TMI Blog2017 (2) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... ojected that though there are eligible departmental candidates available working in Grade-F posts having completed three years or more service in the said grades, they have not been considered for being appointed to the post of Executive Director by way of promotion and instead a practice has been followed to invariably bring persons for appointment by other methods, namely, deputation / contract basis. The appointment to the post of Executive Director by way of deputation is permissible only in terms of Regulation 7(3). The Petitioners have not projected the specific grievance of employees who have been over-looked and in preference to the deputationist. If the Petitioners are praying for safeguarding and protecting the just, legitimate right and interest of internal SEBI employees working in Grade-F and below in matters of promotion to the post of Executive Director, then, they ought to have indicated with clear example of individuals who have been adversely and prejudicially affected. The promotional avenues of the SEBI employees to the extent indicated in the Regulations are untouched and undisturbed. The general grievances as projected in the Writ Petition and in the represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill up 50% of the posts of Executive Director, henceforth by direct recruitment or deputation and/or on contract basis unless there is no eligible and suitable officer available internally in SEBI. The command sought is that the mode of appointment indicated above shall not be resorted to unless there is exigency of work. 3 By prayer clause (b) and the amended prayers, what is sought is that existing and future vacancies be directed to be filled in by promoting the eligible and suitable departmental Grade-F officers of SEBI. Then, a blanket prayer to call for all the records in relation to the appointment to the posts of Executive Directors and Chief General Managers in the SEBI and finally to quash and set aside an advertisement issued by the SEBI in the newspaper of 5th November, 2016 inviting applications for making appointments to the two posts of Executive Directors on deputation / contract basis. 4 The Petitioners had moved this Petition before a Division Bench of this Court and later on sought to amend it. A Chamber Summons (L) No. 384 of 2016 was moved. After hearing both sides on December 2, 2016, we granted leave to amend and by reserving all contentions on the meri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Regulation-4, Regulation-5 and Regulations - 6 to 13 and 14 to 17 to submit that as far as the controversy in the present Petition is concerned, it would have to be decided on the principle that Regulation-6 (4) and 7 (3) of the Regulations states that the post in Grade-D and above can be filled in by deputation / contract or direct recruitment only in special circumstances, namely, the suitable internal candidates are not available and / or exigencies of the work require. Then, there is a reference to the Schedule appended to these Regulations which refers to the mode of recruitment and proportion of posts to be filled up through different modes under the provisions of sub-regulation-4 of Regulation-6. Inviting our attention to paragraph 12, it is submitted that the Schedule mandates that 50% of the total posts to be filled up by promotion from the internal candidates of SEBI and remaining 50% should be filled up by deputation / contract basis and/or direct recruitment subject to the condition that internal candidates are not available. However, this Schedule is not at all applicable to Regulation-7(3) which deals with deputation / contract basis. The Schedule refers to Regulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to amend was obtained and in that one finds a reference to the advertisement published in the Daily Times of India and Economic Times inviting applications from Indian citizens for two posts of Executive Directors on contract / deputation basis. The challenge is raised to this advertisement on the ground that it violates the SEBI Regulations. 11 It is in the above facts and circumstances that the reliefs are sought. 12 After the Writ Petition was served on the SEBI, an affidavit in reply has been filed. In that affidavit in reply, it has been stated that the Petition is filed on a erroneous basis and on a flawed understanding of the applicability of the provisions of law. The provisions are being misread and misinterpreted. If the Petitioners are aggrieved by an advertisement and seeking to appoint the Executive Directors, then, what that argument and challenging the same fails to notice is that by sub-section (1) of Section 9, the Board has power to appoint the Executive Directors and other officers of its choice. The Mandate of sub-section (2) makes it clear that terms and other conditions of service of officers and employees of the board appointed under sub-section-1 shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to this advertisement. Once the applications are received and short listing is in progress, then, all the more there is no substance in the grievance of the Petitioners. Therefore, denying each and every allegation and para-wise it is submitted that the Petition be dismissed. 13 What we have in the file is also a Notice of Motion and a reply thereto. But it is not necessary to refer to the same. It is on the above pleadings that we have heard the submissions and in great detail. 