SEBI Appeal No.1 of 2002,SEBI Appeal No.8 of 2002,SEBI Appeal No.9 of 2002,SEBI Appeal No.10 of 2002

13th October, 2003

Petitioner Counsel: Mr. KUMAR DESAI,M. SETHNA
Respondent Counsel: Mr. C. A. SUNDARAM, Mr. ZAL ANDHYARUJINA, Ms. MADHURI JOSHI

Cases Cited:
Colonial Sugar Refining Company Ltd. Vs. Irving, 1905 AC 369(A) [Para 4]
Hoosein Kasam Dada (India) Ltd. Vs. State of Madhya Pradesh, AIR 1953 SC 221 [Para 4]
Garikapati Veeraya Vs. N. Subbiah Choudhary, AIR 1957 SC 540 [Para 5]
Jose Da Costa Vs. Bascora Sadasiva Sinai Narcornim, (1976)2 SCC 917 [Para 6]
Gurbachan Singh Vs. Satpal Singh, (1990)1 SCC 445 [Para 7]
Rajendra Kumar Vs. Kalyan, 2001(1) ALL MR 253 (S.C.)=(2000)8 SCC 99 [Para 7]
Ramesh Singh Vs. Cinta Devi, (1996)3 SCC 142 [Para 7]
I. T. Commer Bangalore Vs. R. Sharadamma, AIR 1996 SC 3199 [Para 7]
Maria Christine Vs. Maria Zurna, AIR 1979 SC 1352 [Para 8]
New India Insurance Co. Ltd. Vs. Smt. Shanti Misra, (1975)2 SCC 840 [Para 9]
Arka Bikas Chakravorty Vs. State Bank of India, (1997)10 SCC 417 [Para 11]
Kolhapur Canesugar Works Ltd. Vs. Union of India, AIR 2000 SC 811 [Para 11]

JUDGMENT

A. P. SHAH, J. :- We have heard the learned counsel appearing for the parties extensively on the issue as to whether section 15-Z of The Securities and Exchange Board of India Act, 1992, (for short 'SEBI Act') as amended by the Securities and Exchange Board of India (Amendment) Act, 2002, is prospective or retrospective in operation. The amended section 15-Z came into force with effect from 29-10-2002. The maintainability of the above appeals has been questioned having regard to the said amendment to section 15-Z of the SEBI Act. SEBI Appeal Nos.1 and 9 of 2002 were filed much prior to the coming into force of the amended section 15-Z. SEBI Appeal Nos.10 of 2002 and 1 of 2003, however, have been filed after the amendment was brought into force though the orders impugned in both the appeals were passed before the amendment. The question is whether an appeal would lie to the High Court after the commencement of the amended section 15-Z. There is also an issue as to whether pending appeals which were filed under old section 15-Z will not survive in view of the amending Act.

2. To appreciate the rival contentions of the parties with regard to the above issues it is necessary to refer to relevant provisions of the Act as they stood prior to the amendment to the SEBI Act by amending Act. The unamended section 15-L lays down the composition of Securities Appellate Tribunal as follows:

"15-L- Composition of Securities Appellate Tribunal-A Securities Appellate Tribunal shall consist of one person only (hereinafter referred to as the Presiding Officer of the Securities Appellate Tribunal) to be appointed by notification by the Central Government".

Section 15-T which provided for appeal to the Securities Appellate Tribunal reads as follows:

"15-T. Appeal to the Securities Appellate Tribunal - (1) Save as provided in sub-section (2), any person aggrieved -

(a) by an order of the Board made on or after the commencement of the Securities Laws (Second Amendment) Act, 1999, under this Act, or the rules or regulations made thereunder, or

(b) by an order made by an adjudicating officer under this Act, may prefer an appeal to a Securities Appellate Tribunal having jurisdiction in the matter ..."

Section 15-Z which provided for a further appeal to High Court reads as follows :

"15-Z. Appeal to High Court - Any person aggrieved by any decision or order of the the Securities Appellate Tribunal may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Securities Appellate Tribunal to him on any question of fact or law arising out of such order".

