Wait for an additional SAT bench is 8 years old and still counting

SAT currently has just one bench in Mumbai and is the appellate body to hear appeals against orders passed by three regulatory bodies – Sebi, IRDAI and PFRDA.

The Chief Justice of India D Y Chandrachud may well have put forth a case for additional benches of the Securities Appellate Tribunal (SAT) but the idea has been in the planning stage for eight long years with no concrete progress ever since it was first mooted in 2016.

Last week, the CJI, while inaugurating a new premises of the tribunal in Mumbai, said that there has been a rapid growth in the Indian markets with a significant jump in the quantum of transactions and hence urged the policy makers to set up additional SAT benches to handle the growing workload.

This assumes significance as SAT, which currently has just one bench in Mumbai, is the appellate body to hear appeals against orders passed by three regulatory bodies – Securities and Exchange Board of India (Sebi), Insurance Regulatory and Development Authority of India (IRDAI) and Pension Fund Regulatory and Development Authority (PFRDA).

More importantly, the idea of additional SAT benches has been in cold storage for more than eight years now as former finance minister Arun Jaitley had first proposed the idea while presenting the Budget for 2016-17.

“I also propose to amend the SEBI Act 1992 in the coming year to provide for more members and benches of the Securities Appellate Tribunal,” said Jaitley while presenting the Union Budget on February 29, 2016.

Interestingly, while policy makers have not taken any concrete step in this direction and the wait for additional SAT benches is still on, the past has even been witness to the only bench of the tribunal remaining headless for years.

Also Read: 'Amid surge in stock market...': CJI Chandrachud's advice to SEBI, SAT

When Justice N K Sodhi retired as the Presiding Officer of SAT in November 2011, the next head – Justice J P Devadhar – assumed office only in July 2013. There was again a period of nearly five months that the tribunal operated without a head after Devadhar’s terms ended in July 2018.

“The lack of additional benches has created a significant backlog of cases, as the current shortage of members makes it challenging to form the required benches under Section 15L of the SEBI Act, 1992,” says Sumit Agrawal, Partner, Regstreet Law Advisors.

“This provision mandates that SAT can have multiple benches and each SAT Bench must include at least one Judicial Member and one Technical Member. The continued delays not only stall case resolution but also weaken the integrity and attractiveness of India's financial markets. Despite urgent calls from the Chief Justice of India and former Finance Minister Arun Jaitley, the wait for additional SAT benches has stretched to eight years, causing significant delays in the disposal of cases,” adds Agrawal, who was earlier a legal officer at Sebi.

In a similar context, Abhimanyu Bhattacharya, Partner, Khaitan & Co, says that the rapid growth of India’s financial markets across equity, debt, commodities segments calls for a robust enforcement, adjudication & appeals framework and SAT infrastructure needs to be strengthened.

“While significant efforts have been made by the government and SEBI towards monitoring, surveillance and enforcement, the appeals infrastructure at SAT needs to be strengthened with additional benches and use of available technology for virtual hearings which are already deployed in other dispute resolution forums. The recent comment made by the CJI on this matter is timely and merits immediate consideration as India is poised to witness tremendous growth in its financial market capabilities,” says Bhattacharya.

Currently, there are a little over 1,000 appeals pending at SAT and the tribunal has disposed over 6,700 matters since its inception in 1997.

While the regulatory framework mandates the SAT bench should comprise a presiding officer and two members – one judicial and one technical -- there is only one member currently in office at SAT, apart from a presiding officer.

Incidentally, the government had issued a vacancy circular in February this year, inviting applications for the post of a Judicial Member. The bench has been operating with a solitary member since February last year.

“Appeals filed before Hon'ble SAT are increasing year on year,” says Makarand Joshi, Founder Partner, Makarand M Joshi & Co, a corporate compliance firm while highlighting the fact that 545 appeals were filed before the tribunal in FY21 followed by 1,192 in FY23.

“Statement by Hon'ble CJI… seems forward looking and proactive thought. Hon'ble SAT plays an important role in the financial markets ecosystem in India... This proactive thought of increasing benches would help bring ease for market participants at large,” he said while adding that the appeal disposal metrics of SAT are “impressive” when compared to other forums.