Bombay HC to government: Protect whistleblowers or face the heat

The Court, in an interim order, has ordered the government to provide protection to whistleblowers and social activists

In a long overdue judgement, the Bombay High Court (HC) on Friday, (7 May 2010), issued an interim order that would ensure both police protection to whistleblowers and social activists, as well as provide for the speedy investigation of their cases.

Moneylife has, in the past, covered several cases wherein social activists have been threatened, assaulted and even murdered despite pleas for police protection. Many such cases are still unsolved.

The two-member bench, comprising Justices FI Rebello and AA Sayed, passed the interim order that outlined various measures for the protection of social activists and whistleblowers, which covered immediate police protection and set guidelines for the investigation of cases.

The HC specified, among other things, that if a whistleblower or social activist approaches the police after receiving a threat or having been attacked, until the application for police protection is finally processed, the police must immediately provide interim protection.

The Court went on to direct the State government to set up a special committee to identify genuine whistleblowers and activists and ensure that all criminal cases or investigations pending against them be reviewed. It specified that the identification be done in an open and transparent manner and the guidelines of the process be disclosed to the public at the time of forming the committee.

The court also gave the State a 90-day deadline for forming a monitoring system to ensure that the investigations be done in a speedy and thorough manner. It further mandated that the investigations into complaints filed by whistleblowers and activists be investigated by an officer not below the rank of assistant commissioner of police or deputy superintendent of police.

The order also stated that the State government prepare a database consisting of the names of all identified social activists or organisations that have complained of threats in the past and also of the use of force against them if any. The mechanism should ensure the maintenance of confidentiality with regard to the identity of the individual and or the organisation.

The judgement is only an interim order and will be in force till a final order is passed. The case now stands adjourned to 16 June 2010 when the bench will issue further orders and directions on the interim provisions regarding the protection of social activists and

The ruling evoked a mixed response from both the legal and activist fraternity, with some enthusiastic about it, and others who feel that the order will not translate into reality.

“Many a time, conclusive orders of the court are not complied with; time and again even courts have shown their inability to monitor implementation of their orders,” said Sandeep Jalan, an advocate.

He went on to offer a suggestion, “Both the appellant and respondents and the government should update their websites about action taken in pursuant of the court’s directions. As long as the appellant's or respondent's website doesn't show up details of action taken, non-compliance of court orders can and should safely be presumed.”

Some, however, were very pleased with the order, “I was represented and party to this order when it was passed and am quite happy with it. The problems that may arise are not in the court order but mainly in implementation. I think the committee will determine the final efficacy of the measures, so we should ensure that the committee has enough representation from committed activists who will be able to ensure that the new system works. The quality of the database to be prepared and the monitoring of police investigations is what will determine its success,” said Sumaira Abdulali, founder of the Awaaz Foundation.

Incidentally, Ms Abdulali had been the target of physical intimidation when she tried to confront the sand mafia about illegal sand mining.

Despite the optimism among some activists, there were others who felt that the order would not change anything.

“Nothing is going to happen on the basis of this HC order. Whistleblowers and activists will (continue) to be harassed, humiliated, victimised, attacked and even murdered in spite of such an order. It is due to lack of will to protect on the part of politicians who are the real culprits behind victimising the whistleblowers and activists. Similarly, the Central Vigilance Commission (CVC) has been made the designated authority by the Supreme Court to protect whistleblowers. But has the CVC, the designated authority, protected even a single whistleblower so far? We may be pleased by such orders, but can’t the court direct the Central government to enact a Whistleblower Protection Act?” said Ramesh Shah (name changed) a former whistleblower from the customs department.

He did, however, offer some words of encouragement. “In spite of being so pessimistic about the implementation of the court order, it is a good sign that judges of the Bombay High Court have taken cognisance of the problems faced by whistleblowers and activists in Mumbai and let us hope that the government of Maharashtra provides protection, as directed by the Hon’ble Court,” added Mr Shah.

