Finance minister Pranab Mukherjee had approved the controversial decision taken by the Securities and Exchange Board of India (Sebi) to set aside a committee order on the National Securities Depository (NSDL) issue, say sources.
“The decision was approved by Mukherjee on the file put up to him prior to the board meeting,” said an official who was present at the said meeting. After C B Bhave took over as Sebi chairman in 2008, a panel constituting then part-time members Mohan Gopal and V Leeladhar was formed to investigate and adjudicate pending matters in the NSDL case. Bhave, who had headed NSDL till then, had formally recused himself from the matter.
The panel passed two critical orders on the matter, which were declared “null and void” by Sebi. The entire issue has been energised since there is a court challenge on appointment of Bhave’s successor and related matters.
The financial ministry’s response to the suit cites the controversy surrounding the NSDL case as the key reason for not granting an extension to Bhave. The suit alleges irregularities in not granting an extension. In a media interview, Gopal had accused the then board of pressurising him to reverse the order. However, speaking under cover of anonymity, senior officials said his committee took extraordinary interest in the NSDL matter and acted in a pre-conceived manner. “The committee members seemed to have made up its mind about what they wanted to write.”
Officials said the committee had given new life to a sentence from an earlier order, which was deleted by the Securities Appellate Tribunal.
“There was a sentence in the earlier Sebi order on fixing professional and management and individual liability on the management of NSDL in the order by Anantharaman.
SAT had directed the deletion of this sentence. The very sentence got a new life in the committee’s order which observed that NSDL should fix personal responsibility,” an official said.
Initially, when it was decided that a sub-committee of the board was to be formed, it was Gopal who had insisted on wholetime members being kept out of the committee. “If a member can independently try cases of crores of implications then how could a member not be trusted with this case, just because the chairman had something to do with NSDL. Members on the Board are supposed to be judges anyway,” the official said. “They did not even bother to ask Sebi about the long list of changes they had made to the depository framework even before Bhave joined Sebi.”
