If there is a campaign to defame the judiciary in the eyes of the public, you are doing a great damage to democracy and don't shake people's confidence in judiciary, the chief justice told the petitioner
The Supreme Court on Monday came out strongly against repeated attempts and misleading campaign being made to defame the judiciary, saying great damage is being done to democracy.
"There is a misleading campaign going across to defame the judiciary and repeated attempts have been made to spread incorrect information," a bench headed by Chief Justice (CJI) RM Lodha observed.
The remarks were made while dismissing a public interest litigation (PIL) seeking to declare the decision of the collegium to recommend the name of Karnataka High Court judge, Justice KL Manjunath as Chief Justice of Punjab and Haryana High Court as non-binding.
The PIL filed in the apex court by Ram Shankar had sought that in future all recommendations of the collegium on appointment of judges should be put on the apex court website.
At the outset of the hearing, the Bench wanted to know from the petitioner as to who informed him about the name recommended by the collegium.
"Who told you that his (Manjunath) name has been recommended for elevation. Because I am the Chief Justice and I head the collegium, I am not sure and I don't know whether there is any other collegium," the CJI said.
The CJI further said that "the collegium never recommended the name of Manjunath" and there is some misleading campaign going on.
"If there is a campaign to defame judiciary in the eye of public, you are doing a great damage to democracy. Don't shake people's confidence in judiciary. For God's sake don't try to defame judiciary," the CJI, who was heading a bench of justices Kurian Joseph and RF Nariman, observed.
The CJI said as an institution the collegium had its limitations in selecting persons. "After all judges too come from the same society. But to carry on a campaign just because of allegations against one or two judges is unfair," he added.
On Sunday, the FM spoke to SEBI about the need to bring back retail investors and check market manipulation. Maybe someone should make the FM aware of these rampant cases of manipulation
On Sunday, Finance Minister Arun Jaitley spoke to Board members and officials of Securities Exchange Board of India (SEBI) about the need to bring back retail investors. Later, the Board discussed a report on all actions taken by SEBI, as a result of its market surveillance. We wonder whether these rampant cases of manipulation figured in the discussions.
SEBI, in a statement said, “(the Finance) Minister advised SEBI to remain vigilant about probable violations in the market, focus more on attracting the retail investor and on redressing investor grievances. The current state of the investment climate in the country and the recommendations of the Financial Sector Legislative Reforms Commission (FSLRC) were also discussed”.
During the meeting, SEBI chief UK Sinha appraised the minister on initiatives taken by the market regulator. Asked about the surveillance functions of SEBI, Sinha told reporters that the market regulator also presented before the board a report on all such actions taken by it during the last quarter.
This is the same SEBI, which last year in June, declined to provide information on its real time market surveillance system. Moneylife had filed an application under the Right to Information (RTI) Act on 9 April 2013, requesting information on SEBI’s surveillance statistics and had asked SEBI to disclose the number of suspicious cases its sophisticated Integrated Market Surveillance System (IMSS) and Data Warehousing Business Intelligence System (DWBIS) had detected till 31 March 2013.
In its reply, the SEBI said, “It is informed that the information sought by you is not available with the concerned department of SEBI.” This was impossible, because if the surveillance department did not have such information, then who did? Who was really in charge of monitoring the data captured by the surveillance department?
It must be noted here, that SEBI had spent a whopping Rs50 crore in installing the so called “state-of-the-art” surveillance systems: IMSS and the more modern DWBIS.
Moneylife has been constantly raising the issue of stock manipulation, but there has hardly been any action by either SEBI or stock exchanges like BSE and National Stock Exchange (NSE), who are the first line regulators. Moneylife routinely comes across companies, mostly with poor fundamentals and a track record of transgressions, whose share prices are brazenly manipulated, making a mockery of SEBI’s surveillance system. Here are some brazen cases of stock manipulation we had reported.
1. PMC Fincorp: Up 1122%. In Moneylife issue dated 21 August 2014 we pointed out that PMC Fincorp went up a whopping 1122% or 12 times to Rs700.55 as on 28 July 2014 from Rs57.31 as on 19 March 2013. Over the past four quarters (September 2013 to June 2014), PMC has reported total revenue of just Rs15.45 crore and net profit of Rs3.72 core. Its market-cap? An astounding Rs3,500 crore!
2.Nucent Estates: Up 742%. Covered in the Moneylife issue dated 16 May 2013, we pointed out that Nucent went up a whopping 742% from just Rs1.28 to Rs10.78 in just one year. The company had earlier failed to comply with BSE corporate governance norms. It even changed its name, a common tactic adopted by companies to disguise their past transgressions.
3. Kelvin Fincap: Up 549%. In the Moneylife issue dated 2 May 2013, we exposed how Kelvin Fincap shot up 549% within a year after the BSE had revoked its suspension!
Do check out the Unquoted section of the magazine and website . You will be alarmed and shocked to see the ease with which price manipulation goes on in out capital markets.
