TaxTMI 
TaxTMI 
2013 (11) TMI 696
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.... a person of high integrity. (b) The appointment of respondent No.4 is the result of manipulation, misrepresentation and suppression of vital material before the Searchcum- Selection Committee and the Appointment Committee of the Cabinet (hereinafter referred to as 'ACC'). (c) The appointment of respondent No.4, a Chairman of SEBI, is mala fide. 3. Mr. Prashant Bhushan, learned counsel appearing for the petitioner, has made detailed submissions with regard to the manipulations and the maneuvers indulged in by the petitioner with the active connivance of some other persons to successfully mislead the Search Committee as well as the ACC. He has highlighted that the petitioner does not fulfill the requirements of Section 4(5) of SEBI Act which provides as under:- "(5) The Chairman and the other members referred to in clauses (a) and (d) of sub-section (1) shall be persons of ability, integrity and standing who have shown capacity in dealing with problems relating to securities marker or have special knowledge or experience of law, finance, economics, accountancy, administration or in any other discipline which, in the opinion of the Central Government, shall be useful to t....
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....and member of the Board of UTI AMC was aware of the recommendation of JPC. He deliberately violated the recommendations. According to Mr. Bhushan, the deputation was also in violation of policy of not allowing deputation to an officer who had overseen the organization to which he was being deputed. Deputation of Mr. Sinha was also in conflict of interest as he was Joint Secretary, Banking till May 2002 and the ownership of UTI AMC was with the SBI, Bank of Baroda, PNB and LIC. According to Mr. Bhushan, Mr. Sinha was privy to sensitive information. Under the rules, Mr. Sinha was required to file affidavit/undertaking that person sent on deputation was not privy to any sensitive information. 6. Continuing further, Mr. Bhushan pointed out that on appointment as CMD, UTI AMC on 13th January, 2006, Mr. Sinha continued to get pay scale of Joint Secretary, even though he had an option under Rule 6(2)(ii) of drawing the pay of the UTI AMC or the scale of pay of the Government which is beneficial. There was no separate pay scale for CMD of UTI AMC and the same needed to be created in view of the option under Rule 6(2)(ii). On 29th January, 2007, Mr. Sinha made representation to the Gover....
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....ersonnel and under the Guidelines the deputation of Mr. Sinha was determined to be under Rule 6(1). He points out that under Rule 6(1) there is no option of getting remuneration as per the scheme of the organization to which an officer is sent on deputation. On 12th December, 2007, the Finance Ministry, Department of Economic Affairs requested the Department of Personnel and Training (DOPT) to extend the deputation of Mr. Sinha for the remaining one year and nine months under Rule 6(1). On 10th March, 2008, the ACC advised the Finance Ministry (Department of Economic Affairs) that extension of tenure as CMD of UTI AMC has been granted to Mr. Sinha till 31st May, 2008 under Rule 6(1). It was indicated that upon completion of the aforesaid term he would return to his parent cadre (Bihar). A direction was issued to the Department of Economic Affairs to identify a suitable replacement of Mr. Sinha by that date. Mr. Bhushan points out that in the meantime on 25th March, 2008, the shareholders approved the emoluments of Mr. Sinha as recommended with effect from 27th December, 2006. This, according to Mr. Bhushan, was not permissible since 28th November, 2007 or at best since February, 20....
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.... false information in the application for seeking voluntary retirement; he repeated the same in the counter affidavit, in response to the writ petition in this Court. According to Mr. Bhushan, the averments made in paragraph 18 of the counter affidavit are contrary to the Balance Sheet of the UTI AMC for the year 2007-2008. Mr. Bhushan emphasized that it is apparent from the annual report of UTI AMC for the year 2008-2009, 2009-2010 and 2010-2011 (10½ months), Mr. Sinha got remuneration of Rs.2.15 crores, Rs. 2.36 crores and Rs.3.62 crores, respectively. According to Mr. Bhushan again in paragraph 21 of the affidavit Mr. Sinha has tried to mislead this Court. Mr. Sinha had stated that the excessive payment of Rs. 4 crores for the year 2010-2011 was on account of severance payment. He submits that the severance payment is payable only when the concerned organization asks the CEO to leave. In the case of Mr. Sinha, UTI AMC did not ask him to leave. In fact, Mr. Sinha did not even give the mandatory three months notice, and relinquished the charge without giving any opportunity to the organization to appoint another CEO. Mr. Bhushan submits that Mr. Sinha wrongly received benef....
