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SAT Vacancy crisis – hindering India’s regulatory feature

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Business Today has featured a detailed story on the ongoing vacancy issues at the appellate body of SEBI, Insurance Regulatory and Development Authority of India and Pension Fund Regulatory and Development Authority (PFRDA) – the Securities Appellate Tribunal (SAT).

In recent years SAT has been struggling with a chronic problem – vacancies. This issue has been highlighted in a detailed story by Business Today. The appellate body of financial regulators (SEBI, Insurance Regulatory and Development Authority of India and Pension Fund Regulatory and Development Authority (PFRDA)), the SAT plays a crucial role in resolving disputes and regulating the securities market. However, an acute shortage of human resources and infrastructure has hindered its functioning, leading to concerns about investor protection and attracting foreign investment.

According to Mr. Sumit Agrawal, Founder of Regstreet Law Advisors and former SEBI officer “An efficient dispute resolution system with regulators like SEBI and Insurance Regulatory and Development Authority of India is a key criterion for foreign investment and regulatory registrations in India…” He further urges the Department of Economic Affairs (DoEA), Ministry of Finance (MoF) to urgently address the challenges being faced by the SAT, including the acute shortage of human resources and infrastructure.

Readers may recall that the recent vacancy circular issued by the DoEA, MoF for the appointment of a Judicial Member (JM). The post became vacant on February 02, 2023 after Justice MT Joshi’s early retirement. Even a new Technical Member Ms. Meera Swarup was only appointed on February 23, 2022.

The SAT’s vacancy crisis had also led to undesirable situations. For example, after the Technical Member (TM) Dr. CKG Nair’s retirement in March 2021 SEBI shockingly had raised an issue on the composition of the Tribunal. In May 2021 the SAT in-depth examined (Axis Bank Ltd. v. SEBI and Ors) and interpreted Section 15L (Composition of Securities Appellate Tribunal) of the SEBI Act, 1992 and held that the Tribunal comprising of a Presiding Officer (PO) and a JM is not defective on account of non-availability of TM. Further it held that the Bench constituting the PO and JM can proceed to hear and decide the appeals.

The SAT’s vacancy crisis has significant implications for India’s regulatory future. It is essential to fill vacancies promptly. The MoF and its DoEA need to take immediate action to address this critical issue.

Readers are welcome to share their views with Regstreet Law Advisors on info@regstreetlaw.com

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