Securities Appellate Tribunal
Mangalore Stock Exchange vs Securities And Exchange Board Of India on 2 November, 2005
Equivalent citations: [2006]67SCL27(SAT)
ORDER
Kumar Rajaratnam, J. (Presiding Officer) ORDERS ON THE MAINTAINABILITY OF THE APPEAL BEFORE THE SECURITIES APPELLATE TRIBUNAL
1. We have heard the learned senior counsel for the appellant, Mr. Umesh Shetty, and Mr. Kumar Desai, the learned senior counsel for the respondent. We also heard Mr. Ashish Bhakta, a member of the Bar, who was requested to assist the Court as amicus curiae.
2. The appellant in this appeal challenges the Gazette of India Extraordinary Notification published by the Securities and Exchange Board of India (hereinafter referred to as 'SEBI') dated 31st of August 2004 issued under section 4(4) of the Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as "SCR Act, 1956") read with Government of India Notification dated 13th of September 1994. By the impugned Notification, the appellant ceased to be a recognized Stock Exchange and consequential orders were passed by SEBI under section 19 read with section 4(4) of SCR Act, 1956 read with section 11(1) of the SEBI Act. The operative portion of the impugned order reads as follows:
"SEBI is mandated to ensure that there are adequate systems, procedures and effective management in an Exchange, which shall protect the interest of investors and develop the securities market. On a cumulative analysis of the facts abovementioned, I am of the opinion that allowing MGSE to continue in its present form may not be in the interest of trade or public interest. Therefore, it is essential that immediate measures are adopted to ensure that the interests of the investors are not further jeopardized. I am of the opinion that the Governing Board is unable to either perform effectively or provide guidance and direction to MGSE and hence, any further renewal of recognition of MGSE does not seem reasonable and justified, as it would only serve the commercial needs of few broker members.
In view of the above facts and circumstances, and in exercise of the powers conferred upon me under Section 19 of the Securities and Exchange Board of India act, 1992, read with Section 4(4) of the Securities Contracts (Regulation) Act. 1956, read with the Government of India Notification number F.No. 1/57/SE/93 dated September 13, 1994, I hereby refuse to grant renewal of recognition to MGSE. This order shall come into force after 3 weeks from the date of the order.
In view of this Order, MGSE shall cease to be a recognized stock exchange and therefore, it is imperative to pass necessary directions in the interest of investors/shareholders of the listed companies in MGSE and in the overall interest of the securities market. I, therefore, in exercise of powers conferred upon me under Section 19 read with section 11(1) of SEBI act pass the following directions:-
1) The money available in the Investor Protection fund and Investor Services Cell of MGSE shall be utilized only for the purpose for which these funds have been created, as per the articles of MGSE. Any pending claims of any investors should not be appropriated for any other purpose or for payment to the members/shareholders of MGSE.
2) MGSE shall set aside sufficient funds in order to provide for settlement of any claims, pertaining to pending arbitration cases, pending non-implemented arbitration award, if any, liabilities/claims of contingent nature, if any, and unresolved investors complaints/grievances lying with the exchange, on the date of this order.
3) The companies which are exclusively listed in the MGSE, may consider seeking listing at other stock exchanges or provide for exit option to the shareholders as per SEBI Delisting Guidelines.
4) Consequent upon de-recognition of MGSE, the members/shareholders of MGSE shall cease to be members of a recognized stock exchange and therefore liable to be de-registered as stock brokers, and hence, their certificate of registration granted by SEBI shall stand automatically cancelled. However, the said members/shareholders of MGSE shall be liable to pay SEBI registration fees as per Schedule III of the said regulations, till the date of this Order.
F.No.SEBI/LE/19048/2004 Sd/-
A.K. BATRA WHOLE TIME MEMBER SECURITIES AND EXCHANGE BOARD OF INDIA"
3. Both sides were heard on the question of maintainability of the appeal pursuant to an order passed by the Supreme Court dated 1st of April 2005. The Supreme Court, in its order, pronounced as follows:
"...We are of the view that once the Tribunal has noted that the appeal had been challenged as not being maintainable, it should dispose of the issue of maintainability first before passing any further order. In that view of the matter, the impugned order dated 20th January, 2005 is stayed until the Tribunal disposes of the issue of maintainability. The Tribunal is requested to dispose of the issue as early as is conveniently possible, preferably within a period of 8 weeks from date.
