The topic that dominated the agenda at the SEBI Board meeting on Tuesday was the explanation demanded by the Supreme Court from the regulator on the NSDL-IPO scam issue.

“As this is a Court-directed explanation, any communication has to be first made to the Court before it is made public,” said a SEBI source.

The matter concerned has to do with SEBI declaring as null and void its own special committee report on NSDL's role in the 2003-2005 IPO scam.

At the time of the scam, Mr C.B. Bhave, earlier Chairman of SEBI, had been heading NSDL. On his appointment as head of SEBI in 2008, to avoid any conflict of interest, a special two-member committee was formed to look into SEBI's proceedings against NSDL.

This committee in December 2008 passed orders containing adverse findings on NSDL in the IPO scam. In August 2009, the SEBI Board, after seeking legal opinion, decided that the committee had also commented on SEBI's shortcomings. The regulator said these recommendations were outside the confines of the delegation and without authority of law. The Board said the comments vitiated the orders of the committee, and were consequently declared null, void and non-est (non-existent in the eyes of the law).

Later the SEBI Board sat afresh on the NSDL case and finally disposed of two of the cases against it, exonerating the depository.

NGO Manav Adhikari moved the Supreme Court in February this year against the manner in which SEBI had disposed of its own special committee report. The Court asked SEBI to explain its rejection of the special committee's report. This explanation was what the Board considered on Tuesday.

The debate in regulatory circles is about the current stance of those SEBI Board members who declared the special committee orders null and void.

The Board members who were contacted refused to speak on the matter.

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