade.
Provided that an employee, who has put in a minimum of 3 years of service in any post or grade, when promotion opportunities arise, shall be eligible for consideration of promotion to a higher post.
Provided further that an employee in any grade in the cadre of secretarial staff, accounts assistants and library assistants who possess requisite qualifications may be considered for switch over to the 10[corresponding grade in the] Officer cadre against such vacancies, which shall be 10% of total vacancies arising in a calendar year, as may be notified by the Competent Authority, subject to such employees qualifying in a departmental test conducted by the Competent Authority or by an outside agency engaged by the Board and interview to be conducted by the Competent Authority for this purpose. (2) All promotions shall be against vacancies in sanctioned posts declared by the competent authority 11[except promotions to officer Grade C 12[***]] and shall be based on--
(a) Seniority, merit and suitability in the cases of Officers and Secretarial Staff, Accounts Assistants 13[, Library Assistants, Junior Secretarial Assistants,Junior Accounts Assistants, Junior Library Assistants and Junior Engineers];
(b) Seniority and merit in the cases of 14[***] Messenger, Cook, Driver, Messenger-cum-
Driver,Messenger-cum-General Assistant. Provided that in assessing the suitability of the employee for promotion, the performance of the employee in the post or grade, from where he is being considered for Aswale 37/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc promotion, shall be considered.
(3) For the purpose of promotions, Chairman shall constitute a Departmental Promotion Committee comprising such number of persons including external expert which may conduct interviews, if so decided, for selection of employees for considering promotion to the next grade or post.
Provided that in the case of promotions to the post of Executive Director, the Committee shall consist of Chairman and two other members of the Board. "
10 Inserted by SEBI (Employees' Service) (Second Amendment) Regulations, 2012, w.r.e.f. 19-11-2012. 11 Inserted by SEBI (Employees' Service) (Amendment) Regulations 2010, w.r.e.f. 30-1-2008. 12 Words "and officer Circle" omitted by SEBI (Employees' Service) (Amendment) Regulations, 2012 w.e.f. 2-5-2012.
13 Substituted for "and Library Assistants" by the SEBI (Employees' Service) (Amendment) Regulations, 2012 w.e.f. 2-5-2012.
14 Words "Receptionist-com-Telephone Operator and"
omitted by SEBI (Employees' Service) (Amendment) Regulations, 2010 w.r.e.f. 30-1-2008."
28 A perusal of sub-regulation-3 would show as to how a departmental promotion committee constituted by the Chairman makes the promotions. That is not disturbed and mode of promotions also is unaffected. Therefore, there is a power to appoint, appoint on probation and therefore the period of probation and termination of service is provided broadly by this Chapter. For the purpose of all this, there is a classification and Aswale 38/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc appointment of whole-time employees, their recruitment either temporarily or on contract basis and matters of their recruitment and appointment including that of promotions. 29 We, now come to the Schedule and that is referred to Clause (b) of sub-regulation (4) of Regulation-6. At the cost of repetition, we must indicate that sub-regulation (4) of Regulation- 6 deals with recruitment and at the entry level or in Grade-B or in such Grade as may be specified by the competent authority by such method which the Chairman may determine including by campus selection. The proviso to this sub-regulation deals with special circumstances and when no suitable candidate is available in the Board's service. If exigencies of work require, the recruitment may also be made at a higher grade. The mode of recruitment, educational and other qualifications, age limit, experience and other incidental matters related to the recruitment and promotion in the Board's service is governed by the Schedule. The Schedule, firstly, deals with post of Executive Director. The mode of recruitment and proportion of posts to be filled up through different mode, is indicated as under:-
Name Mode of Recruitment Age.Qualification and Length of Qualification Composition of of the and Proportion of posts Experience for Direct service for and the selection post to be filled up through recruits Promotion Experience Committee Aswale 39/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc different mode for Deputation Exec a)Promotion Not less than 40 years Promotion Deputation Chairman and utive b)Deputation from and not more than 50 of internal from Govt. two other Direc Govt.RBI, Banks, years. MBA/MMS candidates (All members of the tor Financial Institutions with specialisation in from Grade India/Central Board shall
c) Direct Recruitment Finance/CA/CS/CFA/ F with Civil Service constitute the
d) On contact basis. CWA/LLB/Post minimum of Group A), Selection 50% of the total posts Graduation in 3 years RBI, Banks, Committee.
from internal Economics, Finance service. Financial The candidates and the or any other discipline Institutions, recommendatio remaining 50% to be which in the opinion with not less n of Selection filled up by of the Board is useful, than 20 years Committee deputation/contact from a recognized of experience shall be placed and/or direct University/Institution in dealing before the recruitment. In case of with a minimum of 20 with Board before non-availability in any years of post problems an appointment category i.e.internal qualification relating to letter/deputatio and deputation/open experience in dealing securities n offer is made market the post may be with problems relating market or to the filled from other to securities market or special candidate. In categories. special knowledge/ex case of knowledge/experience perience of deputation from of law, investigation, law,Iinvestit Govt or other finance, Economics, , Finance, organisation, Accountancy, Economics, terms and Administration or any Accountancy, conditions of other discipline Administratio deputation to e considered useful to n or any other finalized in the Board. discipline consultation considered with the useful to the lending Board. organisation.