Judging by the mixed response from activists, it seems that the effects of the order will only be felt if the State government is serious about protecting whistleblowers.

All will depend on the final ruling that the Court will pass on 16th June.




6 years ago

Terrible attack by police on whistleblower ! Police acting like private militia, going berserk and arresting family members, aged mother, sister in law, any family member

Shocking. But for India this is just every day police atrocity.

2nd world and 1st world countries are shocked and even their journalists do not believe that India is like this.


6 years ago

Dear Sirs, kindly post and comment on the final ruling (16th June ?). Thank you.


6 years ago

I agree with Girish Purohit. What about hundreds of cases of whistleblowers where the harassment is through use of police complaints ? Should the victims approach the same police ? That can not be practical.

In other cases where powerful people are behind the harassment.
For example the case of this

Ultimately there is no remedy for harassment but the message "don't take pangas with these high and mighty people".

The system cannot change so easily by one or two court rulings.

Girish M.Purohit

6 years ago

I do not think that this order will effect unless and untill politician will take interest. This problem created by politicians only and they are totally involved in this game and they only support these Gundas'.

Broking houses make investors go broke with PMS: The Kotak example

Scores of investors have lost a huge chunk of their portfolios due to the terrible investment strategies of the Portfolio Management Services offered by Kotak Securities

Portfolio Management Services or PMS schemes are often touted as the best way for wealthy investors to grow their wealth, but that is mostly in theory. Since their performance is never publicly reported, one has to go by anecdotal evidence of the prowess of portfolio managers. And the anecdotal evidence that Moneylife hears from time to time is pretty ugly.

We recently came across a disastrous story—a large number of PMS investors of Kotak Securities have suffered severe losses due to gross bungling by Kotak’s portfolio managers. PMS refers to services offered by finance companies, mainly broking companies, which manage the investor’s portfolio according to their skills (or luck). Unlike mutual funds (MFs), where the allocation patterns are often standard or structured, wealth managers invest according to what they feel best suits your portfolio. They also attempt to time their buying and selling.

While this may result in higher returns compared to MFs, it also carries a bigger risk and is usually used by high net-worth individuals (HNIs). Portfolio Management Services are meant for a minimum investment of Rs5 lakh to Rs10 lakh.

One customer who lost a significant amount of money approached Moneylife. After investing approximately Rs52 lakh in two Kotak Securities portfolios in January 2007, as on 31 March 2010, he had suffered a loss of approximately Rs15 lakh, or 30% of his total investment. In the same period, the fund’s benchmark indices, the BSE Mid-cap and BSE 200 were up by 15% and 30 %, respectively.

While we know that PMS is usually managed ineptly, mainly to generate brokerage income, an analysis of the performance of the two Kotak schemes, the Smart Investor Portfolio and the SIGMA Equity Portfolio shows shocking ineptitude. Month after month, these schemes have been making losses while the benchmark indices often posted significant gains. In fact, during periods where the markets were positive, these funds significantly underperformed their benchmarks.

A close inspection of the Smart Investor Portfolio (SIP) reveals that barring a brief period from October 2008 to March 2009, where it performed only marginally better the BSE Mid-cap—its benchmark index—the scheme underperformed its benchmark every single month from April 2007 to December 2009, a period of three years.

At times, the difference was scandalous. From April 2009 to December of the same year, while the benchmark shot up by 127%, Kotak’s scheme rose by only 37%—a staggering difference of 90%.

The SIGMA Equity Portfolio did even worse. From April to December of 2009 the benchmark, the BSE 200, posted 91.2% returns, but the scheme inched up by only 8.7%.

A pattern seems to emerge from the data. At the start of every major rally, the manager had most of the assets, at times even 85% in cash, only to sit out the bull run before realising that he might have made money by actually investing in the markets instead of watching from the sidelines. For example, in March 2009, at the start of a 120% bull run lasting months, the manager of the SIGMA Equity Portfolio had 77% of the funds in cash, increasing it to 95% over the next few months! This atrocious ability to neither buy the right stocks nor read the market correctly leaves one agape.