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....ial facts relating to the remuneration of Mr. Sinha as CMD, UTI AMC before the Search-cum-Selection Committee and the ACC. Mr. Bhushan points out that the application form for the post of SEBI Chairman required the applicant to disclose scale of pay and basic pay of the post presently held along with service of the petitioner. The first meeting of the Search-cum- Selection Committee was held on 2nd November, 2010. The SSC short listed five candidates out of nineteen. Mr. Bhushan then points out that the second meeting of the Committee was held on 13th December, 2010, wherein the names of Mr. U.K. Sinha and Mr. Himadri Bhattacharya were recommended for the post of Chairman, SEBI in the order of merit. Mr. Bhushan further submitted that the selection of Chairman of SEBI required the approval of the ACC. The appointments recommended to the ACC have to be sent along with a standard Performa and annexures which are to be filled in by the Ministry recommending the appointment. The proposal for the appointment of Mr. Sinha was put up to the ACC by the Finance Ministry vide its confidential letter No.D.O.No.2/23/2007-RE dated 13th December, 2010. Blatantly false information is given agains....
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....he Government in their entire career. Mr. Bhushan, therefore, submits that it was for this reason that Mr. Sinha manipulated that there should be no advertisement and the selection should be made through the Search route. In the case of advertisement, he would have to reveal the emoluments received by him. Relying on the aforesaid facts, Mr. Bhushan submits that since vital pieces of information was withheld from the Search Committee as well as ACC, Mr. Sinha clearly cannot be said to be a man of high integrity. The post of the Chairman, SEBI is a very important position having a bearing on the flow of investment, Indian and Foreign, economic growth and the safety of funds invested by large and small investors. Therefore, according to Mr. Bhushan, it was important that the complete facts particularly those having direct bearing on deciding the question of integrity should have been placed before the Search-cum-Selection Committee and the ACC. In support of the submission learned counsel has relied on the judgment of this Court in Centre for PIL & Anr. Vs. Union of India & Anr. (2011) 4 SCC 1. 14. The next ground of challenge of the petitioner to the appointment of Mr. Sinha as t....
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....a and RIL. There was a complaint pending with regard to insider trading relating to RIL and Reliance Petroleum in which over Rs.500 crores were made in four days of trading in September, 2007. Mr. Bhushan then submits that in order to facilitate the selection of Mr. Sinha there was illegal and arbitrary change in composition of Search-cum-Selection Committee. Ms. Omita Paul ordered two new names of her own to be appointed as experts of eminence on the Selection Committee. She also suggested Secretary (Financial Services) over and above the two experts. Thus, according to Mr. Bhushan, three of the five members of the Search-cum- Selection Committee were hand picked by Ms. Paul. In order to include Secretary (Financial Services) in the Search Committee, Rule 5 of the Rules, 2010 was amended to include clause (e) under which two nominees of the Finance Minister were included. In such a way, primacy was given to the Finance Minister. Mr. Bhushan submits that the record clearly shows that the object of the entire exercise of changing the Rules was to ensure that the Committee desired by the Advisor Ms. Omita Paul remains unchanged. It was also done probably to ensure that the ex-officio....