After amendment sections 15-L, 15-T, and 15-Z read as follows:

"15-L - Composition of Securities Appellate Tribunal-A Securities Appellate Tribunal shall consist of a Presiding Officer and two other members, to be appointed by notification by the Central Government.

Provided that the Securities Appellate Tribunal, consisting of one person only, established before the commencement of the Securities and Exchange Board of India (Amendment) Act, 2002 shall continue to exercise the jurisdiction, powers and authority conferred on it by or under this Act or any other law for the time being in force till two other members are appointed under this section.

15-T. Appeal to the Securities Appellate Tribunal - (1) Save as provided in sub-section (2), any person aggrieved -

(a) by an order of the Board made on or after the commencement of the Securities Laws (Second Amendment) Act, 1999, under this Act, or the rules or regulations made thereunder, or

(b) by an order made by an adjudicating officer under this Act,

may prefer an appeal to a Securities Appellate Tribunal having jurisdiction in the matter.

15-Z. Appeal to Supreme Court-Any person aggrieved by any decision or order of the Securities Appellate Tribunal may file an appeal to the Supreme Court within sixty days from the date of communication of the decision or order of the Securities Appellate Tribunal to him on any question of law arising out of such order.

Provided that the Supreme Court may, if it is satisfied that the applicant was prevented by sufficient cause from filing the appeal within the said period, allow it to be filed within a further period not exceeding sixty days".

3. By the amended section 15-L the composition of Securities Appellate Tribunal is changed in that the Appellate Tribunal, which originally consisted of only one member, now consists of Presiding Officer and two other members, to be appointed by the Central Government. Section 15-M lays down that a person shall not be qualified for appointment as the Presiding Officer of the Securities Appellate Tribunal unless he is sitting or retired Judge of the Supreme Court or a sitting or retired Chief Justice of a High Court. Section 15-T remains Practically unchanged and provides for an appeal to the Securities Appellate Tribunal against certain orders of the SEBI Board as mentioned in the said section. Under section 15-Z an appeal is now provided to the Supreme Court which is to be filed within sixty days from the date of communication of the order of the Securities Appellate Tribunal on any question of law arising out of such order. Under the old section 15-Z appeal would lie on facts or law arising out of such order whereas under the amended provision appeal would lie on question of law arising out of such order. The amendment to the Act was brought into force by Securities and Exchange Board of India (Amendment) Ordinance, 2002 with effect from 29-10-2002. The Ordinance was replaced by the Securities and Exchange Board of India (Amendment) Act, 2002.

4. The learned Advocate General appearing in SEBI Appeal Nos.10 of 2002 and 1 of 2003 contends that as and from the date of initiation of the proceedings the appellants acquired vested right of appeal to this Court under section 15-Z, which has since then been amended by the amending Act. In support of this contention he relies on certain decisions to which reference may now be made. The leading case on the subject relied on by the learned A G is the Colonial Sugar Refining Company Ltd. Vs. Irving, 1905 AC 369(A). In that case the Privy Council held that although the right of appeal from the Supreme Court of Queens land to His Magesty in Council given by the Order in Council has been taken away by the Australian Commonwealth Judiciary Act, 1903, section 39, Sub-section (2), and the only appeal therefrom now lies to the High Court of Australia, yet the Act is not retrospective, and a right of appeal to the King in Council in a suit pending when the Act was passed and decided by the Supreme Court afterwards was not taken away. The principle laid down in the case of Colonial Sugar Refining Company Ltd. was followed by the Supreme Court in Hoosein Kasam Dada (India) Ltd. Vs. State of Madhya Pradesh, AIR 1953 SC 221. In that case pending the assessment on the appellant's return the Berar Sales Tax Act, 1947 was amended requiring the payment of the entire assessed amount as a condition precedent to the admission of the appeal. The Asst. Commissioner to whom the return was transferred for disposal made an assessment against which the appellant preferred an appeal without depositing the amount of tax in respect of which he had appealed. The Board of Revenue was of the view that section 22(1) as amended applied to the case as the assessment was made, and the appeal was preferred after the amendment came into force and rejected the appeal. In appeal the Supreme Court following the decision of the Privy Council in Colonial Sugar Refining Company Ltd. and certain other decisions held that a right of appeal is not merely a matter of procedure. It is a matter of substantive right. This right of appeal from the decision of an inferior tribunal to a superior tribunal becomes vested in a party when proceedings are first initiated in and before a decision is given by, the inferior Court. Such a vested right cannot be taken away except by express enactment or necessary intendment. The fact that the pre-existing right of appeal continues to exist must, in its turn, necessarily imply that the old law which created that right of appeal must also exist to support the continuation of that right. As the old law continues to exist for the purpose of supporting the pre-existing right of appeal the old law must govern the exercise and enforcement of that right of appeal and there can then be no question of the amended provision preventing the exercise of that right. Therefore the new provision is inapplicable and jurisdiction of the authority has to be exercised under the old law which so continues to exist.