The appeal is, accordingly, disposed of but without any order as to costs."
4. As per the directions of the Hon'ble Supreme Court, we have now taken up the matter only on the question of maintainability of the appeal before dealing with the merits of the case.
5. It is the contention of SEBI that the impugned order was passed under section 4(4) of SCR Act, 1956 and therefore no appeal is maintainable to the Tribunal, although it would be open to the appellant to approach any other forum or forums to redress its grievance.
6. It is the contention of the appellant that the impugned order is appealable, although passed under Section 4(4) of the SCR Act, 1956 for the reason that the Whole-Time-Member has exercised powers under Section 19 read with section 11(1) of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as "SEBI Act"). It is common ground that any direction given under Section 11(1) of the SEBI Act is appealable only to the Tribunal and nowhere else. It was further submitted by the counsel for the appellant that an appeal will lie under Section 15T of the SEBI Act since it is, in effect, an order by the Board under Section 19 (power of delegation from the Board to any Member of the Board under the provisions of SEBI Act) read with section 11(1) of SEBI Act.
7. The question that arises for consideration is whether an order passed by SEBI under Section 4(4) of the SCR Act, 1956 read with section 19 and 11 of the SEBI Act is appealable under Section 15T of the SEBI Act.
8. At the outset it is necessary to look at the appeal provisions in the SEBI Act, which are set out in section 15T.... Section 15T reads as follows:
"(1) Save as provided in sub-section (2), any person aggrieved,-
(a) by an order of the Board made, on and after the commencement of the Securities Laws (Second Amendment) Act, 1999, under this Act, or the rules or regulations made thereunder; or
(b) by an order made by an adjudicating officer under this Act, may prefer an appeal to a Securities Appellate Tribunal having jurisdiction in the matter.
(2) No appeal shall lie to the Securities Appellate Tribunal from an order made-
(a) by the Board on and after the commencement of the Securities Laws (Second Amendment) Act, 1999;
(b) by an adjudicating officer, with the consent of the parties.
(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."
Section 15T provides for an appeal to the Tribunal if an order is passed by the Board under the Act or the Rules or Regulations made thereunder, which includes an order passed by a Whole Time Member by virtue of delegated power under Section 19 of the SEBI Act, or by an Adjudicating Officer under the Act except when an order is passed by consent of parties. We shall deal with section 19 a little later in our judgment.
9. It was submitted by Mr. Kumar Desai, the learned senior counsel for SEBI, that the impugned order was not passed under SEBI Act but was passed by SEBI under the provisions of the SCR Act, 1956.
10. Section 4 of SCR Act, 1956 deals with grant of recognition to Stock Exchanges by the Central Government and reads as follows:
"4. Grant of recognition to stock exchanges.- (1) If the Central Government is satisfied, after making such inquiry as may be necessary in this behalf and after obtaining such further information, if any, as it may require,-
(a) that the rules and bye-laws of a stock exchange applying for registration are in conformity with such conditions as may be prescribed with a view to ensure fair dealing and to protect investors;
(b) that the stock exchange is willing to comply with any other conditions (including conditions as to the number of members) which the Central Government, after consultation with the governing body of the stock exchange and having regard to the area served by the stock exchange and its standing and the nature of the securities dealt with by it, may impose for the purpose of carrying out the objects of this act; and
(c) that it would be in the interest of the trade and also in the public interest to grant recognition to the stock exchange;
it may grant recognition to the stock exchange subject to the conditions imposed upon it as aforesaid and in such form as may be prescribed.