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.... stated that a professional Chairman and Board of Trustees will manage UTIII and that advertisements for appointment of professional managers will be issued. The committee recommended that it should be ensured that the selection of the Chairman and professional managers of UTI-II should be done in a transparent manner, whether they are picked up from the public or private sector. If an official from the public sector is selected, in no case should deputation from the parent organization be allowed and the person chosen should be asked to sever all connections with the previous employer. This is imperative because under no circumstance should there be a public perception that the mutual fund schemes of UTI-II are subject to guarantee by the Government and will be bailed out in case of losses." 16. Mr. Bhushan submits that the aforesaid recommendations were blatantly ignored in the selection of Mr. Sinha. He further pointed out that neither Mr. Sinha nor Mr. Jitesh Khosla were professionals. Neither of them met any of the four criteria in the advertisement inserted for the post of UTI CMD in newspaper dated 4th June, 2012. In fact, the entire manipulation and mala fide exercise, a....
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....ent should reassess his performance after three years. The writ petition was dismissed. The Chairman was given yet another extension in 2000 to make him the longest serving Chairman. What followed was the largest stock market scam in which the investors and the government lost tens of thousands of crores and the entire JPC report is the testimony to the scam. The Government and tax payer lost over Rs.10,000 crores in the UNIT 64 scam. Similarly Mr. Bhushan submits that the respondents have wrongly taken the preliminary objection that earlier two writ petitions having been filed by the petitioner challenging the appointment of respondent No.1 having been dismissed as withdrawn. He further submits that the respondents have wrongly leveled allegations that this petition is at the behest of some other person who is interested to continue as the Chairman of SEBI. The petitioner has not prayed for the reinstatement of any of the previous incumbents. The petitioner only prays for appointment of a person as the Regulator who should be a person of high integrity functioning in a transparent manner. Mr. Bhushan submits that although the respondents claim that the petitioner has suppressed ma....
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....eneficial for him. The recommendations made by the Aapte Committee were taken into notice when extension of tenure of Mr. Sinha was approved by the Board of Directors UTI AMC on 17th September, 2007. Actual sanction came on 11th April, 2008, as the approval of the Bank of Baroda did not come till 29th March, 2008. Therefore, there was no approval prior to 11th April, 2008 of the compensation of Rs.1 crore per annum alongwith the related payment of bonus of Rs. 1 crore. Similarly, it is stated by Mr. Vahanvati that submission of the application for voluntary retirement was done four days after the approval on 15th April, 2008. Until then, the petitioner had been in receipt of pay scale which was duly sanctioned on the post held by him in the Government. Therefore, the petitioner has unnecessarily tried to create an impression that there has been any deliberate misrepresentation or concealment of fact by respondent No.4. In the form of application to accept commercial appointment, respondent No.4 had clearly stated that he has been working as the Director/CEO UTI AMC since 3rd November, 2005 till date. Respondent No.4 had to state the pay scale of the post and the pay drawn by the of....
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....2008 the then Finance Minister had approved on 2nd November, 2007 that the High Powered Search Committee (later notified as the Search Committee) which had four members and one Chairman. The Finance Minister noted that there should be one more outside expert. Accordingly, Dr. S.A. Dave, Chairman CMIE, was nominated as the Member. Therefore, to say that the amendment of the rules has been made just to ensure that balance was tilted in favour of the Finance Minister is without any basis. 21. Learned Attorney General also pointed out that the Search-cum-Selection Committee in its meeting held on 29th January, 2008 had unanimously short listed two names in the following order: (1) Mr. U.K. Sinha and (2) Mr. J. Bhagwati. However, notwithstanding the recommendation of Mr. Sinha by the Selection Committee, Shri Bhave was appointed as Chairman, SEBI on 15th February, 2008. In 2009, a statutory system was established for selection of Chairman/Whole Time Member of the SEBI. The proposal was also placed to amend Rule 3 of the Securities & Exchange Board of India (Terms and Conditions of Service of Chairman and Members) Rules, 1992 to include the provision relating to procedure to be follow....