5. In Garikapati Veeraya Vs. N. Subbiah Choudhary and Ors., AIR 1957 SC 540 the following propositions were laid down:

"i) That the legal pursuit of a remedy, suit, appeal and second appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding.

ii) The right of appeal is not a mere matter of procedure but is a substantive right.

iii) The institution of the suit carries with it the implication that all rights of appeal then in force are preserved to the parties thereto till the rest of the career of the suit.

iv) The right of appeal is a vested right and such a right to enter the superior court accrues to the litigant and exists as on and from the date the lis commences and although it may be actually exercised when the adverse judgment is pronounced such right is to be governed by the law prevailing at the date of the institution of the suit or proceedings and not by the law that prevails at the date of its decision or at the date of the filing of the appeal.

v) This vested right of appeal can be taken away only by a subsequent enactment, if it so provides expressly or by necessary intendment and not otherwise".

6. In Jose Da Costa Vs. Bascora Sadasiva Sinai Narcornim, (1976)2 SCC 917 the Court held in para 31 as follows:

"31. Before ascertaining the effect of the enactments aforesaid passed by the Central Legislature on pending suits or appeals, it would be appropriate to bear in mind two well established principles. The first is that while provisions of statute dealing merely with matters of procedure may properly, unless that construction be textually inadmissible, have retrospective effect attributed to them, provisions which touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment (See Delhi Cloth and General Mills Co. Ltd. Vs. CIT)

The second is that a right of appeal being a substantive right the institution of a suit carries with it the implication that all successive appeals available under the law then in force would be preserved to the parties to the suit throughout rest of the career of the suit. There are two exceptions to the application of this rule viz (1) when by competent enactment such right of appeal is taken away expressly or impliedly with retrospective effect and (2) when the court to which appeal lay at the commencement of the suit stands abolished (see Garikapati Veeraya Vs. N. Subbiah Choudhary and Colonial Sugar Refining Co. Ltd. Vs. Irving)."

7. Still later the Supreme Court in Gurbachan Singh Vs. Satpal Singh, (1990) 1 SCC 445, Rajendra Kumar Vs. Kalyan, (2000)8 SCC 99 : [2001(1) ALL MR (S.C.) 253], Ramesh Singh and anr. Vs. Cinta Devi and ors., (1996)3 SCC 142 and I. T. Commer Bangalore Vs. R. Sharadamma, AIR 1996 SC 3199 expressed in the similar vein as regards the element of retrospectivity. In Rajendra Kumar's case the court, however, observed the rule that an Act of Parliament is not to be given retrospective effect applies only to statutes which affect the vested right, it does not apply to statutes which alter the form of procedure or the admissibility of evidence, or the effect which the courts give to evidence, if the new Act affects matters of procedure, only, then, prima facie, it applies to all actions pending as well as future.

