Date:29/04/2005 URL: http://www.thehindubusinessline.com/2005/04/29/stories/2005042902281000.htm

Back SAT functioning sans quorum

Veena Venugopal

Mumbai , April 28

THE Securities Appellate Tribunal, which has fallen short of its necessary quorum since March 1, has now started taking up cases for final orders. Battling a pile up of pending cases, the Tribunal is disposing off the cases where both the parties have no objection to the shortfall in the quorum.

The Tribunal has passed over 10 final orders since the retirement of the members.

The Finance Ministry had set up a committee to find replacements for Mr N.L. Lakhanpal and Dr Samal, the two members who retired earlier this year.

This committee is understood to have forwarded its recommendations to the Finance Ministry close to a month ago.

However, there are no indications about the final appointment so far. Sources say that the questions about the procedure that preceded the choice of names have been raised.

Mr Lakhanpal and Dr Samal retired on February 15 and March 1, respectively. The Tribunal has, therefore, been functioning with only the Presiding Officer present for nearly two months now.

The statute does not provide for SAT's functioning without both members. This was seen as a strong case for the early appointment of new members, but there are no indications about when the members would be appointed. The delay has now forced the Tribunal to pass final orders based on an interpretation of the regulation.

The retirement age for the members of the Tribunal is 62 and since appointees to the position are usually retired bankers or bureaucrats, the duration of their tenure is very short. This is true for the whole time members of the Securities and Exchange Board of India (SEBI), as well. In fact, SEBI had earlier requested the Ministry to extend the retirement age of the Tribunal members to 65, but no action has been taken so far.

The two Members of SEBI, appointed in December 2004, also have less than 12 months and 18 months respectively, before they retire.

By the time the members of the SEBI Board and the Tribunal grasp the nuances of the job, it is time for them to retire. This has a restrictive impact on the performance of these critical organisations, said a securities lawyer.

The legal community suggests that even if the superannuating age is unaltered, there should be a provision that allows retired members to continue serving, till the new members are appointed. This would help in ensuring that the business of the Tribunal proceeds without hiccups.