14 Mr. Aney, learned Senior Counsel appearing on behalf of the Petitioners invited our attention to the allegations in the Writ Petition to submit that the Petitioners have based their case on the pleadings. The pleadings would denote as to how the whole system of appointment and promotion operates. Our attention has been invited to some of the definitions. Mr. Aney would rely upon the definition of the term 'Board' appearing in Section- 2 (1) (a), 'prescribed' as appearing in Section- 2 (1) (g) and 'regulations' appearing in Section 2 (1) (h). Mr. Aney would submit that Chapter-II provides for 'establishment of the SEBI'. Then, 'Management of SEBI' is set out b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Board under sub-section-1 of Section 9 of the Act and to every whole-time employee transferred to the Board under Clause (d) of sub-section-1 of Section 10 of the Act. It is submitted that by the proviso to Regulation 2 (1), it is indicated that the Regulations shall not apply, except as otherwise provided in these Regulations or to such extent as may be specifically or generally decided by the Board, to persons employed temporarily or on contract. After inviting our attention to the definitions appearing in these Regulations, it is submitted that the power to implement the Regulations vests in the Chairman. He is empowered to issue administrative instructions as may be necessary to give effect and carry out purpose of these Regulations or otherwise to secure effective control of the employees and decision of the Chairman is binding on the employees. There is a power but that is in the Board to relax or waive the strict application of the provisions of these Regulations. Mr. Aney would rely upon Chapter-II of these Regulations and particularly Regulation-6. He would submit that the whole time employees of the Board shall be classified as officers (Grades -A, B, C, D, E, F and Exec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inging the outsider staff either on deputation or contract basis a balance is struck and even the officers of SEBI are given opportunity to apply. That is how some of the Petitioners have applied for the post in question. If the arguments of Mr. Aney are accepted, then, such of these Petitioners who have applied pursuant to the advertisement inserted on 5th November, 2016, were clearly ineligible and not permitted to apply at all. Once they could not have applied given the argument of the Petitioners, then, the legal basis must fail. If the Petitioners are conceding that even the officers within the SEBI are eligible for being considered to the promotional posts either in the promotional exercise or otherwise, then, the right to be considered for promotion, is not defeated or frustrated but protected. Mr Dada would, therefore, submit that the Writ Petition be dismissed. 18 For appreciating these contentions, we must refer to the Securities and Exchange Board of India Act, 1992 (for short 'Act'). The Act has been enacted by the Parliament with a view to promote orderly and healthy growth of the securities market and for investors protection. SEBI was established for monit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erm and other conditions of service of officers and employees of the Board appointed under sub-section-1 shall be such as may be determined by Regulations. Then, we have Chapter-III which deals with 'transfer of assets, liabilities etc of the existing securities and exchange board to the board', and 'powers and functions of the Board'. That aspect is covered by Chapter-IV. Section-11 appearing therein reads as under:- POWERS AND FUNCTIONS OF THE BOARD Functions of Board. 11. (1) Subject to the provisions of this Act, it shall be the duty of the Board to protect the interests of investors in securities and to promote the development of, and to regulate the securities market, by such measures as it thinks fit. (2) Without prejudice to the generality of the foregoing provisions, the measures referred to therein may provide for - (a) regulating the business in stock exchanges and any other securities markets; (b) registering and regulating the working of stock brokers, sub-brokers, share transfer agents, bankers to an issue, trustees of trust deeds, registrars to an issue, merchant bankers, underwriters, portfolio managers, investment advisers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnishing to any such agencies, as may be specified by the Board, such information as may be considered necessary by it for the efficient discharge of its functions; ] (m) performing such other functions as may be prescribed. 21[ (2A) Without prejudice to the provisions contained in sub-section (2), the Board may take measures to undertake inspection of any book, or register, or other document or record of any listed public company or a public company (not being intermediaries referred to in section 12) which intends to get its securities listed on any recognised stock exchange where the Board has reasonable grounds to believe that such company has been indulging in insider trading or fraudulent and unfair trade practices relating to securities market. ] 22[(3) Notwithstanding anything contained in any other law for the time being in force while exercising the powers under 23[clause (i) or clause (ia) of sub-section (2) or subsection (2A)], the Board shall have the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908),while trying a suit, in respect of the following matters, namely : (i) the discovery and production of books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... listed public company or a public company (not being intermediaries referred to in section 12) which intends to get its securities listed on any recognised stock exchange where the Board has reasonable grounds to believe that such company has been indulging in insider trading or fraudulent and unfair trade practices relating to securities market: Provided further that the Board shall, either before or after passing such orders, give an opportunity of hearing to such intermediaries or persons concerned.] 