When the aggrieved investor complained to Kotak, the company stated, “It can be observed that most of the underperformance in portfolios is a result of high levels of cash, in the portfolio during Q2CY09 during the election time, maintained to protect portfolios in case of adverse election results. The decision to protect and de-risk the portfolio by remaining in high levels of cash during the June’09 quarter, in which the markets went up significantly, has reflected on the portfolio performance.” Sounds academic to us but utterly irresponsible to the investor who has lost lakhs.

Moneylife has copies of the communication between the investor and the company. When we approached Kotak Securities to understand what the portfolio manager was smoking, we received a similar bland, offhand reply. “In the April-June 2009 quarter, the Sensex went up by 49.49% and BSE Mid-cap by 71. 72%. Since we had taken a conscious call to adopt a defensive strategy of being under-invested, the performance of portfolio compared to benchmark started underperforming. As on 31 March 2009 the portfolio was not fully invested and had a major portion of the same in cash to be invested. We had communicated to our clients about the fact that the equity investment in these portfolios was less,” said the spokesperson. The company cites macroeconomic reasons behind its strategy of under-investing during March.{break}

All this is a far cry from the sales literature of broking firms that entice you to invest in their PMS. “Portfolio Management from Kotak Securities comes as an answer for those who would like to grow exponentially on the crest of the stock market, with the backing of an expert,” reads the Kotak marketing pitch.

The only exponential growth seems to be in the losses that they have made. Kotak claims that “to understand the dynamics of various asset classes and investment options we use the best talent in the industry to come up with cutting-edge products.” This looks like pure snake oil. Investors will find it hard to understand how the “best talent in the industry” could make absurd judgement calls so as to lose a large chunk of capital in a period that has been hugely rewarding to investors.

In its sales brochure, Kotak states that their portfolio managers all have an average experience of over nine years in the equity markets and boasts of a research team with an average experience of five years. With such talent and experience, the Kotak team seems to be following two simple rules that take retail investors to ruin; One, “buy high and sell low”, and two, “chase market momentum too late”.

While making losses is perfectly natural in the equity markets, making such losses and under-performing the benchmark by such a huge margin consistently is pathetic. To add insult to injury, Kotak charges high fees for managing money under PMS. Indeed, the investor could have got a much higher return by investing in an index fund and wouldn’t have had to pay the high management fees charged by PMS. Incidentally, after some investors made some noise, Kotak has offered to refund the management fees. This could not be independently verified, however.

While the scheme was doing so badly, the investors were provided detailed quarterly reports, showing just how much money they had lost. Investors could see in minute details, the story of their sinking portfolio unfold.

In the quarterly reports sent to the customers, Kotak took great care to present the data in a detailed manner, with elaborate graphs, charts and tables, all trying to window dress the basic fact that the investor was losing money.

Kotak Securities is not the first company to have messed up PMS. Virtually every single broker is guilty of this. Some other broking companies do far worse. But nobody becomes wiser because there is no public disclosure of PMS performance.

Indeed, Moneylife is keen to compile the data about PMS and invites you write to us about the details of a scheme’s performance—whether good or bad. Email us at [email protected]



Suiketu Shah

4 years ago

Sanjay Kotak

We have never done PMS but I know HDFC Banl extemely well.Their head of euities Parimal Shah himself is a totally untrsutworthy person in every which way.They are a bank to send yr sworn enemies to.When I asked him 1 yr ago about the wrongdoings of his right hand crony Amit Kapadia(director of HDFC Bank) he replied saying others would have taken even more adavntage of our lack of knowledge then.This Parimal Shah is ex-Motilal and ex-Citibank.

HDFC Bank is running its company on the brand image of its founders but in rewality it has already eroded worst than the Kotaks,JM Financial and Motilal Oswals on the world.

