Establishment And Jurisdiction Of Appellate Tribunal | Overview Introduction to Securities Appellate Tribunal (SAT) Establishment of Securities Appellate Tribunal (SAT) Conversion of SAT  into Financial Securities Appellate Tribunal (SAT) Composition of Securities Appellate Tribunal Qualifications for Appointment as Presiding Officer or Members of Securities Appellate Tribunal Tenure of Office of Presiding Officer and Other Members of Securities Appellate Tribunal… Read More »

Establishment And Jurisdiction Of Appellate Tribunal | Overview Introduction to Securities Appellate Tribunal (SAT) Establishment of Securities Appellate Tribunal (SAT) Conversion of SAT into Financial Securities Appellate Tribunal (SAT) Composition of Securities Appellate Tribunal Qualifications for Appointment as Presiding Officer or Members of Securities Appellate Tribunal Tenure of Office of Presiding Officer and Other Members of Securities Appellate Tribunal Salaries, Allowances...

Establishment And Jurisdiction Of Appellate Tribunal | Overview

This article discusses the Establishment and Jurisdiction of Securities Appellate Tribunal. Chapter VIB was brought into effect from 25th January of 1995 by virtue of the Securities Laws (Amendment) Act, 1995.

Introduction to Securities Appellate Tribunal (SAT)

The reasons for bringing this amendment or statement of an object for the said amendment provided that this change in the Act is brought so that the Board can function in a better way. It had appointed an adjudicating officer for getting the penalties imposed as well as for getting the appellate authority established with the name of the Securities Appellate Tribunal (SAT). SAT was set up to hear the appeal arising out of the orders or decisions of the adjudicating officer.

The jurisdiction of the appellate authority established under this Act was so wide that those orders passed by the Board, which were appealable to Central Government, became appealable to SAT. This widening of jurisdiction was done by virtue of the Securities Laws (Second Amendment) Act, 1999. Another amendment was brought in 2002 with the title of SEBI (Amendment) Act, 2002 which came in effect from 29th October 2002.

This amendment became the source for the introduction of changes in the composition of the appellate tribunal, qualifications of these members and so on. The major change that came by virtue of this amendment was that the appeal from SAT was transferred directly to the Apex Court of India in the place of respective High Courts.

Establishment of Securities Appellate Tribunal (SAT)

Securities Law Amendment Act proposed for the establishment of the Securities Appellate Tribunal and henceforth, SAT was set up on 28th July 1997. SAT was established at Mumbai by Central Government by virtue of a notification dated 28th July 1997 with the help of the powers that are conferred by this provision.

It took two years for getting an appellate forum even when SEBI Appellate Tribunal (Procedure) Rules, 1995 got notified on 11th September 1995. Later, these rules got repealed and replaced by the Securities Appellate Tribunal (Procedure) Rules, 2000 vide a notification from the central government.[1]

According to Rule 5(1) as prescribed under Securities Appellate Tribunal (Procedure) Rules, 2000, SAT is empowered to hold its sittings either at a place that falls within its jurisdiction or at a place where the office of SAT is situated, as it suits to SAT. It seems that the tribunal is conferred with subject jurisdiction but territorial jurisdiction.

The functioning of the SAT commences with the appointment of Shri C Achuthan, who was Jt. Secretary and Legal Advisor to the Government of India, as the Presiding Officer. Initially, the SAT was constituted in the form of a single member body.

Conversion of SAT into Financial Securities Appellate Tribunal (SAT)

There were several proposals for widening the current scope of the SAT. Some of the major recommendations are as follows:

  • Percy S Mistry Committee Recommendation

The High Powered Expert Committee of the Ministry of Finance has come forward with the recommendation of increasing the scope provided to the SAT in a connection with ‘Making Mumbai an International Financial Centre’. This committee is also titled as Percy S Mistry Committee in the common parlance even though the final report was not signed by Percy S Mistry.