4. Midland Polymers: Up 271%. In the Moneylife issue dated 7 August 2014 we pointed out that Midland Polymers went up a whopping 271% from Rs5.66 on 1 January 2013 to Rs21 on 10 July 2014, that too when there is no business activity for the company.
Moneylife even did a cover story on this, which can be accessed here: Stock Manipulation.
Stock rigging is not the only evidence of poor monitoring by SEBI. Companies often get away with blue murder, leaving shareholders in the lurch. Consider Geodesic Ltd, a sham internet software and service provider, that had run up liabilities of more than Rs1,200 crore and defaulted on payment of its Foreign Currency Convertible Bonds (FCCB) and loans. Moneylife reader and investor, Krishna Raj, has filed two complaints with SEBI about non-disclosure of its financial results and subsidiary accounts, along with non-disclosure of material information on FCCB repayment. SEBI failed to give him satisfactory reply and said that the company was taking necessary steps regarding FCCB repayment issues and in its annual report 2011-2012, stated that Ministry of Corporate Affairs (MCA) has granted general exemption from attaching various documents in respect of subsidiaries as per section 212(8) of the Companies Act, 1956. Hence, the subsidiary companies' account is not attached with the balance sheet.
SEBI never took any action against Geodesic and finally the Bombay High Court issued a winding up order against the company. Following orders from the High Court, the Registrar of Companies (RoC), Maharashtra, appointed an official liquidator to wind up Geodesic.
In May 2014, we reported how Transgene Biotek Ltd, the company that has been in the news over alleged misuse of global depository receipts (GDRs) and ignoring investor complaints, made a new record. On 20th May, during the first two hours of trading on the BSE, the Hyderabad-based company's shares breached both, its lower and upper circuit. This not only shows extreme volatility but also a possible price manipulation.
As reported by Moneylife, several shareholders of the Hyderabad-based company are crying foul over the alleged misuse of GDRs — a financial instrument used to raise capital overseas, and several “well-timed” announcements by the company. However, market regulator SEBI was to even acknowledge several complaints filed by these shareholders.
Coming back to SEBI's surveillance system, Moneylife had found out that 48 staff members are posted in the Integrated Surveillance Department (ISD) of SEBI, which houses the IMSS and DWBIS system, as of 31 March 2013. The IMSS contract value was found out to be Rs20.55 crore, out of which Rs6.52 crore went towards “capital expenditure” between 2007 and 2010. HCL Technologies was the vendor.
Then SEBI adopted another system known as DWBIS, which came into existence from 2010 onwards, and the contract value was found to be Rs34.38 crore and Tata Consultancy Service (TCS) is the new vendor. Out of this amount, over Rs11 crore has gone towards “capital expenditure” in the last two years alone. This is collectively over Rs50 crore of taxpayers’ money.
This is a lot of taxpayers’ money and nobody knows if SEBI is truly looking at cases triggered by the systems, if at all, let alone punishing offenders and compensating minority shareholders. Nobody knows how effective SEBI’s surveillance system is either.
As per the SEBI chief's claims, its Board members have now been given the surveillance and action taken report. Lets hope something comes out of this show of 'accountability' from SEBI.
Justice Katju ups the heat on judicial corruption with a new blog post. Justice Katju's revelations paint a scary picture about the state of our judiciary at a time when public impatience over denial of justice due to cases that drag on for decades
Justice Markandey Katju's latest blog makes even more startling revelations about judicial corruption and the reluctance of a former chief justice to act, for fear of damaging the reputation of the judiciary. The new revelations about five judges in the Allahabad High Court expose the extent of the rot in the system.
On Sunday, 10th August, Justice Katju wrote on his blog, “Most Chief Justices of India are reluctant to expose corruption in the judiciary thinking that this will defame the judiciary, and so they prefer to bury corruption under the carpet, not realizing that the bulge under the carpet will show.”
Here is the story he narrates: There was a Judge in a High Court who had a very bad reputation about his integrity, and on this account was transferred to Allahabad High Court. Later with passage of time he became very senior and Acting Chief Justice of Allahabad High Court. Some people started demanding that he be made Chief Justice of some High Court, and later brought to the Supreme Court.The then Chief Justice of India, Justice Kapadia, had received several complaints about this Judge that even at Allahabad he was indulging in corruption,and Justice Kapadia requested me to find out the true facts about that Judge ( I was then a Judge of the Supreme Court).
At that time I had to go to Allahabad, my home town for attending a function, and while there I contacted some lawyers I knew, and got 3 mobile numbers of the agents of this Judge through whom he was taking money. On returning to Delhi I gave these 3 mobile numbers to Justice Kapadia, and suggested that he get these numbers tapped through intelligence agencies.
About two months thereafter Justice Kapadia told me that he had done as I had suggested, and the conversations tapped revealed the corruption of this Judge.