(2) The conditions which the Central Government may prescribe under clause (a) of sub-section (1) for the grant of recognition to the stock exchanges may include, among other matters, conditions relating to-
(i) the qualifications for membership of stock exchanges;
(ii) the manner in which contracts shall be entered into and enforced as between members;
(iii) the representation of the Central Government on each of the stock exchanges by such number of persons not exceeding three as the Central Government may nominate in this behalf; and
(iv) the maintenance of accounts of members and their audit by chartered accountants whenever such audit is required by the Central Government.
(3) Every grant of recognition to a stock exchange under this section shall be published in the Gazette of India and also in the Official Gazette of the State in which the principal office of the stock exchange is situate, and such recognition shall have effect as from the date of its publication in the Gazette of India.
(4) No application for the grant of recognition shall be refused except after giving an opportunity to the stock exchange concerned to be heard in the matter; and the reasons for such refusal shall be communicated to the stock exchange in writing.
(5) No rules of a recognized stock exchange relating to any of the matters specified in sub-section (2) of section 3 shall be amended except with the approval of the Central Government."
11. The impugned order was passed under sub-section (4) of section 4 of SCR Act, 1956, which deals with application for grant of recognition of a stock exchange.
12. Under the SCR Act, 1956 certain additional provisions were introduced with respect to appeal provisions by Securities Laws (Amendment) Ordinance, 2004. Certain orders passed by the Central Government were appealable to the Tribunal under the provisions of the SCR Act, 1956. These appeal provisions are identical to the appeal provisions under Section 15T of the SEBI Act. However, only certain impugned orders are appealable to the Tribunal. But it was submitted that an order passed under Section 4(4) of the SCR Act, 1956 is not appealable since no mention is made in SCR Act that it is appealable. Those orders that are appealable under SCR Act, 1956 are as follows:
(1) An order of de-listing of securities. This is appealable by the listed company to the Tribunal under Section 21A.
(2) Refusal of stock exchange to list securities of public companies. There is a right of appeal to the Tribunal under Section 22A.
(3) Pari Passu with the SEBI Act, all penalties imposed by the Adjudicating Officer of SEBI are appealable under Section 23-L.
13. The catch is that section 23L of SCR Act, 1956 does not refer to any order under Section 4 except an order under Section 4-B. Section 4B deals with procedure for corporatisation and demutualization of the Stock Exchanges. Section 23L also refers to appeals to the Tribunal under sections 22-B, 22-C, 22-D & 22-E.
14. Section 23L reads as follows:
"(1) Any person aggrieved, by the order or decision of the recognized stock exchange or the adjudicating officer or any order made by the Securities and Exchange Board of India under section 4-B, may prefer an appeal before the Securities Appellate Tribunal and the provisions of sections 22-B, 22-C, 22-D and 22-E of this Act, shall apply, as far as may be, to such appeals.
(2) 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 or decision is received by the appellant 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.
(3) 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.
(4) The Securities Appellate Tribunal shall send a copy of every order made by it to the parties to the appeal and to the concerned adjudicating officer.
(5) 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."
15. It was vehemently submitted by Mr. Desai that the right of appeal to the Tribunal is excluded both under the provisions of SEBI Act and under the provisions of the SCR Act, 1956 if an order is passed under section 4(4) of the SCR Act.
16. When a pointed question was put to the learned senior counsel for the respondent that this order was also under Section 19 read with section 11(1) of the SEBI Act and therefore is appealable to the Tribunal, it was rather curiously argued by Mr. Desai that the main order is not appealable but the directions under Section 11(1) are, admittedly, appealable before the Tribunal.
17. It was further submitted that the directions under Section 11 were not under challenge before the Tribunal.
18. This submission cuts at the root of the appeal and cannot be accepted. It is not possible to have a truncated appeal, one before the Tribunal and one, perhaps, under Article 226 of the Constitution as suggested by the respondent.
19. The learned counsel for the appellant, Mr. Umesh Shetty, said that the High Courts are overburdened with writ petitions and it is not legally feasible to file an appeal of the second part of the order, i.e. the directions issued under Section 11 before the Tribunal and the first part of the order under Article 226. Such a truncated appeal to the Tribunal only with respect to directions under Section 11 would lead to anomalous consequences and would not be in public interest.
