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Kerala High Court Rules That Delegation Of Quasi-judicial Functions Is Permissible If The Statute Provides For Such Delegation

Diya Pradeep ,
  06 June 2023       Share Bookmark

Court :
Kerala High Court
Brief :

Citation :
WP(C) NO. 32861 OF 2022

Case title: 

BRD Securities Limited vs. UoI and SEBI

Date of Order:

25 May 2023


Hon’ble Justice V. G Arun





The Securities and Exchange Board of India Act, 1992, or SEBI Act of 1992 is an important legislation passed by the Parliament of India. It was enacted to protect the interests of investors in securities and to promote the development of and regulate the securities market. It provides for the establishment of SEBI as the regulator of the securities market. It also provides for the establishment of the Securities Appellate Tribunal to adjudicate disputes between investors and SEBI. This Act applies to the entire country and is amended periodically to keep up with the changing requirements of the securities market.


Securities and Exchange Board of India Act, 1992

  • Section 3(1)
  • Section 11
  • Section 19


  • The petitioner is a Non-Banking Finance Company registered with the Reserve Bank of India carrying asset financing business.
  • A show cause notice was issued to the petitioner, alleging him of violating the Companies Act, 1956, SEBI (Issue and Listing of Debt Securities) Regulations, 2008, and SEBI (Disclosure and Investor Protection) Guidelines, in the issuance of debentures and bonds during the period 2003 to 2017.
  • The petitioner denied these allegations and requested a personal hearing.
  • Firstly, the hearing was supposed to take place before the Whole Time Member of the Board. Later, it was supposed to happen before the Chief General Manager. However, both hearings were adjourned.
  • Aggrieved by the same, the petitioner filed the present writ petition before the Kerala High Court.


  • Can the functions under Sections 11(1), 11(4), 11(4A), 11B, and 11D of the SEBI Act be delegated to an officer of the Board?
  • Senior Advocate E.K. Nandakumar represented the petitioner in the present case.
  • He contended that the supposed proceedings could only be conducted by the SEBI Board established in Section 3(1) of the SEBI Act, as they’re quasi-judicial.
  • It was submitted that an officer of the Board cannot delegate the functions enumerated in Section 11. Following Section 11A, only the Board can regulate or prohibit the distribution of prospectuses, offer documents, or advertisements soliciting money for securities.
  • The counsel pointed out that even though section 19 of the Act provides for delegation of the Board's powers and functions, this doesn’t include the quasi-judicial functions of the Board.
  • The decision of Barnard and others v. National Dock Labour Board and another ([1953] 2 QB 18) was cited to assert the contention that quasi-judicial functions cannot be delegated.
  • Reliance was placed on the case Indian National Congress v. Institute of Social Welfare and others [(2002) 5 SCC 685] to state the principles distinguishing quasi-judicial and administrative functions.


  • Advocate Raju Joseph appeared on behalf of the respondents.
  • The counsel submitted that the delegation of quasi-judicial functions to Senior Officials of SEBI reduces the pendency of quasi-judicial work at SEBI and helps in the timely disposal of proceedings.
  • The counsel argued that by challenging the show cause notices and the interim order, the petitioner successfully delayed a legally and validly instituted proceeding.
  • Reliance was placed on the case of Sahni Silk Mills (P) Ltd. v. ESI Corpn. [(1994) 5 SCC 346] to hold that the general principle that the quasi-judicial functions cannot be delegated wouldn’t be applicable if the statute expressly provides for it.


  • The Hon’ble High Court of Kerala dismissed the writ petition.
  • The court stated that the delegation of quasi-judicial power to whole-time members and the Chief General Manager/ Executive Director cannot be interfered with.
  • Reliance was placed on the case Saurashtra Kutch Stock Exchange Ltd v. SEBI and another [2012 (13) SCC 501] to substantiate the above finding.
  • The court ruled that in the present administrative environment, judicial aversion to delegation cannot be carried to an extreme. A public authority is free to employ agents to exercise its powers. Delegation is therefore expressly or impliedly authorized by many statutes.
  • The court further observed that the wide power to delegate statutory and administrative functions is limited when it comes to quasi-judicial functions and non-existent when it comes to judicial functions.
  • The court interpreted Section 19 of the Act plainly to conclude that all powers and functions of the Board (except the rule-making power under Section 29) can be delegated to any member, officer, or other person.


The legal principle of "delegatus non potest delegare" (literally meaning "a delegate cannot delegate") holds that a person who has been given the authority to act on behalf of another person or entity cannot further delegate that authority to another person or entity. In the present case, the High Court of Kerala reiterated that due to the extensive rise in the nature of activities to be handled by the statutory authorities, the maxim 'delegatus non potest delegare' cannot be applied carelessly. The bench consisting of Hon’ble Justice V. G Arun held that delegation of quasi-judicial functions is permitted only if the statute provides for such delegation

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