Factual Matrix 

In the case of BRD Securities Ltd v Union of India & Anr. BRD Securities, a Non-Banking Finance Company (NBFC) that is registered with the Reserve Bank of India (RBI) and engaged in the asset financing sector, filed a complaint objecting to the delegation of the quasi-judicial powers to the SEBI officers and staff.

For violating the Companies Act, SEBI Regulation (Issue and Listing of Debt Securities) 2008, and SEBI (Disclosure and Investor Protection) Guidelines while issuing debentures and bonds between 2003 and 2017, BRD received a show cause notice from SEBI. BRD Securities denied the accusations and claimed that it had not broken any laws, rules, or regulations in doing so. As a result, it asked for a personal hearing. Two meetings were scheduled: once with the chief general manager and once with the SEBI Board’s permanent member. Both times, the meeting was called to order, but BRD was not given a chance to speak. They decided to go to the High Court as a result of this.

Contention from both parties 

BRD Securities contended that According to the SEBI Act, the proposed procedures may only be conducted by the SEBI Board because they are quasi-judicial in nature and cannot be assigned to a SEBI officer. Despite the fact that any Board member may be granted authority to act on behalf of the Board under Section 19 of the SEBI Act. He argued that, to the extent,t the quasi-judicial functions of the Board are delegated, the SEBI (Delegation of Statutory and Financial Powers) Order, 2019, issued in the ostensible exercise of Section 19 power, provides for the delegation of the Board’s function, including those under Sections 11(1), 11(4A), 11B(1), 11B(2), and 11B of the SEBI Act to the Chief General Manager.

According to the SEBI Act, the proposed procedures may only be conducted by the SEBI Board because they are quasi-judicial in nature and cannot be assigned to a SEBI officer. Despite the fact that any Board member may be granted authority to act on behalf of the Board under Section 19 of the SEBI Act. He argued that to the extent, the quasi-judicial functions of the Board are delegated, the SEBI (Delegation of Statutory and Financial Powers) Order, 2019, issued in the ostensible exercise of Section 19 power, provides for the delegation of the Board’s function, including those under Sections 11(1), 11(4A), 11B(1), 11B(2), and 11B of the SEBI Act to the Chief General Manager.

Analysis of Court Order 

Justice VG Arun of the Kerala High Court single judge bench ruled that all of the Securities and Exchange Board of India Act’s (SEBI Act) powers and duties, including the quasi-judicial powers of the SEBI Board, can be delegated to any member, officer, or another person with the exception of the power to make rules under Section 29.

According to the court, a delegation of quasi-judicial functions is allowed provided the statute permits it. All of the Board’s powers and duties, with the exception of the authority to make rules under Section 29, can be assigned to any member, official, or other person, according to a straightforward reading of Section 19 of the SEBI Act. The judge In Sahni Silk Mills (P) Ltd. v. ESI Corpn, the Supreme Court noted that severe resistance to the transfer of power is no longer practical due to the enormous amount of work that statutory bodies must complete

According to the Court, where such delegation is permitted by statute, it is acceptable to delegate quasi-judicial functions. As a result, the Court denied the petition insofar as it contested the decision granting a SEBI employee or officer quasi-judicial powers.