20. We are ultimately left with the vexed question whether an appeal is maintainable under Section 15T of the SEBI Act if a Whole Time Member passes an order as a delegate of the Board under Section 19 of the SEBI Act, although the impugned order is ostensibly passed by SEBI under Section 4(4) of the SCR Act, 1956, which by itself is not appealable either under the provisions of SCR Act, 1956 or under Section 15T of the SEBI Act. In other words, any order passed under Section 4(4) of the SCR Act, 1956 is, admittedly, by itself not appealable under Section 15T of the SEBI Act. We have already referred to section 4(4) in the earlier part of our order. However, it would be relevant to refer to section 4(4) once again. Section 4(4) reads as follows:
"No application for the grant of recognition shall be refused except after giving an opportunity to the stock exchange concerned to be heard in the matter; and the reasons for such refusal shall be communicated to the stock exchange in writing."
21. What SEBI has done in the impugned order was to reject the application for renewal of recognition to the Mangalore Stock Exchange (the appellant herein) for the reasons stated in the impugned order, although the Mangalore Stock Exchange was in existence for a long time.
22. After hearing the rival contentions, we are of the view that an appeal is maintainable in the facts and circumstances of this case for the following reasons.
23. Section 15T deals with appeals being maintainable by any order of the Board under the Act or Rules or Regulations made thereunder. Although the competent authority with respect to any order under Section 4(4) was the Central Government, the Central Government has delegated its power to the Board under SCR Act, 1956. The power to delegate to the Board is enshrined in section 29A of the SCR Act, 1956. Section 29A reads as follows:
"29-A. Power to delegate.- The Central Government may, by order published in the Official Gazette, direct that the powers (except the power under section 30) exercisable by it under any provision of this Act shall, in relation to such matters and subject to such conditions, if any, as may be specified in the order, be exercisable also by the Securities and Exchange Board of India or the Reserve Bank of India constituted under section 3 of the Reserve Bank of India Act, 1934 (2 of 1934)."
24. It can also be said that, on a careful reading of section 29A of the SCR Act, 1956, there is concurrent power and jurisdiction both by the Central Government and by the Securities and Exchange Board of India. Otherwise, the Parliament in its wisdom could not have used the words "exercisable by it under any provisions of this Act in relation to such matters and subject to such conditions, if any, as may be specified in the order, be exercisable also by SEBI". In other words, under Section 29A the power of the Central Government can also be exercised by SEBI concurrently. That is why the words "be exercisable also by SEBI" have been included in section 29A. Section 29A makes it clear that the power exercisable by SEBI is concurrent with that of the Central Government.
25. The Gazette notification, which empowers SEBI under Section 29A, is dated 13.9.94 and reads as follows:
"Securities Contracts (Regulation) act, 1956: Notification under Section 29A: Delegation of powers of the Central Government also to SEBI Notification No. Section O...dated 13th September, 1994.
In exercise of the powers conferred by section 29A of the Securities Contracts (Regulation) act, 1956 (42 of 1956), the Central Government hereby directs that the powers exercisable by it under section 3, sub-section (1), (2), (3) and (4) of section 4, section 5, sub-section (2) of section 7A, section 13, sub-section (2) of section 18, section 22, and sub-section (2) of section 28 of the Act shall also be exercisable by the Securities and Exchange Board of India.
Sd/-
P.J. Nayak, Joint Secretary to the Government of India (F.No.1/57/SE/93)"
26. In short, we have before us section 29A, which delegates powers to the Board and the notification issued under Section 29A. A strict reading of section 29A (power to delegate) and the notification dated 13.9.94 would indicate that the power vests only with the Securities and Exchange Board of India or the Reserve Bank of India and not with any Member of the Board. SEBI Act has given wide discretion to the Board to delegate its power to any Member, Officer of the Board or any other person subject to such conditions. Section 19 of the SEBI Act reads as follows:
"The Board may, by general or special order in writing delegate to any member, officer of the Board or any other person subject to such conditions, if any, as may be specified in the order, such of its powers and functions under this Act (except the powers under section 29) as it may deem necessary."
