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The Supreme Court said on Friday that it will hear on November 21 a petition challenging the new procedure for appointing the chairman and whole-time members of the capital market regulator SEBI.
Appearing for the petitioners, former Solicitor General Mr Gopal Subramaniam, contended that this involves a larger issue of the appointment of the chiefs and members of all regulatory bodies. He said that petitioner has nothing against any particular person.
The amended rule gives “unbridled power to the Finance Minister” in the selection of the SEBI chairman and whole-time members, the petition said. The amended rule “militates against the very object and purpose of creating SEBI as an independent body and therefore deserves to be struck down by the Supreme Court,” it added.
The Attorney General told the court that the Centre will file an affidavit in this regard within a fortnight.
The petition was filed by former chief of air staff Mr S Krishnaswamy and two former top police officers including Mr Julio Ribeiro. It has made the Finance Ministry, the Finance Secretary, the SEBI and its chairman, the Centre and the Cabinet Secretary as respondents.
The petition said that according to the new rule, the Finance Minister – and not the Centre -- has the power to nominate two persons in the selection committee.
“Therefore, the status as a watchdog enjoyed by the SEBI stands to the compromised and its independence taken away,” it said, adding that “new members were duly appointed thereby subverting the process of selection and eliciting persons who would not necessarily have any expertise in the area would be handpicked.”
The petition also alleged that “There are clear indications that there is a nexus between the Ministry of Finance and major corporate players and that the free and fair functioning of the SEBI is no longer possible.”
“Hence the petition is being filed to protect the interest of the common investor from the workings of the tainted machinery,” it added. It alleges that the former SEBI chairman Mr C B Bhave was denied a five-year term.
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