FACTS OF THE CASE
- The present writ petition is filed by the petitioner who is registered as a Non-Banking Finance Company with the Reserve Bank of India carrying on the business of asset financing.
- On 18.03.20, second respondent SEBI issued a show cause notice to the petitioner alleging violation of provisions of the Companies Act, 1956 and SEBI Regulations 2008 in the issuance of debentures and bonds for the period 2003 to 2017.
- The petitioner refuted the allegations raised against it and requested for a personal hearing. The personal hearing was to be heard before the Chief General Manager of the Board but was adjourned. Aggrieved by which, this writ petition was filed by the petitioner.
CONTENTIONS OF THE PARTIES
- The learned counsel appearing on behalf of the petitioner contended that the proceedings since quasi judicial in nature are to be conducted by the board itself as per section 3(1) of the SEBI Act.
- It was contended that as per section 11 of the Act, the functions of the board cannot be delegated to an officer. The quasi judicial functions are distinct from statutory functions and cannot be delegated.
- The counsel of the respondent contended that SEBI is a regulatory body and section 19 of the Act inter alia allows delegation of powers and functions of the board to any member or officer if the body.
- It was argued that in pursuance to the said section, the body delegated its powers and functions regarding the proceedings to the Whole Time Members of the board which was later through amendment in the order, was delegated to the Chief GM.
JUDGEMENT AND OBSERVATIONS
- The court dismissed the writ petition and rejected the contentions to the extent of challenging the delegation of quasi judicial functions through the amendment order to the officer under SEBI Act .
- Court referred to the decision of the Gujarat High Court in the case of Saurashitra Kutch Stock Exchange Ltd v. SEBI and another [2012 (13) SCC 501] wherein the functions of the board were delegated to the whole time members in light of section 11 and 19 of the SEBI Act.
- Court held that in Indian Context, delegation of quasi judicial functions is permissible if the statute provides so. It was observed that except rule making power under Section 29, powers and functions can be delegated to any member or officer of the board.