26(5) The amount disgorged, pursuant to a direction issued, under section 11B of this Act or Section 12A of the Securities Contracts (Regulation) Act, 1956 or section 19 of the Depositories Act, 1996, as the case may be, shall be credited to the Investor Protection and Education Fund established by the Board and such amount shall be utilized by the Board in accordance with the regulations made under this Act. 24 Inserted by the SEBI (Amendment) Act, 2002 (w.e.f. 29-10-2002). 25 Inserted by the SEBI (Amendment) Act, 2002, (w.e.f. 29-10-2002). 26.Inserted by the Securities Laws (Amendment) Act, 2014 w.r.e.f.18-07-2013. 21 A bare perusal of the various clauses of sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be issued, the amount of fee to be paid for certificate of registration and the manner of suspension or cancellation of certificate of registration under section 12.] (da) the terms determined by the Board for settlement of proceedings under sub-section (2) and the procedure for conducting of settlement proceedings under sub-section (3) of section 15JB; (db) any other matter is required to be, or may be, specified by regulations or in respect of which provision is to be made by regulations.] 22 A bare perusal of this section would show that Regulations governing the term and other conditions of service of officers and employees of the Board are traceable to Section 9 (2). Once Section 9 speaks of officers and employees of the Board, then, their term and other conditions of service can be determined by these Regulations. Accordingly, the Regulations have been made. The Regulations are heavily relied upon. The Regulations define the terms and conditions of service of the employees of the Board. The Regulations shall apply to every whole-time employee appointed by the Board under sub-section-1 of Section 9 of the Act and to every whole-time employee transferred to the Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Act itself. The term of Competent Authority is defined in Regulation (3) (e) to mean the Chairman in the case of officers, which expression shall also include whole-time member of the Board or Executive Director. It shall be the Chairman who is the Competent Authority and in cases of officers other than the Chairman, the Chairman will have to be delegated the powers. In cases of all other employees, concerned Executive Director is the Competent Authority. Then, what we have is the definition of a term duty , which includes service as a probationer and which would indicate as to how the Regulations have to be implemented and power to implement the same vests in the Chairman. Chapter-II of these Regulations deal with appointments, probation and termination of service. Therein appears Regulation (6) which reads as under:- APPOINTMENTS, PROBATION AND TERMINATION OF SERVICE Classification and appointment of whole-time employees 6. (1) The whole-time employees of the Board shall be classified as follows: (a) Officers (Grades A, B, C, D, E, F and Executive Director); (b) Secretarial Staff, Accounts Assistants and Library Assistants (Grades A,B, C); 2[(ba) Junior Secr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted by SEBI (Employees' Service) (Amendment) Regulations 2010, w.r.e.f. 30-1-2008. 5Substituted by the SEBI (Employees' Service) (Amendment) Regulations, 2010, w.r.e.f. 30-1-2008. 6Substituted by SEBI (Employees' Service) (Amendment) Regulations, 2010, w.r.e.f. 17-2-2007. Prior to its substitution, clause (a) read as under:- (4)(a) Recruitment shall be made at the entry level in Grade A or in Grade B or such grade as may be specified by the competent authority or in special circumstances where no suitable candidate is available in the Board's service, or the exigencies of work require, at a higher grade by issuing newspaper advertisement. Provided that the Competent Authority may recruit trainee officers and such trainee officers may be considered for regular appointment on successful completion of the training period and subject to passing a departmental test and interview. 25 A perusal of this Regulation would indicate that by sub-regulation (1) the classification of the whole-time employees of the Board is made. Though it is clear that officers are classified together with their Grades A to F and Executive Director is also classified as a who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in such grade as may be specified by the competent authority by such method as the Chairman may determine, including by Campus Selection and proviso to Regulation (6) (4) (a) states that in special circumstances where no suitable candidate is available in the Board's service or the exigencies of work requires, recruitment may also be made at a higher grade. Thus, the mode of recruitment, Educational and other qualifications, age limit, experience and other incidental matters related to recruitment and promotion in the Board's service shall be as specified in the Schedule. Therefore, recruitment can be made in terms of the substituted Regulations. In