The Supreme Court has issued notice to Sebi chairman UK Sinha on the prayer of quo warranto filed by noted lawyer Prashant Bhushan on behalf of Bangalore-based financial expert Arun Agarwal. Agarwal is challenging the appointment of Sinha as Sebi chairman under various grounds.
The court has also made Omita Paul, Secretary to the President, party in the present writ and issued notice to her also as she was involved in his appointment. The notices are returnable after 4 weeks.
The petition challenged the appointment of Sinha as Chairman of Sebi on the grounds “of his not being a person of integrity which was one of the eligibility conditions” as laid down in Sub-section 5 of Section 4 of the Sebi Act. 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 crores 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 petiotioner 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 KM 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 June 1, 2011 to the Prime Minister, after Mr Sinha became the Chairman of the Sebi,” the petition said.
According to Agarwal, the letter is a telling expose on extraneous forces influencing the functioning of the regulator of the capital market. In the letter the WTM alleged that Mr Sinha tried to influence him on four cases and invoked the name of Advisor while doing so. One of the cases related to securities fraud of Reliance group, and others related to Tayals of Bank of Rajasthan, Sahara, and MCX. While trying to influence him, Sinha had stated that these matters were “engaging the attention of Union Minister for Finance, or Mrs Omita Paul, Advisor to the Finance Minister,” the petition said.
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