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....ure of Mr. Bhave are totally baseless and need to be ignored. He makes a reference to a detailed explanation given in the affidavit filed by the UOI. The term of Mr. Bhave was not extended to avoid the Government being unnecessarily involved in a scandal. In the earlier petition (W.P. No. 340 of 2012), the petitioner has sought an extension to continue the tenure of Mr. Bhave for 5 years which was withdrawn. Prayer No.2 in the W.P.(C) No.340 of 2011 was as follows : "Issue a writ of mandamus or any other appropriate writ, order or, direction to quash and declare void constitution of sub-committee of the Search-cum-Selection Committee under Shri U.K.Sinha, Chairman SEBI for conducting interview to the post of whole time members and proceedings/recommendation thereof." 24. This would clearly ensure that as soon as Mr. Sinha's appointment was declared void, Mr. Bhave would continue as a Chairman. This is evident from Prayer 5 which is as under : "Issue a writ of mandamus or any other appropriate Writ, order or direction to direct Respondent Nos.1 & 2 to act in accordance with the Government of India Notification No.2/106/2006-RE, dated 23rd July, 2009 which stipulates enhance....
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....e reiterates the submissions of the Attorney General that public interest litigation is founded on the principle of uberrima fide, i.e., the utmost good faith of the petitioner. To buttress his submission, learned senior counsel relied on S.P. Gupta's case. This petition is motivated by ill will, and the moving spirit behind the petition is Mr. C.B. Bhave. He reiterated the submissions of the Attorney General that Mr. C.B. Bhave and the Whole Time Member Dr. K.M. Abraham were aggrieved by the non-grant of extension to them, on the posts occupied by them, in the light of change in the rules. In fact, the petitioner, in his submission, has made detailed reference to the motivated complaint made by the Whole Time Member Dr. K.M. Abraham about the functioning of the new Chairman, i.e., Mr. U.K. Sinha. This was only because Mr. Bhave and Mr. Abraham were upset about the nonextension of tenure of Mr. Bhave. Apart from the change of rules, the extension was not granted to Mr. Bhave for his lapses in dealing with the IPO Scam of 2005 when he was the Chairman of NSDL. Conclusions: 27. We have considered the submissions made by the learned counsel for the parties. Although all the resp....
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....unfair trade practices relating to securities market. To enforce its directions, the Board has powers under Section 11(4) to issue any suspension/restraint orders against the persons including office bearers of any stock exchange or self regulatory organisation. It can impound and retain the proceeds or securities in respect of any transaction which is under investigation. The wide sweep of the powers of SEBI leaves no manner of doubt that it is the supreme authority for the control and regulations and orderly development of the securities market in India. It would not be mere rhetoric to state that in this era of globalisation, the importance of the functions performed by SEBI are of paramount importance to the well being of the economic health of the nation. Therefore, Mr. Bhushan is absolutely correct in emphasising that the Chairman of SEBI has to be a person of high integrity. This is imperative and there are no two ways about it. The importance of the functions performed by SEBI has been elaborately examined by this Court in the case of Sahara India Real Estate Corporation Ltd. & Ors. Vs. Securities and Exchange Board of India & Anr. 2013 (1) SCC 1 Justice Radhakrishnan, upon....
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....airman and other Members of the SEBI shall be persons of "ability, integrity and standing who have shown capacity in dealing with problems relating to securities market." Statutorily, therefore, a person cannot be appointed as Chairman/Member of the SEBI unless he or she is a person of high integrity. We, therefore, have no hesitation in accepting the submission of Mr. Bhushan that the selection and appointment of respondent No.4 could be challenged before this Court in a writ petition under Article 32 of the Constitution of India on the ground that he does not satisfy the statutory requirements of a person of high integrity. 31. Since Mr. Bhushan has relied on the judgment of this Court in Centre for PIL & Anr. (supra), it would be appropriate to notice the observations made in that judgment by S.H. Kapadia, C.J. in paragraph 2 of the judgment, it has been observed as follows :- "2. The Government is not accountable to the courts in respect of policy decisions. However, they are accountable for the legality of such decisions. While deciding this case, we must keep in mind the difference between legality and merit as also between judicial review and merit review. .... If a du....
