Financial market regulators such as the Securities Exchange Board of India (SEBI) may crack the whip on market actors suspected of manipulation, unfair trade practices or fraud, by issuing scores of penal orders every month. But it is the Securities Appellate Tribunal (SAT), the statutory body for hearing appeals, which is the final arbiter of the more serious cases investigated by SEBI. In FY23 alone, over 1,100 appeals were filed before the SAT, with 758 of them pending by end of that year.

In the past year, SAT has watered down SEBI’s penalties in the NSE colocation and dark fibre cases, asked it to reconsider its disgorgement order in the Satyam Computers case, quashed the order cancelling Brickworks Ratings’ license and offered relief to the Zee Enterprises management. It is, therefore, disconcerting that SAT should be hobbled by lack of bench strength. As per a recent report in this newspaper, hearings before SAT have been getting adjourned for the last three months and new appeals have been piling up because the tribunal has been functioning with just one technical member, after its presiding officer demitted office in December 2023. The three-member body had already been functioning with just two members, after its judicial officer vacated his position last February. With the Centre not managing to fill either of these positions in time and the technical member not authorised to pass final orders, the tribunal is virtually non-functional.

This is not the first time that SAT’s functioning has been impaired by delays in appointments. In 2021-22, it went for almost a year without a technical member after the previous appointee demitted office in March 2021. The technical member is expected to weigh in with specialised inputs on the functioning of markets. Therefore, the vacancy led to SEBI lodging a protest on the validity of SAT orders without its technical member, prompting the tribunal to rule that its own orders were valid. There have also been a couple of occasions in the past where third-party petitioners have gone to Court questioning SAT orders which were passed without a presiding officer in place. Such controversies are quite unseemly for a statutory body which decides on landmark cases that have implications not only for investors, but also for the country’s reputation of having a well-regulated capital market.

This makes it imperative for the Centre to fill SAT vacancies on priority. Given the rising backlog of cases, and the fact that the tribunal rules not just on SEBI orders but also orders from insurance and pension regulators, there’s an urgent need to strengthen its composition by adding judicial muscle. The technical member on the tribunal should ideally be a person with experience of serving in the financial services industry. It is also about time the Centre acted on the Budget promise made by Finance Minister Jaitley in 2016 to amend the SEBI Act to provide for more benches of the SAT so that its backlog can be dealt with.