27. A perusal of section 19 of SEBI Act would indicate that the Board may, in writing, delegate its powers to any Member of the Board such of its powers under "this Act" (SEBI Act).
28. By no stretch of imagination can it be said that a Member acting on behalf of the Board can act or exercise powers except under the provisions of the SEBI Act. Therefore logically when the Board delegates its authority to the Member and a Member passes an order, he exercises powers and functions under the provisions of the SEBI Act and not under the provisions of SCR Act, 1956.
29. That is why the Whole Time Member has issued certain directions to the appellant under Section 11 in the impugned order. These directions are extracted once again to show that the impugned order has been passed under the provisions of the SEBI Act.
30. The directions issued under section 11 of the SEBI Act in the impugned order by the Whole Time Member are as follows:
"1) The money available in the Investor Protection Fund and Investor Services Cell of MGSE shall be utilized only for the purpose for which these funds have been created, as per the Articles of MGSE. Any pending claims of any investors should not be appropriated for any other purpose or for payment to the members/shareholders of MGSE.
(2) MGSE shall set aside sufficient funds in order to provide for settlement of any claims, pertaining to pending arbitration cases, pending non-implemented arbitration award, if any, liabilities/claims of contingent nature, if any, and unresolved investors complaints/grievances lying with the exchange, on the date of this order.
(3) The companies which are exclusively listed in the MGSE, may consider seeking listing at other stock exchanges or provide for exit option to the shareholders as per SEBI Delisting Guidelines.
(4) Consequent upon de-recognition of MGSE, the members/shareholders of MGSE shall cease to be members of a recognized stock exchange and therefore liable to be de-registered as stock brokers, and hence, their certificate of registration granted by SEBI shall stand automatically cancelled. However, the said members/shareholders of MGSE shall be liable to pay SEBI registration fees as per Schedule III of the said regulations, till the date of this Order."
31. It is nobody's case that any direction issued under Section 11 of SEBI Act is not appealable under Section 15T. In fact, it is common ground that any direction issued under Section11 by a Whole Time Member is appealable to the Tribunal under Section 15T. We fail to understand how it can be understood that this order is not appealable under Section 15T. When we read the order as a whole it is clear as daylight that this order was passed by a Whole Time Member by virtue of the delegated power under the provisions of SEBI Act. And if the Board chooses to delegate its authority, in turn, to a Member, this can only be done under Section 19. And if a Whole Time Member acts under Section 19, he, undoubtedly, acts under the provisions of SEBI Act and therefore the impugned order is, without doubt, passed under the provisions of the SEBI Act.
32. If the Board itself would have passed the impugned order, the position may have been different but that is not the case here.
33. But once the Board delegates its power under the provisions of the Act to a Member and that Member passes the impugned order after hearing the appellant, then the impugned order becomes the baby of SEBI and not of the Central Government and such an order, in our considered view, is appealable to the Tribunal under Section 15T. The fact that this is an order by SEBI and not by the Central Government is crystal clear when we look at the preamble before the operative portion of the impugned order, which reads as follows:
"SEBI is mandated to ensure that there are adequate systems, procedures and effective management in an Exchange, which shall protect the interest of investors and develop the securities market. On a cumulative analysis abovementioned, I am of the opinion that allowing MGSE to continue in its present form may not be in the interest of trade or public interest. Therefore, it is essential that immediate measures are adopted to ensure that the interests of the investors are not further jeopardized, I am of the opinion that the Governing Board is unable to either perform effectively or provide guidance and direction to MGSE and hence, any further renewal of recognition of MGSE does not seem reasonable and justified, as it would only serve the commercial needs of few broker members."
34. The above statement in the impugned order also indicates that it is the duty of SEBI to ensure that there are adequate systems, procedures and effective management in a stock exchange to protect the interest of investors and to develop the securities market. Taking into account the above passage of the impugned order, which deals with the paramount duty of SEBI in protecting the interests of investors and in view of the delegated power exercised by the Member and in view of the fact that directions have been issued to the appellant under Section 11, the appeal is maintainable.