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....e Chairman of SEBI. DEPUTATION : Was it irregular, illegal or vitiated by colourable exercise of power? 35. It is a matter of record that respondent No.4 was on deputation with UTI AMC since the year 2005. His deputation was duly approved by the Ministry of Finance, DOPT and the Government of Bihar, wherever applicable. Respondent No.4 was first appointed as CEO, UTI AMC by order dated 30th October, 2005. He was initially on deputation under Rule 6(2) (ii) and subsequently under Rule 6(2)(i) of the IAS Cadre Rules. The terms and conditions of service of respondent No.4 at UTI AMC were settled on 16th April, 2007. This was in conformity with the letter dated 31st October, 2005 written by the DOPT accepting the request made by the Government of Bihar in its letter dated 28th October, 2005 for approval of deputation of respondent No.4 with UTI AMC for a period of two years under Rule 6(2)(ii) of IAS Cadre Rules. The letter further indicated that terms and conditions applicable in the aforesaid deputation were under examination and would be communicated shortly. The deputation was converted from Rule 6(2)(ii) to Rule 6(2)(i), upon clarification of the applicability of the appropr....
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.... Government has approved his deputation to UTI AMC, in public interest. UTI AMC is a company formed by SBI, PNB, BoB and LIC, each having equal shareholding. It is registered with Securities and Exchange Board of India (SEBI) and is engaged in activities pertaining to mutual fund, portfolio management, venture fund management, pension fund and offshore fund management. The UTIAMC is managing the 'financial assets of over Rs. 50,000/- crores. Considering the challenges that UTI AMC faces in the prevailing market conditions and the need for continuity necessitated by the structural changes undertaken in the Company, the Chairman of SBI, in consultation with other stakeholders of UTI AMC (viz. LIC, BoB and PNB) has offered to Shri Sinha a four year tenure as CMD of UTIAMC w.e.f. 1st June, 2008, or earlier without break of continuity on the understanding that Shri Sinha will take voluntary retirement from Government service and that Shri Sinha will be entitled for salary and perquisites decided by the Compensation Committee of the Board of the Company from time to time. Hon'ble Finance Minister has approved this proposal. 2. The Department of Economic Affairs supports the requ....
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....ssed. He was, however, required to obtain approval under Rule 26 for commercial employment-post retirement. Sr.No.5 of Form `L' requires the person seeking approval to state the pay scale of the post and pay drawn by the Officer at the time of retirement. Undoubtedly, respondent No.4 was drawing the pay scale of Rs.22400-525-24500. He also stated his present pay to be Rs.23,450/-. There is no legal infirmity in the aforesaid statement by respondent No.4. It is a settled proposition of law that deputationist would hold the lien in the parent department till he is absorbed on any post. The position of law is quite clearly stated by this Court in State of Rajasthan & Anr. Vs. S.N.Tiwari & Ors. (2009) 4 SCC 700 "18. This Court in Ramlal Khurana v. State of Punjab observed that: (SCC p. 102, para 8) "8. ... Lien is not a word of art. It just connotes the right of a civil servant to hold the post substantively to which he is appointed." 19. The term "lien" comes from the Latin term "ligament" meaning "binding". The meaning of lien in service law is different from other meanings in the context of contract, common law, equity, etc. The lien of a government employee in service law ....