Thei Director Amit Kapadia goes periodically to Goa to "invest"money ionto casinos.Question is where does he get cash money from.Answer lies within.

Sanjay Kotak

6 years ago

Please get feedback from investors who have suffered in HDFC PMS. When markets gave over 40% returns, my investments have given me -20% .
Complete disaster!! At times, you tend to believe that there is nexus between fund managers and companies


Suiketu Shah

In Reply to Sanjay Kotak 4 years ago

Ofcourse Sanjay there is a nexus between HDFC wealth manager and fund managers.I suggest you make yr decisions based on trustworthy moneylife.

HDFC Bank and HDFC welaht management are (for investment purpose) ideal organisations to send yr enemies to.Take care.



6 years ago


Rajan Manchanda

6 years ago

On 3 January 2011, I sought information under RTI from SEBI regarding Kotak PMS (Kotak Securities Ltd) I received a reply on 4th.Feburary 2011 from SEBI which makes interesting reading material.

% of complaints received by SEBI against Kotak securities (PMS)in a year are equivalent to 50 % of the total complaints received by SEBI for the entire INDUSTRY (PMS) !

Yet, day in and day out we are bombarded with advertisments on tv channels by Kotak claiming to be the best broker, and the best broker award winners ! Who has given the awards mention !
Certainly the Investors forum would not have showered them with blessings leave aside giving awards.

The license for conducting PMS schemes by Kotak is due for renewal by SEBI on March 31, 2011. Should SEBI renew the license looking at the past disasterous performance of Kotak PMS ? Should SEBI renew the license when 50 % of the complaints received by it pertain to Kotak PMS ? Should SEBI not caution the investors from making investments in Kotak PMS as it has done with Sahara schemes where there is a scroll on it's website.Should SEBI not answer what penalty and fines it has imposed on Kotak for the complaints received by it. For each complaint received against a company what are the charges levied by SEBI to handle the complaints ?
Kotak website proudly claims that no penalty has been levied by SEBI in last three years.

Rajan Manchanda

6 years ago

Mr.Uday Kotak is a FORBES BILLIONAIRE with wealth in excess of $ 3.3 Billion,now supposed to be the 21st.Richest INDIAN. (Information on the net) He is the Vice Chairman and Managing director of the bank.

Do you want him to bother about your pms ?

I have been duped by his bank and he does not respond for 18 months.

There is no shortage of investors. Public memory is too short.

Burn your hands and you become wiser.


6 years ago

We had a similar experience of loosing money in PMS run by kotak securities .Moreover there is absolutely no customer service. The branch manager & customer relation manager are never there in their offices, telephone calls are not returned & bank employees do not do anything to solve customer problems. Even their helpline takes 48 hours! to reply customer queries. It appears all Kotak securities are interested is in swindling investors money.

Silki Garg

6 years ago

The story is really eye opener and re-iterates the fact that a systematic and continuous pattern of investment is the best bet in equity markets.


Rahul Shah

6 years ago

All PMS scheme has high profile flamboyant kind of fund manager who is good in speech and personality and not having proper knowledge of economy cycle ,interest rate cycle and market behaviour. Many times they buy very strange stocks .Religare PMS bought RNRL in peak of January 2008 and sold at half price. Same way they bought Lok Housing at 400+ price and sold at big loss. Lack of regulation and control elads to fund manager to do all "ulte kam". More moreover most of fund managers always looking for better job and never devoted to related PMS scheme. Rather than giving Money to idiot MBA ,itis better to find someone who is locally bases ,experienced since many years and having own profession so he can be more devoted and responsible

Manali Rohinesh

6 years ago

They have also come up with an unique way of stonewalling mutual fund redemptions - with excuses such as redemption slips are not filled out with the folio number or the name etc.

That's funny because there is no provision made on the slip for these details in the first place.

Kotak mutual fund needs to come up with more creative excuses than these cya - cover your ass - types they are getting their customer service reps to mouth off to customers, for not providing any service at all.