8. It is no doubt well settled that right of appeal is a substantive right and it gets vested in the litigant no sooner the lis is commenced in court of the first instance and such right or any remedy in respect thereof will not be affected by any repeal of the enactment conferring such right unless the repealing enactment either expressly or by necesary implication takes away such right or remedy in respect thereof. The question, however, is whether a litigant has or can have, vested right in a particular forum. Can he contend as a matter of right that his suit or application should be tried by the forum which exists on the date when his cause of action arose. Forum belongs to realm of procedure and does not constitute substantive right of a party or a litigant. Therefore the appeal the right to which has arisen after a repealed Act, will have to be filed in a forum provided for by the repealing Act. In Maria Christine Vs. Maria Zurna, AIR 1979 SC 1352, the Supreme Court expressly held that the forum of appeal and limitation are the matters pertaining to procedural law. The Court referred to following passage appearing at page 462 of Salmond's Jurisprudence (12th Edn):

"Whether I have a right to recover certain property is a question of substantive law for the determination and the protection of such rights are among the rule of the administration of justice, but to what courts and within what time I must institute proceedings are questions of procedural law, for they relate merely the modes in which the courts fulfil their functions".

The Court further observed :

"It is true that under Clause (c) of the proviso to section 4 of the Central Act XXX of 1965 (which corresponds to S.6(e) of the General Clauses Act, 1897) it is provided that a remedy or legal proceeding in respect of a vested right like a right to an appeal may be instituted, continued or enforced as if this Act (meaning the repealing Act) had not been passed. But this provision merely saves the remedy of legal proceedings in respect of such vested right which it is open to the litiant to adopt notwithstanding the repeal but this provision has nothing to do with the forum where the remedy or legal proceeding has to be pursued. If the repealing Act provides new forum where the remedy or the legal proceedings in respect of such vested right can be pursued after the repeal, the forum must be as provided in the repealing Act. We may point out that such a view of S.6(e) of the General Clauses Act, 1897 has been taken by the Rajesthan High Court in the case of Purshotam Singh Vs. Narain Singh and State of Rajasthan AIR 1955 Raj 203. It is thus clear that under the repealing enactment (Act XXX of 1965) read with Goa Enactment (Act XVI of 1965) the appeal lay to the Judicial Commissioner's Court and the same was accordingly filed in the proper court". (emphasis supplied)

9. In this context a reference may also be made to the observations of the Supreme Court in New India Insurance Co. Ltd. Vs. Smt. Shanti Misra (1975)2 SCC 840. The question in that case was when there is change in the forum and new period of limitation is provided whether the change operates retrospectively. The court held that the change in law was merely a change of forum i.e. a change of adjectival or procedural law and not substantive law. It is well established propostion that such a change of law operates retrospectively and the person has to go to the new forum even if his cause of action or right to action accrued prior to the change of forum. He will have vested right of action but not a vested right of forum if by express words the new forum is made available only to causes of action arising after the creation of the forum, then the retrospective operation of the law is taken away. Otherwise the general rule is to make it retrospective. The Court also held that the expression arising out of an accident occuring in sub-section (1) and over the area in which the accident occured mentioned in sub-section 2 clearly show that the change of forum was meant to be operative retrospectively irrespective of the fact as to when the accident occured.

10. By the amending Act the remedy of appeal to the superior court is not taken away. It is merely replaced by an appeal to the Supreme Court. Undoubtedly under the amended provision appeal would lie only on the question of law arising out of the order of the Appellate Tribunal and not on law or fact as provided in old section 15-Z but this pertains to the domain of the procedure and it cannot be said that the substantive right of litigant is affected. When an appeal is provided to the Supreme Court on the question of law as distinct from question of law or fact it is merely a matter of procedure how the appeal in question is to be heard and disposed of by the Supreme Court. The right to prefer an appeal is derived from the provisions of section 15-Z of the SEBI Act and mere change of forum cannot or will not whittle down the right itself and therefore after coming into force of the amended provision of section 15-Z, appeal will lie to the Supreme Court and not to the High Court. Apart from the fact that forum belongs to the realm of procedure and does not constitute a substantive right, there is sufficient indication in the amending Act that after the amendment came into force, no appeal will lie to the High Court. Under the amended section 15-Z composition of the Securities Appellate Tribunal is radically changed. Under the old section the tribunal consisted of only one member whereas under the amended provision the tribunal consists of a Presiding Officer and two other members appointed by the Central Government. Under section 15-T appeal against the order of the SEBI Board would lie to the newly constituted tribunal. The amended section 15-Z provides an appeal to the Supreme Court against the order of the tribunal. It seems to us that by changing the composition of the tribunal and by providing appeal to the Supreme Court, the Legislature has clearly evidenced an intention to the contrary.