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.... is based only on assumption and cannot be accepted without any supporting material. Respondent No.4 in his capacity as a Joint Secretary/Additional Secretary to Government of India was required to state whether he was privy to any sensitive information in his official capacity. The information would be required if the Officer was in receipt of information whilst working as Officer in the Government and is aware of the sensitive proposals or other decisions which are not otherwise known to others and which can be used for giving undue advantage to the Organization in which he is seeking a future position. In the case of respondent No.4, he was already working as CMD-cum-CEO in the UTI AMC. Therefore, there was no question of respondent No.4 having been privy to any sensitive information with regard to UTI AMC at the time when he was posted as Joint Secretary/Additional Secretary in the Government of India. In fact, respondent No.4 in the same Form No. L at Sr.No.7-C had stated that he was earlier working as Director in UTI AMC and was appointed as CEO cum MD from 3rd November, 2005 and CMD from 13th January, 2006. The declaration is in fact in conformity with the 3rd proviso to Rul....
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....re consideration for the aforesaid transfer was received by the Central Government. Therefore, it becomes quite evident that UTI AMC is not a "Government Company" under Section 617 of the Companies Act. In the affidavit filed, this has been the consistent stand taken by the Central Government and the CAG in various writ petitions filed by the petitioner. In a company like the UTI AMC, it is for the shareholder on the Board to decide what process to follow and whom to appoint. When the selected candidate is not a government employee having a lien on a government job, then the government would have nothing to do with the selection process. In this case, the shareholders made a request to the Government for the deputation of respondent No.4. They again made a request for extending his deputation beyond two years. In April 2008, respondent No.4 was offered commercial employment provided he took VRS. At each stage, permission was duly granted by the competent authority after duly following the prescribed procedure as per the rules of executive business. Therefore, we do not find any justifiable reason to doubt the legality of the manner in which respondent No.4 continued to work in UTI ....
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.... of good governance, it is the responsibility of the Board to ensure succession planning at the top. As a normal practice, nominations are made by the Board and share-holders, either directly or through a search firm and the post is rarely advertised. In any event, it would be the decision to be taken by the Board of Directors. Respondent No.4 would clearly have no say in the matter. 46. We are also of the opinion that there is nothing so outlandish or farfetched in the statement made by respondent No.4 that "such higher-level posts are generally not advertised". It is a matter of record that previously Shri M. Damodaran, an IAS Officer of the rank of Additional Secretary, the post was not advertised. Subsequently also, the appointment of Mr. S.B. Mathur and Administrator Mr. K.N. Tripathi Raj was made without any advertisement. In fact, both the appointments were made without even resorting to the Search-cum-Selection Process. The erstwhile Chairman of SEBI was also appointed without any advertisement. It is also a matter of common knowledge that the posts such as the Government of Reserve Bank of India are hardly ever advertised. Similarly, the post of Chairman, SEBI was adver....
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....n of a cadre Officer under an international organization, an autonomous body not controlled by the Government or a private body. The aforesaid deputation can be made only in consultation with the State Government on whose cadre the Officer is borne. We had earlier noticed that due procedure was followed when respondent No.4 was sent on deputation. However, at the risk of repetition, since the petitioner has made such a grievance about the same, it will be apt to notice that DOPT had agreed with the proposal of DEA with the consent of Government of Bihar for deputation of respondent No.4 for a period of two years under Rule 6(2)(ii) and conveyed to the Government of Bihar, Department of Economic Affairs through Letter No.14017/26/2005-AIS-(II) dated 31st October, 2005. As noticed earlier, the deputation of respondent No.4 as CEO, UTI was conveyed to UTI vide DOPT letter dated 16th April, 2007. The terms and conditions clearly provided that the Officer could draw the pay of the organization or the government pay scale which was beneficial to respondent No.4. Respondent No.4 had made a representation to DOPT vide his application dated 29th January, 2007 requesting to allow him to draw....