35. The learned amicus curiae, Mr. Ashish Bhakta, submitted that the power exercised by the Whole Time Member is contrary to the SCR Act, 1956 and the Gazette Notification pursuant to it.
36. By virtue of section 29A of SCR Act, 1956, the Central Government delegates its power to pass orders, which is exercisable by the Securities and Exchange Board of India. Even the notification pursuant to section 29A delegates the power to the Board and not to any other person.
37. Mr. Bhakta, the learned amicus curiae, further submitted that the maxim delegates non potest delegare is clearly applicable to the facts of the present case. According to Mr. Bhakta, when the statute gives the power to the Board, which is reiterated in the notification, the Board cannot, in turn, delegate its power to a Whole Time Member. There is no authority for the Whole Time Member to act as a delegate of the Central Government.
38. The learned amicus curiae relied on text book on Administrative Law by Wayde & Forsyth, Chapter 11 of Part V, and submitted that an element which is essential to the lawful exercise of power is that it should be exercised by the authority upon whom it is conferred and by no one else. He referred to the following passage at Chapter 11 of Part V of the Book, which reads as follows:
"DELEGATION Inalienable discretionary power An element which is essential to the lawful exercise of power is that it should be exercised by the authority upon whom it is conferred, and by no one else. The principle is strictly applied, even where it causes administrative inconvenience, except in cases where it may reasonably be inferred that the power was intended to be delegable. Normally the courts are rigorous in requiring the power to be exercised by the precise person or body stated in the statute, and in condemning as ultra vires action taken by agents, sub-committees or delegates, however expressly authorized by the authority endowed with the power.
One aspect of this principle is the rule that the participation of non-members in the deliberations or decisions of a collective body may invalidate its acts. The decision of a disciplinary committee, for example, is likely to be invalid if any non-member of the committee has taken part in its proceedings. It is not clear that the mere presence of a non-member will be fatal, although in one case Lord Wright Mr said:
It would be most improper on general principles of law that extraneous persons, who may or may not have independent interests of their own, should be present at the formulations of that judicial decision."
39. This is not the occasion to deal with the maxim delegates non potest delegare, although there is some force in his submission, since this is not the issue before the Court and it may have to be debated if such an occasion arises in the future.
40. Reliance was also placed by the learned amicus curiae on the judgment of the Supreme Court in State of Tamil Nadu v. K. Sabanayagam & Anr. reported in AIR 1998 SC 344 stating that conditional legislation is not left to a subjective satisfaction of a delegate and is not a ministerial exercise. In the case of conditional legislation, it was submitted relying on the pronouncement of the Supreme Court that it is the delegate who has to satisfy himself before passing orders. This judgment has no application to the facts of the present case since the delegate has applied the principles of natural justice before passing the impugned order.