Inoculated Investor

6 years ago


It’s definitely distressing to have lost money and especially the situation gets further aggravated when its causes permanent loss of capital. It is after all hard-earned money for each of us!!

Reading all the comments I thought it would probably be worthwhile to share my thoughts as well. So here are my 2 cents:

1. Expectation V/s reality - there always seems to be a mismatch between expectations of the investors v/s that of a portfolio manager - a factor which might be a root cause of the problem. Unfortunately, when there are multiple layers in between (distributors / RMs etc) this seems to get further distorted. Expecting returns as we did from 2003-2007?? Frankly, I don’t think that’s going to be possible but I would still advocate equity as the best investment class only with more moderate returns.

2. How to look at returns - I would like to believe the objective of any MFs or PMS is not to beat the benchmark. Something that is always missed out by us as investors. Its a zero sum game (& a dangerous one too). The expectation needs to be more realistic of earning reasonable returns in the longer run (& try and stay away from relative returns marketing gimmicks). Food for thought - In a good year if your portoflio can make 75-80% of an index returns (wow, 20% underperformance!!) and say 50-60% in a bad year (rembr you are still negative but better than the index), you will not only make handsome money in the long run but SUBSTANTIALLY beat the index as well.

3. PMS / MF - A Layman (with limited understanding of equity investments) investor should always invest in MFs and SIP is one of the best route. PMS is a strict NO NO for a ticket size of 5-10 Lac is too small to manage of good portfolio (considering the expenses v/s returns). PMS is more customized service, a good portfolio manager would not want to manage 500 clients with 10 Lacs portfolio he rather manage 50 clients with 1 cr. Makes more sense for everyone…. Rite??

The issue - investors small / big get too carried away by the sophisticated nature of the product & having some pride by taking some exposure to them. One should always keep in mind "KISS" - Keep It Simple Stupid. So if you understand a product properly only then you should go ahead whether it’s a PE/ PMS /Art fund.

4. Selecting managers – Lot of fund managers have emerged over the last couple of years. Unfortunately, many of them have been products of bull-run so when the tide went out lot of them were founding swimming naked (few funds like JM have been listed below). I think there are some definitely good managers out there in the MF as well as PMS (surprisingly but true)!!! Yr 2008-09 has been able to differentiate the men from the boys. I would like to stress while considering or selecting a investment product one should focus MORE on the MANAGER than THE FIRM
a. Investment philosophy of the manager (rather than the firm)
b. Consistency of investment approach (a portfolio manager - PMS/MF cannot manage different mandates as he is tuned to thinking in a certain way).
c. An imp factor – how long the manager has been there with the FIRM. It’s the managers stocking picking ability you are betting on; so if the manager quits there is no guarantee that the new manager also has the same thinking.
d. Performance - should be looked at from atleast 2-3 year view. Infact 2007-2010 would be a good period to check performances (both MF/PMS) since it considers up-down & up cycle of the markets.

Lastly, ML has done a good job of bringing such issues to the forefront in order to make investors more aware for better decision making. However, what has been presented is only one side. There are definitely managers out there doing some good work and it would be nice if investors/ ML can share their good experience as well.


Inoculated Investor

Darshit Shah

6 years ago

Kotak is still better, they are responding, FT is worst, they returned the money in Feb 2009 and shamelessly charged all fees and closed the business.

Apoorva Kanhere

6 years ago

Thank you. Now I will not be tempted to go PMS way. I was repeatedly coxed to allocate 10-15 LAKH FOR THE SAME, BUT masterly inactivity on my part helped me avoid this disaster. I like to buy fundamentally strong stocks when others are selling and sell when all are in a hurry to buy. This has helped me grow in a consistent manner CAGR of 20-25%
Rule no 1: do not loose money.
Rule no 2: do not forget rule no. 1.