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....d shareholders of UTI AMC. It was entirely for them to adopt such policy of appointment as they deem fit. We fail to understand that even upon respondent No.4 complying with all the conditions of deputation, it would render him a person of not high integrity. We may notice here that the Appointment Committee of the Cabinet (ACC) had approved the extension of tenure of respondent no.4 as CMD UTI AMC till 31st may, 2008. 49. This takes us past the alleged irregularities regarding deputation of respondent No.4, the alleged misstatement/nondisclosure about his pay scale/sanctioned emoluments as disclosed in the letter dated 16th April, 2007; the alleged appointment of respondent No.4 is contrary to recommendations made by the AAPTE Committee on July, 2007; the alleged false declaration under Rule 26(3)(ii) of AIS Death-cum-Retirement Rules that in the last three years of his career he had not been privy to sensitive and strategic information of UTI AMC; the alleged false statement about higher-level posts are generally not advertised. Was the recommendation and appointment of Mr. U.K. Sinha vitiated by MALA FIDE exercise of powers? 50. Mr. Bhushan submitted that the appointmen....
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.... of mala fides are often more easily made than proved, and the very seriousness of such allegations demands proof of a high order of credibility. As noted by this Court in E.P. Royappa v. State of T.N. courts would be slow to draw dubious inferences from incomplete facts placed before it by a party, particularly when the imputations are grave and they are made against the holder of an office which has a high responsibility in the administration." 52. Further, in Saradamani Kandappan's case (supra)¸ this court again emphasized that the contention of fraud has to be specifically pleaded and proved. 53. Keeping in mind the aforesaid observations, we shall now examine the material placed before us by the petitioner to establish the allegations of mala fide exercise of power. 54. The first instance of mala fide relied upon by Mr. Bhushan that number of steps were taken deliberately to deny extension to the earlier Chairman. According to Mr. Bhushan, the moving spirit in the strategic plan to deny the extension to Mr. C.B. Bhave was respondent No.6. The allegations made by the petitioner have been emphatically denied by UOI, Mr. Sinha, respondent No.4 and Ms. Omita Paul, r....
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....hat the amendment of the rules had no relevance to the consideration of recommendation of Mr. Sinha to be appointed as Chairman of the SEBI. The Attorney General had also pointed out that in spite of the change in the Selection Committee and in spite of Mr. Sinha having been short-listed at No.1 by the Search-cum- Section Committee in its meeting held on 29th November, 2008, it was Shri C.B. Bhave who was appointed Chairman, SEBI on 15th February, 2008. We also find substance in the submission of learned Attorney General that the amendment in Rule 3 of the Security Exchange Board of India (Terms and Conditions of Service and Members) Rules, 1992 was to provide for more participation by the expert members. Therefore, sub-rule (5) of the aforesaid rules was incorporated which requires that recommendation of Search-cum-Selection Committee will consist of Cabinet Secretary, Department of Economic Affairs, Chairman, SEBI for selection of WTM and two expert eminent from relevant field. We have also been taken through the necessary correspondence for the inclusion of Shri Suman Berry and Shekhar Chaudhary, two experts of eminence from the relevant filed for the selection of Chairman, SEBI....
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....rch-cum-Selection Committee. We are unable to discern any illegality in the procedure adopted by the Search-cum-Selection Committee. We also find substance in the submission of Mr. Salve that the petitioner has made much a do about the non-mention of the pay scale of the petitioner in the Performa sent to the ACC which was enclosed with the Confidential Letter No. DO No.2/23/2007-RE dated 13th December, 2010. The letter clearly mentions that Search-cum-Selection Committee was constituted under Rule 3 of the SEBI Rules, 1992. The Searchcum- Selection Committee consisted of :- 1. Shri K.M.Chandrasekhar, Cabinet Secretary - Chairman 2. Shri Ashok Chawla, Finance Secretary - Member 3. Shri R.Gopalan, Secretary (DFS) - Member 4. Shri Devi Dayal, Former Secretary (Banking) - Member 5. Prof. Shekhar Chaudhuri, Director, IIM Kolkata - Member 6. Dr. Suman K.Bery, Director General, NCAER - Member 57. Applications were invited by circulating the vacancy position to all cadre controlling authorities in the Government of India and States on 10th September, 2010. The vacancy was simultaneously put on the Website of the Ministry of Finance, Department of Personnel and Trainin....