41. The Supreme Court, in 1991 SC 2137 in the case of Yogendra Prasad v. Addl. Registrar, Co-op. Societies, Bihar and Ors., pronounced that although the power exercised by an Addl. Registrar of Co-op Societies is a delegated power delegated by the Registrar, it is still revisable by the Registrar. The Supreme Court pronounced as follows:
"5. In Chintapalli Agency Taluk arrack Sales Co-op. Society Ltd. v. Secretary (Food & Agriculture), Govt. of Andhra Pradesh, , a similar question had arisen. The Dy. Registrar of Co-operative Societies gave notice to the appellant and amended under Section 16(5) of the A.P. Co-operative Societies Act the Bye-laws of the Society so as to restrict the area of operation within the specified area. On a revision filed against the order under Section 77, the Registrar gave certain direction which was assailed being without jurisdiction. When it came before the High Court, the High Court allowed the writ petition. On appeal this Court held that the power of the Registrar is in accordance with the pre-eminent position accorded by the Act to the Registrar under whose supervision any other person appointed under Section 3(1) may function and act. 'It is, therefore, not correct that the Registrar could not exercise powers under Section 77 in examining the correctness, legality or propriety of the proceedings initiated by the Dy. Registrar under Section 16(5) of the Act'. It was further held that the power under Section 16 is that of the Registrar, but the Dy. Registrar is empowered by the Government to exercise the power, but under the general superintendence of the Registrar. Accordingly it was held that the revision was maintainable. The same ratio applies to the facts on hand. The Registrar under Section 6(1) of the Act has his pre-eminent supervisory authority over the functions and orders of the Registrars appointed under Section 6(2)(a) to assist him in the discharge of the duties or functions under the Act except over his delegate under sub-section (4) of Section 6. His supervisory or revisional power is to correct all palpable material errors in the orders passed or the action taken by the subordinate officers feeding injustice. The language couched in Section 56 advisedly was wide of the mark to reach injustice whenever found in the orders or actions of his subordinate officers. Merely because the Asstt. Registrar on reference exercised the power under sub-section (3) of Section 48, the Registrar is not denuded of his supervisory or revisional powers under Section 56 of the Act. Therefore, the Addl. Registrar as delegate of the Registrar is clearly within his power to exercise his revisional power over the appellate order under Section 48(6) of the Act. It is accordingly legal and valid. The ratio in Roop Chand v. State of Punjab, is clearly distinguishable. Therein the State Govt. have expressly delegated their power to the Asstt. Director. Thereby the Subordinate Officer exercised the powers of the State Govt. as their delegate. The Govt. was thereafter devoid of powers to exercise the revisional powers over the subordinate officers. This Court in Chintapalli Agency's case (supra) distinguished Roop Chand's ratio. Din Dayal Singh's case (supra) no doubt supports the contention of the appellant.
Relying upon the language in sub-section (9) of Section 48 'save as expressly provided in this section', the Division Bench construed that the appellate order of the Deputy Registrar passed under Section 48(6) was otherwise provided and so was not amenable to revision under Section 56. The learned Judges construed that since the appellate order shall be final, the effect of language under sub-section (9) of Section 48 was to exclude the revisional jurisdiction of the Registrar under Section 56. In addition, the Division Bench also construed that the Registrar himself referred the dispute to the Asstt. Registrar and any person exercising the power of the Registrar in this behalf is to be in the parameters of his delegate and that, therefore, the Registrar himself cannot revise his own order under Section 56. We find it difficult to approve the ratio of the High Court. At the cost of repetition we point out that Section 6, sub-section (1) and sub-section (2)(a) make a distinction between 'the Registrar' and 'a person exercising the powers of the Registrar'. Sub-section (4) further amplifies the exercise of the power of the Registrar by the Additional Registrar as his delegate. That apart, it is clear that the Registrar is the final supervisory authority over the subordinate officers exercising the powers or performing the duties under the Act. The language in Section 56 was couched very widely without being hedged with any limitation like the revisional powers under Section 115, C.P.C. or the similar language used in sister Acts in some other States like A.P. The reason appears to be obvious. The order of the Dy. Registrar by language of sub-section (6) of Section 48, undoubtedly shall be final. We are aware that when the legislature gives 'finality' to an order, it is normally not open to revision. But still it must be construed in the light of the Scheme of the Act, its operation and resultant effect. The language in Section 56 is not hedged with any limitation of the finality in sub-section (6) of Section 48. Thus we hold that the revisional power under Section 56 is independent of the appellate powers under Section 48(6). The later is amenable to revision by the Registrar. The ratio of the Division Bench in Din Dayal's case (supra) is, therefore, not good law."
42. We are essentially dealing with the question whether the impugned order is passed under the provisions of SEBI Act. The directions are clearly under Section 11, which, admittedly, are appealable to the Tribunal and it would be anomalous to suggest that the order of SEBI can be bifurcated into two parts as suggested by the learned counsel for SEBI.
43. We accordingly hold, for the reasons stated above, that the appeal is maintainable in the facts and circumstances of the case.
44. The Court places on record the valuable assistance rendered by Mr. Ashish Bhakta as amicus curiae.
45. Call on 16th November 2005 to be heard on merits.