the case before us the Schedule that is referred to by the parties would be referred to a little later but what one finds from the further sub-regulations of Regulation (6) is that it is entirely the domain of the Board and when it comes to the appointment to the post of the Executive Director, the Selection Committee consisting of the Chairman and two other members of the Board constituted by the Chairman, will make appointment to the post of Executive Director. That appointment has to be approved by the Board before an off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nct from a power to make a temporary appointment conferred by sub-regulation-1 and contractual employment equally can be made by resorting to the overriding powers and to be found in sub-regulation (2) of Regulation-7. Then, by sub-regulation (3), competent authority, depending upon exigencies of work and/or non-availability of suitable candidates within the Board's service, take on deputation such employees in Grade-D and above from the Government or any other organizations for a specified period and their terms and conditions of deputation shall be specified by the competent authority in consultation with the lending organization. Therefore, we have noticed that there is a power to make temporary appointment, to make contractual appointment or appointment on contract or to take on deputation an employee in Grade-D and above from Government or any other organizations. Sub-regulation (4) of Regulation-7 deals with appointment to the post of Executive Director by deputation or contract. Therefore, it is not in dispute that appointment to the post of Executive Director by deputation and/or contract can be made and that has to be approved by the Board before an offer of appointmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees' Service) (Second Amendment) Regulations, 2012, w.r.e.f. 19-11-2012. 11 Inserted by SEBI (Employees' Service) (Amendment) Regulations 2010, w.r.e.f. 30-1-2008. 12 Words and officer Circle omitted by SEBI (Employees' Service) (Amendment) Regulations, 2012 w.e.f. 2-5-2012. 13 Substituted for and Library Assistants by the SEBI (Employees' Service) (Amendment) Regulations, 2012 w.e.f. 2-5-2012. 14 Words Receptionist-com-Telephone Operator and omitted by SEBI (Employees' Service) (Amendment) Regulations, 2010 w.r.e.f. 30-1-2008. 28 A perusal of sub-regulation-3 would show as to how a departmental promotion committee constituted by the Chairman makes the promotions. That is not disturbed and mode of promotions also is unaffected. Therefore, there is a power to appoint, appoint on probation and therefore the period of probation and termination of service is provided broadly by this Chapter. For the purpose of all this, there is a classification and appointment of whole-time employees, their recruitment either temporarily or on contract basis and matters of their recruitment and appointment including that of promotions. 29 We, now come to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable in as much as in the past as well many appointments were made on deputation / contract on the post of Executive Director. If a legal and constitutional right of the Petitioners is put in issue, then, that right is not defeated, if one carefully peruses the above Regulations. If the above provisions of the Act and Regulations are perused, it is evident that there is no challenge to the power to make the Regulations nor the Regulations themselves. What the Petitioners have been projecting and throughout is that they have some sort of a vested right and they alone ought to be considered in promotional matters. What one finds from their representations is that a meeting was held with the concerned officials and in regard to a complaint that SEBI should take into consideration the resources and expertise already available within, in a manner that furthers the career prospects opportunities of its own employees. Representations Annexures-B, C, D and others falling therein highlight these aspects. What we have found and projected as a serious grievance is the interpretation of the regulation on the filling up of 50% of the posts and as made in this representation but that doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filled up by the internal candidates. Thus, the internal candidates and their interests are not sacrificed or surrendered much less defeated or frustrated. Once the recruitment even from open market enables Petitioner No.1 and its members to apply and they can be considered, then, all the more we do not see any substance in the Petitioners' grievance. Further, paragraph 5 of the affidavit highlights as to how the eight positions have been filled in and/or are being filled in. The four positions of the Executive Directors have been filled in by promoting the officers from highest grade i.e. Grade-F. For the remaining four posts, two are filled in by the Executive Directors who have been appointed on contractual basis for three years, one by deputation and remaining two are vacant. They are to be filled in by the process of advertisement. In that process as well, the Petitioners have participated. If their understanding was as projected in the Writ Petition or their representations, possibly they would not have been able to apply at all. 32 As a result of the above discussion, we do not find that the Petitioners have any pre-existing legally enforceable right to claim a writ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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