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....position for the purpose of abusing the authority of Chairman, SEBI. Adverting to the allegation of non-disclosure of ESOP, in our opinion, Mr. Salve has rightly submitted that it was not done to avoid any investigation by the ACC into the question as to why respondent No.4 would wish to join Chairman, SEBI when he was drawing much higher emoluments as Chairman, UTI AMC. This non-mention cannot lead to the conclusion that if the same had been mentioned, respondent No.4 would not have been selected as Chairman, SEBI on the ground that it would have been illogical for a person drawing higher emoluments on one post to join another post having lesser emoluments. Mr. Salve has rightly reiterated that there was nothing abnormal; in the course adopted by respondent No.4. No material has been placed on record to show that respondent No.4 was in receipt of ESOP illegally. It has been pointed out that under ESOP, an employee is given an option by the company to buy its shares upto the given quantity allotted to him which can be exercised after a specified time. In the case of UTI AMC, the stock option was to vest after a period of three years. Secondly, an employee could not exercise 100% of....
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....sly as it involves the commission of very serious criminal offence under Section 120-B of the IPC. Such a charge of criminal intent and conduct had to be clearly pleaded and established by evidence of very high degree of probative value. No notice of such allegations can be taken based only on pure conjectures, speculations and interpretation of notings in the official files. 61. The observations made by this Court in the judgments noticed earlier make it clear that it was incumbent on the petitioner not only to make specific allegations, but to produce very strong evidence to lead to a clear conclusion that the selection was actuated by mala fide. The 7 steps relied upon by the petitioner to establish conspiracy per se do not amount to conspiracy to mislead the ACC. It is unbelievable to expect such a coordinated overt and covert operation to have been even conceived, let alone successfully executed just to have Mr. U.K. Sinha appointed as Chairman, SEBI. The appointment of Mr. Sinha is strictly in conformity with the procedure prescribed by service rules, i.e, Rules 16 and 26 of the AIS (DCRB) Rules, 1958. The files were sent to PMO as and when required by rules of business. I....
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.... has been set out that prior to July, 2009; selections were made by the Committee as decided by the Finance Minister from time to time. As noticed earlier, the name of Dr. S.A. Dave, Chairman, CMIE was added as an expert member of the high powered Selection Committee constituted by the Finance Minister for the selection of Chairman, SEBI in 2008. Even at that time, Mr. Sinha was short-listed and placed at Sr.No.1. Out of the two names short listed as noticed by us earlier in spite of the recommendations, it was C.B. Bhave who was appointed. In 2009, a statutory system was established for the selection of Chairman/Whole time Member of SEBI. In this back-ground, Rule 3 was amended by introducing sub-rule (5) which provided that the Chairman and every whole time member shall be appointed by the Central Government on the recommendation of the Selection-cum-Search Committee consisting of the (i) Cabinet Secretary as the Chairman, (ii) Secretary, Department of Economic Affairs, (iii) Chairman, SEBI (for selection of whole time members) (iv) two experts of eminence from the relevant field to be nominated by the Central Government. In 2010, it was decided to initiate action for a fresh sel....
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....odate the brother of respondent No.6. In our opinion, the allegations are malicious and without any basis, and therefore, cannot be taken into consideration. 63. This now brings us to the preliminary objections raised by the respondents that the writ petition deserves to be dismissed on the ground that it is not a bona fide petition. According to the respondents, the petitioner has been set up by interested parties. We entirely agree with the submissions made by the learned Attorney General that the first requirement for the maintainability of a public interest litigation is the uberrimae fide of the petitioner. In our opinion, the petitioner has unjustifiably attacked the integrity of the entire selection process. It is virtually impossible to accept the submission that respondent No.6 was able to influence the decision making process which involves the active participation of the ACC, a high powered Search-cum-Section Committee with the final approval of the Finance Minister and the Prime Minister. The proposition is so absurd that the allegations with regard to mala fide could have been thrown out at the threshold. We have, however, examined the entire issue not to satisfy th....