The committee recommended that the tribunal comprises individuals specialized in the domain of the securities market and they also possess a judicial capacity. Pursuant to which SAT should be allowed to deal with matters relating to FMC and PFRDA. Thus, the extent of the scope of the SAT should be increased to cover IFS along with SAT leading to the formation of an IFS Appeals Tribunal (IFSAT). SAT will be able to cover the matters of appeals not only for the transactions of the capital market but also for insurance, banking, pensions, and securities.[2]

  • Recommendations of Raghuram Rajan Committee & Working Group on Foreign Investment

The recommendation made by Percy S Mistry Committee was reiterated by the Committee on Financial Sectors Reforms but in a different way. This committee is generally known as Raghuram Rajan Committee Report[3] as well as by the Working Group on Foreign Investment that was led by Shri U K Sinha.[4]

It was recommended that the SAT must be renamed as Financial Service Appellate Tribunal (FSAT). SAT should also be given the power to hear the appeals arising out of the orders passed by SEBI, IRDA as well as PFRDA or any other regulatory authority.[5]

Composition of Securities Appellate Tribunal

By virtue of an amendment dated 29th October 2002, substitution for Sec 15L was brought. Earlier, the composition of the SAT was limited to just one member which was amended to include a Presiding Officer along with two other members in the composition of the appellate tribunal. These other members will be appointed by Central Government by passing a notification in the Official Gazette.

The judgments passed by the tribunal when it comprised of just one member will have binding authority on the new composition of the tribunal as well.[6]SAT rejected the argument by stating that just because of the fact that single-member tribunal is no more in existence cannot be given due weightage for considering it as a court of coordinate jurisdiction to a board comprising of three members.[7]

Sec 15L provides for the composition of the tribunal as the three-membered body pursuant to which they are allowed not to hear the matters individually but collectively as a bench. The recommendations in this regard were given by Kania Committee Report.[8] It was recommended that at least one of the total members present for the constitution of the bench should be a judicial member.

Qualifications for Appointment as Presiding Officer or Members of Securities Appellate Tribunal

Sec 15M of the SEBI Act, 1992 provides the qualifications for the Board. Subsection 1 of Sec 15M provides the qualifications of the Presiding Officer of SAT while subsection 2 provides for the qualifications required for becoming eligible to be appointed as a member of the bench of SAT.

For having the eligibility to be appointed as Presiding Officer, a person can be a sitting judge or a retired judge either of Supreme Court or a High Court.

  • Meaning of “… in consultation with …”

The meaning of the above-mentioned words is not specified by the Act but it can be understood by drawing an analogy from Article 217(1) as well as Article 222(1) provided in the constitution of India. These articles also used the words ‘after consultation with the Chief Justice of India’ for either getting the judge appointed in any High Court or getting the judge of any High Court transferred from one High Court to another.

It was observed by the Supreme Court that these words as provided in Art 222(1) implies effective and full communication.[9] The same interpretation was conferred to the words in Art 217(1) by the Supreme Court itself.[10]

According to Rule 3(1), as provided by the Securities Appellate Tribunal (Salaries and Allowances and Other Conditions of Service of the Presiding Officer and Other Members) Rules, 2003, the Central Government has the power to appoint the Presiding Officer of the bench. This appointment has to be made on the recommendations given by the selection committee that has to be formed after consulting the Chief Justice of India.

  • Meaning of “ … appointment as under…”

The criteria for becoming eligible to be appointed as a member of the bench are provided under subsection 2 of the sec 15M of SEBI Act, 1992.

It is worth noting that no requirement of minimum years of experience or age bar has been prescribed for getting any person appointed as a member.

Any individual with a past record indicating that he is an expert to deal with the matters that relate to the securities market as well as he has qualification and experience earned in securities law, corporate law, accountancy, economics, and finance is eligible to be appointed as a member on the bench. In addition to it, such a member should also be a man of ‘ability, integrity, and standing’.[11]

Tenure of Office of Presiding Officer and Other Members of Securities Appellate Tribunal

The Presiding Officer is capable to hold the office either till he attains the age of 68 years or for a period of five years, whichever is earlier. On the other hand, the member is allowed to hold the office either till he attains the age of 62 years or for a period of five years, whichever is earlier.

