How Attorney General defended Sebi chief in SC

The Centre on Wednesday opposed in the Supreme Court a plea seeking removal of  SEBI Chairman U K Sinha on grounds of alleged irregularities in his appointment, saying the charges against him are false as recently he acted against corporates including Sahara.

"They are obsessed with conspiracies...This man (SEBI chairman) has gone against Sahara and is looking into the case of RIL and others," Attorney General (AG) G E Vahanvati submitted before a bench of justices S S Nijjar and Pinaki Chandra Ghose.

The AG was responding to arguments of Prashant Bhushan, appearing for petitioner Arun Kumar Agrawal, that M Abraham, a Kerala-cadre IAS officer and a whole-time member of SEBI, had written a letter to the Prime Minister that information regarding cases, pending with the market regulator, against some corporates were sought by the Finance Ministry.

Solicitor General Mohan Parasaran said Omita Paul, Secretary to the President, who was then advisor to the then finance minister, had "no role" in the appointment of Sinha as SEBI Chairman.

The Cabinet Committee on Appointment, headed by the Prime Minister, appoints the SEBI chairman and the advisor has no role in it.

Seeking dismissal of the PIL of Agrawal, the AG said that complete facts relating to two earlier petitions on the same issue were not disclosed to this court.

"I should have raised preliminary issues earlier. The court entertained the petition in good faith. The PIL petitioner should have disclosed these facts," Vahanvati said, adding "this kind of selective amnesia is not expected of a veteran PIL petitioner...”

Bhushan, however, said the PIL, filed by Agrawal, was different from earlier petitions of retired IPS officer Julio F Ribeiro which were dismissed as withdrawn and moreover, the court had granted him the liberty to file it afresh.

He also referred to the prayers sought by Agrawal and Ribeiro in their respective pleas.

Initiating the arguments, Bhushan said Sinha, who was appointed as SEBI Chairman for three years in February 2011, allegedly lacked "integrity"

to head the market regulator which has "become an extremely important institution in the wake of various scams in the stock market in recent past."

He also referred to the rules governing the salary to be drawn by an IAS officer if he is sent on deputation to a PSU or to private firms, NGO and other independent bodies.

Sinha, who had become the CMD of UTI Asset Management Company, earlier hit by the Ketan Parikh stock scam, withdrew salaries which was inconsistent with the rules, he said.

The lawyer also said Sinha, who also served as Joint Secretary (Banking) and CMD of UTI Asset Management Company, gave wrong undertaking before becoming SEBI chairman that he was not privy to "various sensitive and strategic information".

Senior advocate Harish Salve, appearing for Sinha, raised preliminary objections relating to previous PILs on the issue and said "this court needs to decide the preliminary issues ... what the champion of human rights and public cause was doing since 2005."

The petition is a "motivated one" and does need to be entertained, Salve said, adding that he would later advance arguments on merits in the case.

Earlier, the court had issued the notice to the Centre and others on the PIL alleging irregularities in Sinha's appointment as chief of the market regulator.

The bench had impleaded the President's Secretary Omita Paul, who was advisor to the then Finance Minister, when the decision to appoint Sinha as SEBI chairman was taken.

The impleading was done after it was alleged that the process of selection of SEBI chairman was interfered with due to which incumbent C B Bhave was refused extension and Sinha appointed. It was contended that Sinha had not even applied for the post.

Bhushan had submitted the "appointment of Sinha is malafide and a result of a deep-rooted conspiracy" and placed various documents which were procured through Right to Information Act to buttress his allegations.

"Sinha failed to fulfil one of the eligibility conditions as laid down in the SEBI Act which requires that the Chairman shall be a person of high integrity. He is not a person of high integrity as is apparent from various facts," Bhushan had further said.