6 years ago

Sack the fund manager...crap..guys can buy concurrent india infra for decent returns over the longer term perspective.Chec the below mentioned site for details about it



6 years ago

Its unfair to make general statements like PMS are designed to make money for the broker. There are some really good PMS that are offered by some AMCs. ICICI Pru AMC has been in this business for over 6 years & its has a good large-cap oriented PMS(Focused) & a Mid/Small cap PMS(Deep Value). ING Investment Managers ING India BSE 200 Quant is less than a year old but has already made its mark as a consistent outperformer.
Hence instead of writing PMS off completely, it is advisable to look at the past record, talk to a few references on the services offered by the PMS provider & then arrive at a decision.

Satish Amin

6 years ago

With such terrible experiences poor customers are facing with these white collared board day light cheaters who call themselves executives giving PMS is hard to believe. If these jokers ever knew how to make money for others then at first they should play with their money and then the customers.
In short these AMC are playing with customers money and there is absolutely no accountabality to what they do. I request Money Life to strongly take up this matter with SEBI/Regulators and ensure such whole sale cheating is banned. Take these AMC'S and the staff to task and blacklist such AMC'S and even the PIC and SEBI should inform such incidents to the public thru media/news so that there is some kind of accountabality and responsibility the AMC should hold.
Thank you ML you are doing an excellent job. I would also like to congrulate you on your bravery to expose such case as there are no other media that carry such information/news.

Antony rules out changes in FDI policy for defence sector

“Our Defence Production Policy (DPP) is evolving over the years...But at the moment we feel (the) Indian defence sector is not matured enough...not ready to absorb more FDI in defence sector”, defence minister A K Antony said

Defence minister A K Antony today ruled out for now any change in the defence production policy to raise the Foreign Direct Investment (FDI) from existing 26% to 100% as suggested by the commerce ministry recently, reports PTI.

"At the moment it (policy on FDI in defence) is 26%. Our Defence Production Policy (DPP) is evolving over the years...But at the moment we feel (the) Indian defence sector is not matured enough...not ready to absorb more FDI in defence sector. We feel that time is not right to further expand it," Mr Antony told reporters on the sidelines of the Navy Commanders Conference in New Delhi.

The defence minister said initially, there was 100% monopoly of Public Sector Undertakings (PSUs) in the defence sector, but that policy was changed over the last decade to first allow 100% private participation and later permitting 26% FDI in the defence industry.

But, the 26% FDI policy notwithstanding, the defence ministry would consider allowing more than the prescribed FDI in the sector "on a case-to-case basis," he added.

"Ultimately, forever I can not rule out (higher FDI). On a case-by-case basis, we will allow more FDI in defence sector," he said.

The commerce ministry had recently brought out a discussion paper that called for allowing 100% FDI in the defence sector, a demand forcefully made by foreign players who are eyeing the over $50 billion Indian defence spending expected over the next five years.

"Commerce ministry has brought out a discussion paper only. The commerce minister himself said it is a discussion paper. We can discuss. There is no problem. You should not think there is a clash (between the two ministries)," Mr Antony said.

He said the annual review of the DPP was in progress and in the next round of DPP amendments, his ministry would give more emphasis on Indianisation to strengthen domestic defence industrial base.

"Not only the PSUs, we will give more space to the private sector also. So by combining the resources and capacity of the PSUS and the Indian private sector, we want to enhance the capacity of Indian defence sector.”

“This year, in the coming edition of DPP, our priority is to strengthen the Indian defence industry," he added.

To another question on the environment ministry asking for a moratorium on new shipyards along the coast due to ecological considerations, Mr Antony said the priority was modernisation of the Navy and Coast Guard by providing its more ships and vessels to enable it to meet the increasing threats from the seas and the coastal areas.

"Whatever is needed to expand the capacity to provide more ships and vessels to the Navy and the Coast Guard... whatever effort is needed, we will make. We must modernise the Navy at the earliest to enable it to meet the increasing threats from the seas and coastal areas as fast as possible," he added.




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