Kania Committee has given its recommendations in this regard. It recommended that the need for frequently appointing new members will generate because the tenure of the members is limited just to the maximum age of 62 years.[12] Thus, in order to get rid of this frequent appointment, it had recommended the solution to increase the age limit to 65 years from that of 62 years.[13]

Salaries, Allowances and Other Terms and Conditions of Service of Presiding Officers

Central Government had framed new rules in 2003 by virtue of the power conferred upon it by Sec 15L read with Sec 15M and Sec 29(2)(f). These rules replaced the Securities Appellate Tribunal (Salaries and Allowances and Other Conditions of Service Of the Presiding Officer) Rules of 1997.

The salary of the Presiding Officer is equivalent to that of the serving judge of the Supreme Court or the Chief Justice of High Court. While the salary paid to the member of the bench is equivalent to that of the Secretary to the Government of India.[14]

In addition to the salary, these rules also lay down the terms and conditions of the provident funds and pension, leave travel concession, medical treatment facility, conveyance facility, travelling allowance and so on.

Resignation and removal

Resignation and removal of the Presiding Officer and the members of the SAT are dealt with by subsection (1) and (2) of sec 15Q respectively. They can be removed only on two grounds viz., incapacity or misbehaviour. The power to follow the procedure for the investigation undertaken for their removal is conferred by 15Q (1).

Securities Appellate Tribunal (Salaries and Allowances and Other Conditions of Service Of the Presiding Officer) Rules of 2003 provides for the procedure which is to be followed during the investigation undertaken for their removal.

According to the said rules, Presiding Officer may be removed by the Central Government inter alia on the grounds of acquisition of any financial interest or any other interest that is capable to affect the functions of the Presiding Officer or Member prejudicially.[15]

On the other hand, the Presiding Officer or the member has to provide a written resignation to the Central Government. In spite of this notice being served to the government, it is required that the resigning officer or member shall hold office for either three months from the date when the notice was received by the government, when his successor joins the vacant position or when the term of the office gets expired, whichever is earlier.


[1] Notification vide GSR No 142 (E) dated 18.02.2000 in accordance with Section 29 and 15K, 15T and 15U of the SEBI Act

[2] Report of HPEC on Making Mumbai an International Financial Centre, Ministry of Finance, Government of India, p 154

[3] A Hundred Small Steps – Report of the Committee on Financial Sector Law Reforms, Planning Commission, Government of India, p 133

[4] Report of the Working Group on Foreign Investment, 2010, Dept. of Economic Affairs, Ministry of Finance, Government of India

[5] Para 2.7.1 of agenda note for item No. 13, in respect of 124th Meeting of SEBI Board dated 18.06.2009

[6] First Global Stockbroking Pvt Ltd v SEBI, Appeal Nos. 90- 90A/ 2002, SAT Order dated 03.12.2004. The question that arose was whether the three-member tribunal is conferred with the power to consider the earlier judgments again while the power of the new composition to overrule the previous judgments were not addressed specifically.

[7] Id.

[8] Report of the Expert Group that was headed by Mr. Justice M H Kania, para no. 2.27

[9] Union of India v Sankalchand Seth, AIR 1977 SC 2328

[10] S P Gupta v Union of India (Judges’ case), AIR 1982 SC 149

[11] Law Commission of India Report No 225, p 22- 23

[12] Report of the Expert Group headed by Mr. Justice M H Kania, para no 2.28

[13] Report of the Expert Group headed by Mr. Justice M H Kania, para no 2.29

[14] Rule 4 of Securities Appellate Tribunal (Salaries and Allowances and Other Conditions of Service Of the Presiding Officer) Rules, 1997

[15] Rule 12(1)(d) of Securities Appellate Tribunal (Salaries and Allowances and Other Conditions of Service Of the Presiding Officer) Rules, 2003


  1. Securities Contract Regulation Act: Salient Features(Opens in a new browser tab)
  2. Securities Appellate Tribunal (SAT): Appeals and Limitation
Updated On 6 Jun 2020 1:06 AM GMT
Akriti Gupta

Akriti Gupta

Akriti Gupta is a student at Symbiosis Law School, NOIDA. She is a research enthusiast and possesses capable draftsmanship along with this, Akriti is a holder of various renounced publications and participated in prestigious national moots.

Next Story