11. The only question that remains to be considered is whether the appeals pending in this Court which were filed prior to coming into force of the amending Act would not survive in view of the amendment to section 15-Z. Mr. Sundaram submitted that if right to appeal to a particular forum is not a vested right and a new forum is prescribed by the statute without providing as to what would happen to the pending appeals filed under old section 15-Z, it is clearly implied that all the pending appeals would come to an end. He submitted that there is nothing in the amending Act which would save pending appeals as under the said Act no saving has been provided. According to the learned counsel if the forum is within the realm of the procedure then section 6 will not be attracted and the pending appeals will also be affected. In support of this proposition Mr. Sundaram placed reliance on the decision of the Supreme Court in Arka Bikas Chakravorty Vs. State Bank of India, (1997) 10 SCC 417 and Kolhapur Canesugar Works Ltd Vs. Union of India, AIR 2000 SC 811. We are unable to accept the submission of Mr. Sundaram. It is well settled that law which brings out a change in the forum does not affect the pending actions unless the intention to the contrary is clearly shown. One of the modes by which such an intention is shown is by making a provision for change over of proceedings, from the court or the tribunal where they were pending to the court or the tribunal which under the new law gets jurisdiction to try them. Wherever legislature has intended to transmit pending appeals to the new forum specific provision to that effect has been made in the statute, for example, The Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Patents (Amendment) Act, 2002 etc. It is true that no litigant has any vested right in a matter of forum but when the appeals have been filed in the tribunal or court before the new law bringing the change in the forum is brought into force, unless the Legislature by specific words or by necessary implication clearly so indicated, the court or the tribunal would continue to have jurisdiction to entertain the appeals. However, the position would be different if the forum is abolished as held in the case of Jose Da Costa. We find nothing in the amending Act to indicate that the legislature intended to affect the pending appeals which were filed long prior to the coming into force of the amending Act.

12. The decisions relied upon by Mr. Sundaram are of no assistance to him. In the first case of Arka Bikas Chakravorty the remedy then being available under the Bihar Shops and Establishments Act was extinguished as during the pendency of the proceedings notification was issued under section 4(2) of the Act, whereby the Act ceased to apply to the employees of any branch of State Bank of India situated within Bihar. Therefore the Court held that the authority constituted under the Act ceased to have jurisdiction to decide any pending application from the date of issue of notification under section 4(2) of the Act whereby the Act ceased to apply to the employees of any branch of State Bank of India situated within Bihar. In the other decision of Kolhapur Canesugar Works Ltd. the Court has held that section 6 of the General Clauses Act does not apply in case of omission of a rule and applies when the repeal is of a Central Act or Regulation and not a rule. This decision has also no application to the facts of the present case. Therefore we have no hesitation in holding that the pending appeals are not affected by the amending Act and this Court continues to have jurisdiction to entertain the said appeals.

13. In view of the foregoing discussion we hold that the SEBI Appeal Nos.10 of 2002 and 1 of 2002 are not maintainable as they have been filed after coming into force of the amended section 15-Z. However, the amendment will not affect pending appeals being SEBI Appeal Nos.1 and 9 of 2002 which were filed prior to coming into force of the amending Act.

14. SEBI Appeal No.10 of 2002 is dismisised as not maintainable. SEBI Appeal No.1 of 2002 is allowed to be withdrawn for being presented in the Supreme Court.

Ad-interim order granted in SEBI Appeal No.10 of 2002 to continue for a period of six weeks.

Certified copy expedited.

Order accordingly.