After this, Justice Kapadia should have called this Judge to Delhi and asked for his resignation, failing which he would refer the matter to Parliament for impeachment, but he did no such thing,(though he did not allow the Judge to become Chief Justice of any High Court or a Supreme Court Judge). Criticising the inaction and reluctance to act against judicial corruption, he says, "Does corruption by Judges defame the judiciary, or does exposing such corruption defame it ?".
The blog goes on to narrate another episode: When I was Acting Chief Justice of Allahabad High Court I went to Delhi and met Justice Lahoti, the then Chief Justice of india, and gave him a chit containing names of five judges of Allahabad High Court who were doing shocking things. Justice Lahoti asked me what should be done ? I replied that if he permitted, I would solve the problem in 24 hours. He asked, how ?
I replied that I was going back to Allahabad by the night train, and on reaching there would call the Registrar General and tell him to telephone these 5 Judges, and tell them that the Chief Justice had instructed that they would not be allowed entry into the High Court premises. Police was being posted at the gate of the High Court with instruction from me that these judges were not to be allowed entry. Their chambers had been locked, and they will receive their salary checks at home, and they need not come to the High Court. I did not want to see them inside the High Court premises as they had disgraced the High Court.
When I said this Justice Lahoti said "Please do not do this, because then the politicians will get a handle, and then they will set up a National Judicial Commission". I replied that since he was not permitting me to do this, I would not, but he may take whatever action he thought fit.
Later some of the five judges whose names I gave were transferred to another High Court.
But is transfer a solution ? Such corrupt judges should be sacked, but this is not done to ' avoid defaming the judiciary'. I again ask : does corruption by Judges defame the judiciary, or does exposing such corruption defame it ?
Predictably, the judges, even retired ones aren't happy with Justice Katju's revelations. Justice Kapadia, former chief justice of India has apparently denied knowledge of the episode that Justice Katju cites. But clearly, the whistleblower is on the warpath and the public is delighted that a senior judge of the supreme court is on their side.
In yet another blog post today, Justice Katju has rebutted ex-CJI Kapadia's denials. He says, “In response to my statement Justice Kapadia has said that he did not remember this. It is strange that he has no recollection of this, but the record would be existing with the intelligence agency concerned, and perhaps also in the official file of the Chief Justice.
Justice Kapadia also said that he did not bring any Judge to the Supreme Court who was unfit.
I may remind him that the Supreme Court Collegium, headed by CJI KG Balakrishnan, and of which Justice Kapadia was a member, almost succeeded in bringing a totally unfit person into the Supreme Court. That Judge was a Judge of the Madras High Court when I was Chief Justice there, so I knew all about his bad reputation. Later, he was made Chief Justice of another High Court , and was being considered for elevation to the Supreme court.
One day during lunch interval, I went to Justice Kapadia's chamber and told him about the bad reputation of that Judge, giving details. I told him that I was not in the Supreme Court Collegium, but he was, and now it was for him to do whatever he thinks proper, and I have done my duty. There was no use informing Justice Balakrishnan since it was he who was pushing for the Judge's elevation to the Supreme Court.
After listening to me, Justice Kapadia thanked me, and said that in future also if I have such information I should pass it on to him.
Despite this, the Collegium, of which Justice Kapadia was a member, recommended the name of that Judge having questionable integrity, and he would have definitely been elevated to the Supreme Court but for the Tamilnadu lawyers who produced voluminous documentary evidence of his corruption. As a result, he was transferred to a small High Court, and later impeachment proceedings were brought against him in Parliament, which lapsed when he resigned.
So Justice Kapadia's claim that he did not bring any corrupt Judge to the Supreme Court, has to be qualified by at least one instance where he ( or rather the Collegium of which he was a member) almost succeeded.
It may be further mentioned that even though I had informed Justice Kapadia about that Judge's reputation, neither the Collegium, nor Justice KG Balakrishnan ever consulted me about that Judge. I should have been consulted, as the decision in the Judges case says, since I was on the bench of the Madras High Court ( as Chief Justice ) at the time that Judge was also in the Madras High Court. Instead, Justice Ravindran was consulted, although Justice Ravindran and that Judge were never in any High Court at the same time. This was obviously done by Justice K.G. Balakrishnan knowing that if consulted I would give an adverse report . But why did Justice Kapadia not tell Justice Balakrishnan to consult me ?
Much later I met Justice Kapadia and reminded him that I had informed him about the bad reputation of that Judge, but no heed was paid to my words. I said that the Supreme Court could have been saved so much embarrassment if my advice had been sought. Justice Kapadia admitted that I had informed him, but said that Justice Balakrishnan, the CJI, was adamant, and so the recommendation was made.”
Justice Katju's posts are bound to provoke much debate in the media, but it seems safe to say that the people of India will overwhelmingly back his boldness in letting the sunlight on to how corruption is buried by the judiciary, which hands out punishment to the rest of India for the very same offences that they get away with.