The Supreme Court has issued notices to the central government and the Securities and Exchange Board of India (Sebi) Chairman U K Sinha on the prayer of quo warranto filed by noted lawyer Prashant Bhushan on behalf of Bangalore-based financial expert Arun Aggarwal.
Aggarwal has challenged Sinha’s appointment on various grounds, including his integrity, illegality in denying extension to the previous chairman and the alleged lobbying by corporate groups facing action. The petition, among other things, pleaded the Court to restrain Sinha from functioning as the chairman of Sebi. It also sought an immediate enquiry into the process adopted for Sinha’s selection, and a criminal investigation into his appointment as the CMD of UTI Asset Management.
The Court has also made Omita Paul, secretary to the President, party in the writ and issued a notice to her over allegations of manipulation in the appointment process. The notices are returnable after four weeks.
The central government, Sebi, the chief vigilance commissioner and the Central Bureau of Investigation are the other respondents to the petition.
This is the third such petition filed against Sinha’s appointment to the high profile office in February 2011. Unlike the first two petitions — which challenged the appointment process and was subsequently dismissed by a bench headed by the Chief Justice, who remarked that there was no justification for such petitions — the latest one questions the integrity of the Sebi chairman, accusing him of concealing emoluments received as CMD of UTI Asset Management.
In response to the earlier petition challenging the appointment, the finance ministry had denied the allegations that the appointment process was manipulated. The ministry claimed that the petition was made on behalf of disgruntled former Sebi officials. The finance ministry had also defended the appointment saying no undue favour was shown to Sinha.
More From This Section
The latest PIL comes shortly after Sebi took strong action against several corporate houses for allegedly diverting crores of rupees. The petition further alleged that Sinha committed a “fraud on the Search and Selection Committee and the Appointment Committee of the Cabinet. The fraud relates to concealing from the committees the unheard emoluments of over Rs four crore per annum which he wrongfully earned while working for a PSU by declaring the post of the CMD, UTI AMC, as commercial appointment.”
The information relating to emoluments was mandatory information and it had a material bearing on the selection to a post of high integrity that Sinha failed to fulfill, Agarwal alleged in the petition.
“The emoluments also had to be concealed because UTI AMC was a PSU and could not pay the emoluments that were being paid to Mr Sinha. The emoluments paid to Mr Sinha was almost 30 times more than paid to those occupying very high position in the government. It was also more than what the bureaucrats senior to him and involved in the selection process were paid by the Government in their entire career.”
The petitioner also alleged that the previous chairman and members of Sebi were illegally denied extension. The petition also refers to the letter written by former Sebi member K M Abraham in which he alleged that Sinha was under pressure from finance minister’s advisor Omita Paul.
“The allegation of Paul acting on behalf of the corrupt companies and how Mr Sinha was lobbying for them with the WTM was revealed by Dr Abraham as a WTM (Whole Time Member) of the SEBI Board, in a letter written by him on 1/6/2011 to the Prime Minister, after Mr Sinha became the Chairman of the SEBI,” the petition said.
In response to the earlier petition challenging the appointment, the Finance Ministry, had denied all the allegations that the appointment process was manipulated. The Ministry claimed that the petition was made on behalf of disgruntled ex-officers of SEBI. The Finance Ministry had also defended the appointment saying no undue favour was shown to Sinha.
The latest PIL comes shortly after Sebi took strong action against several corporate houses which were diverting funds worth crores of rupees.