Legal tussle over reappointment of Saran as Sebi member

Business Standard: Mumbai: Wednesday, 18 November 2015.

The logo of the Securities and Exchange Board of India (SEBI), India's market regulator, is seen on the facade of its head office building in Mumbai.

 A legal tussle is brewing  over the reappointment of Prashant Saran as whole-time member of the Securities and Exchange Board of India (Sebi). The Society Standing for All Youth Mass Awareness, a  non-governmental organisation (NGO), had filed a writ petition in the Delhi High Court against the reappointment of Saran in 2012. The petition alleges that his fresh application for the term was with an invalid vigilance clearance.

According to the guidelines of the Central Vigilance Commission (CVC), the department of economic affairs (DEA) has vigilance jurisdiction and the ministry of finance is the disciplinary authority for whole-time members of Sebi.

The petition has claimed that both the authorities were not involved while giving vigilance clearance to Saran.

“The records show that no vigilance clearance was sought for the appointment of Prashant Saran from the CVO, DEA nor was vigilance clearance sought or obtained from the CVC,” stated the petition.

An email sent to Sebi remained unanswered.

The petition has named the Union of India, Sebi, CVC, Saran and U K Sinha, chairman of Sebi, as parties to the case.

The petition has further alleged that Saran’s application was processed on the basis of clearance accorded by the then Sebi Chief Vigilance Officer (CVO), Padmnabhan. The petition also claims that the application was forwarded to ministry by the Sebi chairman. The petition has sought an inquiry into the matter.

The petitioners have claimed a conflict of interest as Padmanabhan was reporting to Saran during the period when Saran’s reappointment was cleared.

In the same matter, the Chief Information Commission (CIC) had issued a warning to Sebi for not disclosing the terms of reappointment under the Right to Information (RTI) act. Business Standard had first reported it in September.

The next hearing is scheduled for December 15.

The appointments for all government organisations such as Public Sector Undertakings (PSU), quasi judicial bodies such as Sebi, Insurance Regulatory and Development Authority (IRDA) and Telecom Regulatory Authority of India (TRAI) are approved by the government. The appointments for the post of chiefs of these organisations necessitate vigilance clearance by their nodal ministry.

According to sources, Sebi has also moved courts and filed caveats to prevent ex-parte orders against Saran’s appointment.