30 On a perusal of this reproduced portion, we find that the Executive Director can be a promotee. He can also be a deputationist. He can also come by direct recruitment and that direct recruitment is distinct from another mode of recruitment and that is on contract basis. However, 50% of the total posts are to be filled from internal candidates and the remaining 50% to be filled-in by deputation / contract and/or direct recruitment. In case of non-availability in any category, namely, internal and Aswale 40/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc deputation / open market the post may be filled in from other categories. Thus, a person who has experience and special knowledge of law, investigation, finance, economics, accountancy, administration etc and found to be useful to the Board, can be recruited. That is permissible by adopting various modes of recruitment. It is not as if there is no guarantee in as much as the post of Executive Director can be filled in by promotion. 50% of the posts can be filled in by internal candidates and remaining 50% can be filled up by above mode, namely, deputation / direct recruitment / contract basis. We have found from a perusal of all these materials that there is no substance in the contention of Mr. Aney that the Board cannot make appointment in pursuance of the impugned advertisement. We do not find any reason to interfere with the impugned advertisement. There is nothing arbitrary or unreasonable in as much as in the past as well many appointments were made on deputation / contract on the post of Executive Director. If a legal and constitutional right of the Petitioners is put in issue, then, that right is not defeated, if one carefully peruses the above Regulations. If the above provisions of the Act and Regulations are perused, it is evident that there is no challenge to the power to make the Regulations nor the Aswale 41/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc Regulations themselves. What the Petitioners have been projecting and throughout is that they have some sort of a vested right and they alone ought to be considered in promotional matters. What one finds from their representations is that a meeting was held with the concerned officials and in regard to a complaint that SEBI should take into consideration the resources and expertise already available within, in a manner that furthers the career prospects & opportunities of its own employees. Representations Annexures-B, C, D and others falling therein highlight these aspects. What we have found and projected as a serious grievance is the interpretation of the regulation on the filling up of 50% of the posts and as made in this representation but that does not accord with the Regulations. It is not as if there is an embargo or restriction and of the nature placed before us by the Petitioners on the power to recruit an Executive Director. We have not found that the representations and which culminate into the advocates notice have any legal or valid basis. The grievance projected therein is just an interpretation by the Petitioners of the Regulations. The Petitioners have projected that though there are eligible departmental candidates available working in Grade-F posts having completed three years or more service in the said Aswale 42/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:21 :::
906.wp.759.16.doc grades, they have not been considered for being appointed to the post of Executive Director by way of promotion and instead a practice has been followed to invariably bring persons for appointment by other methods, namely, deputation / contract basis. The appointment to the post of Executive Director by way of deputation is permissible only in terms of Regulation 7(3). The Petitioners have not projected the specific grievance of employees who have been over-looked and in preference to the deputationist. If the Petitioners are praying for safeguarding and protecting the just, legitimate right and interest of internal SEBI employees working in Grade-F and below in matters of promotion to the post of Executive Director, then, they ought to have indicated with clear example of individuals who have been adversely and prejudicially affected. The promotional avenues of the SEBI employees to the extent indicated in the Regulations are untouched and undisturbed. The general grievances as projected in the Writ Petition and in the representations / legal notice have been rightly answered by relying on the provisions of the Act and the Regulations.
31 It is, therefore, clear that notwithstanding anything in Aswale 43/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:22 :::
906.wp.759.16.doc the employees Regulations the Board's right to appoint the officers of its choice has not been affected. Even if the Regulations are to be taken as they are, there are sufficient safeguards therein and equally overriding provisions which would enable the Board to carry forward the object and purpose of the Act. The affidavit in reply rightly relies upon the fact that the Schedule specifically states that the recruitment for the position of Executive Director in the grade is to be made by promotion, by deputation, by direct recruitment or on contract basis provided that 50% of the positions are filled up by the internal candidates. Thus, the internal candidates and their interests are not sacrificed or surrendered much less defeated or frustrated. Once the recruitment even from open market enables Petitioner No.1 and its members to apply and they can be considered, then, all the more we do not see any substance in the Petitioners' grievance. Further, paragraph 5 of the affidavit highlights as to how the eight positions have been filled in and/or are being filled in. The four positions of the Executive Directors have been filled in by promoting the officers from highest grade i.e. Grade-F. For the remaining four posts, two are filled in by the Executive Directors who have been appointed on contractual basis for three years, one Aswale 44/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:22 :::
906.wp.759.16.doc by deputation and remaining two are vacant. They are to be filled in by the process of advertisement. In that process as well, the Petitioners have participated. If their understanding was as projected in the Writ Petition or their representations, possibly they would not have been able to apply at all.
32 As a result of the above discussion, we do not find that the Petitioners have any pre-existing legally enforceable right to claim a writ of mandamus and direction in terms of prayer clauses
(a) and (b). The Writ Petition is devoid of merits and it is dismissed. Rule is discharged. In the circumstances, there shall be no order as to costs.
(B. P. COLABAWALLA, J.) (S. C. DHARMADHIKARI, J.) Aswale 45/45 ::: Uploaded on - 23/01/2017 ::: Downloaded on - 27/08/2017 12:07:22 :::