SC allows eminent citizens to withdraw petition against SEBI chief's appointment
The apex court, however gave the petitioners the liberty to file afresh raising constitutional issues regarding appointment of regulators and on the concept of regulatory independence
The Supreme Court on Monday allowed eminent citizens, who had filed a public interest litigation (PIL) challenging the procedure for appointment of the Securities and Exchange Board of India (SEBI) chief, UK Sinha, to withdraw their petition.
However, it gave the petitioners the liberty to file afresh raising constitutional issues regarding appointment of regulators and on the concept of regulatory independence.
"What is being argued before us (by the petitioners) is on concepts arising out of Constitutional law. However, that has not been taken up as a prayer in the writ petition. We expect proper pleading in the matter where Constitutional doctrines are sought to be invoked particularly with respect to regulatory independence... If so advised, petitioners may file afresh a fresh petition raising the points which were argued before us," the Supreme Court said.
A group of eminent citizens, including former Chief of Air Staff S Krishnaswamy, former Punjab police chief Julio Ribeiro and former joint director of CBI, BR Lall, filed the PIL alleging that the constitution of the search committee for appointing the chairman and directors was altered to give the finance minister more say on the selection.
"The constitution of the search-cum-selection committee for recommending the name of chairman and every whole-time members of SEBI for appointment has been altered, which directly impacted its balance and could compromise the role of the Sebi as a watchdog. It is the only instance of its sort where the concerned minister has placed two members of his own choosing in the search-cum-selection committee," the PIL alleged.
Replying to the PIL, the Finance Ministry (FinMin), in a hard-hitting affidavit, challenged the assumptions and motivations of the group. The affidavit filed by Amit Bansal, an undersecretary in the Finance Ministry refuted two assumptions on the basis of which the 'eminent citizens' have sought to quash the appointment of Mr Sinha as chairman and to extend the term of two whole time directors MS Sahoo and KM Abraham from three to five years (both have already quit SEBI).
The affidavit also pointed out that in 2009, the search committee had mentioned four names. First M Damodaran who was already the SEBI chairman, UK Sinha and Dr Jaimini Bhagwati (both former joint secretaries in charge of the capital markets portfolio at the Finance Ministry) and it mentioned that CB Bhave had mentioned that he was disinclined to accept the post. Yet, strangely enough, Mr Bhave was selected, when (as Moneylife has frequently reported) the Prime Minister was all set to grant an extension to Mr Damodaran.
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