Supreme Court to hear petition tomorrow on NSDL’s role in the IPO scam

PTI New Delhi | Updated on November 12, 2017

The Supreme Court will tomorrow hear a petition seeking directions to market regulator SEBI to take action on the report of a high-powered committee, which had probed the IPO scam of 2006 and NSDL’s role in it. The matter would be heard by a bench comprising justices RV Raveendran and AK Patnaik.

SEBI is supposed to inform the apex court about its board’s decision on whether to revisit the earlier verdict of giving a clean chit to NSDL (National Securities Depository Ltd) for its alleged role in the scam.

The scam relates to share allotment irregularities in various initial public offers (IPOs) between 2003 and 2006.

On April 25, the apex court adjourned the hearing after SEBI sought more time to present its views on the report. SEBI said that its board was meeting the following day, and a discussion on the report was on its agenda.

In March, the court had asked SEBI to reply within four weeks whether it would revisit its decision to give a clean chit to NSDL.

It also asked SEBI “to consider whether its board will reconsider the special committee’s December 4 order in respect of NSDL and DSQ Securities and to pass an appropriate resolution and place it before this court”.

NSDL was given the clean chit last year by SEBI, when Mr C B Bhave was its chairman. He had recused himself from the SEBI board meeting in February 2010, when the NSDL matter was discussed, as he had previously headed the depository.

The court had also pulled up SEBI for not taking any stand in this matter. It was not satisfied with his reply that the SEBI board has already taken a decision on the report of the committee, which had declared it as “non-est (does not exist).”

The Ministry of Finance had set up a committee consisting of two SEBI members Mr G Mohan Gopal, now Director of National Judicial Academy, and Mr V Leeladhar to look into the scam.

The Committee had passed three orders and found that NSDL had failed in its duty. It had also passed remarks against the manner in which SEBI had functioned in the IPO scam.

Earlier, the apex court had expressed concern over SEBI’S outright rejection of the report, and had asked the market regulator to give its stand.

It had remarked that as the Committee comprised of senior SEBI officials, the report should have been considered by the regulator.

The apex court was also not convinced by the submissions of SEBI that the committee exceeded its limit.

Published on May 08, 2011

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