Sie sind auf Seite 1von 65

IN THE SUPREME COURT OF INDIA [CIVIL WRIT JURISDICTION] WRIT PETITION (CIVIL) No.

___________of 2012 IN THE MATTER OF: Arun Kumar Agrawal //Versus// Union of India & Ors Respondents Petitioner

I.A.______OF 2012 (APPLICATION FOR INTERIM DIRECTION)

SYNOPSIS AND LIST OF DATES That the present writ petition under Article 32 of the Constitution of India is being led challenging the appointment of Shri U. K. Sinha as Chairman of SEBI on mainly following grounds: (i) Shri Sinha failed to fulll one of the eligibility conditions as laid down in Sub-section (5) of Section 4 of the SEBI Act as well as in the govt. communication which requires that the Chairman shall be a person of high integrity. Shri Sinha is not a person of high integrity is apparent from the following facts: (a) Shri Sinha before joining SEBI was working as the CMD of a Public Sector Enterprises, Asset Management Company Private Ltd. (UTI AMC). Mr Sinha was rst sent in UTI AMC on deputation in Nov. 2005 for two years when he was posted as Joint Secretary in the Finance Ministry overlooking affairs of UTI and was also on the Board of UTIAMC. He was appointed to the post of CEO of UTI AMC by overlooking the policy of not seeking deputation in an organization which he had overseen in the Ministry and also the JPC recommendation accepted by the government. The rst deputation was for a period of two years ending on 2/11/07. (b)Thereafter, he was given extension upto 31/05/08. The

Appointment Committee of the Cabinet vide its letter dated 10/3/2008 advised the Finance Ministry (Department of Economic Affairs) that after 31/5/2008 Shri Sinha would return to his parent cadre (Bihar) and directed the Ministry to identify a suitable replacement of Shri Sinha by that date. (c) Instead of accepting the order of the ACC, Mr. Sinha took voluntary retirement and thereafter, he sought permission for postretirement commercial employment in UTI AMC as CMD. The DOPT waived the post retirement waiting period before accepting the commercial employment inspite of the provision in Rule 26 of AIS(D&RB) Rules stating that PSUs which were substantially owned or controlled by the government would not mean commercial appointment and also apparently ignored the fact that the declaration given by Shri Sinha under Rule 26 (3) (ii) of AIS Death cum Retirement Benet Rules that in the last three years of his ofcial career he has not been privy to sensitive or strategic information of UTI AMC could not be true as he was already on deputation in the same organization at the time of taking VRS. (d) Shri Sinha remained in the same position and the organization remained the same, but the character of the employment changed

from that of a government servant on deputation to a PSU to that of a retired bureaucrat having taken up commercial employment. (e) Within a period of a month the emoluments too increased from around six lacs per annum to one crore per annum. Later on these emoluments were made over two crores and then four crores. Mr Sinhas total emoluments for the year 2010-11 were at over 4 crores per annum while working in a PSE (3.62 crores for 10.5 months). Mr Sinha also gave himself emoluments of over Rs 2 crores per annum for the period of his deputation from the IAS to the PSU retrospectively. The pay scale and the pay drawn by him at the time of his retirement was 22400-525-24500 and Rs23,450 respectively. (f) All the aforementioned crucial facts were suppressed before the Search-cum-Selection Committee. Mr Sinha did not ll the column relating to pay which was mandatory data for the post. Facts were deliberately suppressed from the Appointment Committee of the Cabinet also. Against the column for scale of pay it was mentioned not available. (g) Further, the manner in which the facts regarding his deputation to the UTI AMC was suppressed and when denied extension, how he

took VRS and immediately thereafter illegally joined UTI AMC and got his salary increased to Rs. 4 Crores per annum also raise serious question about his integrity. (ii) The appointment of Shri Sinha as Chairman of SEBI is malade and a result of deep rooted conspiracy which is apparent from the following facts: (a) The then advisor to the Finance Minister ensured that the earlier Chairman could not get further extension though he was entitled to get extension of two years as per the amended notication. (b)Further, the composition of Search-cum- Selection Committee for selecting the SEBI Chairman and WTMs was changed arbitrarily to give primacy to the Finance Ministry so that Shri Sinhas appointment could be ensured. It was probably also done to reduce the Cabinet Secretary, who was ex ofcio Chairman of the Committee, to a minority as he was aware of the deputation history of Shri Sinha. Mr Sinha was the only candidate who did not apply for the post but was handpicked through the search route. (c) The developments subsequent to Shri Sinhas appointment show that it was done to benet some of the big corporates like Reliance, Sahara against whom action after investigation was pending before

the SEBI. One Whole Time Member of SEBI in his complaint to the Prime Minister made serious charges against the then Advisor to the Finance Minister and Mr. Sinha of acting on behalf of the corrupt companies in the cases related to securities fraud of Reliance group, Tayals of Bank of Rajasthan, Sahara, and MCX. (d)Shortly after the appointment of Mr Sinha as Chairman of SEBI, all out efforts were made by the Finance Ministry to appoint the brother of the then Advisor as the CMD of UTIAMC, and the post remained vacant for sixteen months as his appointment was objected to by a foreign shareholder who had bought a 26% stake because he was not suited for the post. Ultimately when the advertisement for the post was released it became clear that neither Mr Sinha nor his proposed successor, the brother of the then Advisor to the Finance Minister met any of the eligibility conditions. The post of UTI AMC managing around Rs 60,000 crores of public money lay vacant for sixteen months because the brother of the Advisor could not be appointed to the post having emoluments of four crores.

1998

The Government gave Rs 3000 crore as bailout programme for

UTI appointed Deepak Parikh Committee whose report has not been implemented. August 2001 Issues relating to UTI were referred to the existing JPC on stock scam. 31/8/2002 Government announces a RS 14,500 crore bailout for UTI, after it is found to be involved in Ketan Parekh stock scam. Investors loss is an additional Rs 8000 crores. 29/8/02 Dec 2002 15/1/2003 UTI Act was repealed. JPCs 450 page report was tabled in the House. A notication bearing No. SO 40(E), dated 15-1-2003, in exercise of the powers conferred by sub-section (h) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (the Act), the State Bank of India, the Punjab national Bank, the Bank of Baroda and the Life Insurance Corporation of India are made equal subscribers to the share capital of UTI Trustee Company Private Limited as trustee of the UTI Mutual Fund and UTI Asset Management Company Private Ltd. (UTI AMC), a company sponsored by the same set of subscribers to which all the employess of the erstwhile company were transferred. The Mutual Fund

would comply with the SEBI Mutual Fund Regulations. 03/02/200319/12/2004 Mr K Damodaran IAS was appointed as CMD of UTI AMC. He was paid Rs 6,37,901 as annual remuneration. Dr R H Patil took over as Chairman from 13/1/05 but he was not paid remuneration, he got sitting fees till Nov 2005. 01/07/2003 Mr U K Sinha, Joint Secretary, Capital Market, Ministry of Finance, appointed as additional Director on the Board of UTI AMC. 03/11/2005 Mr Sinha was appointed as CEO and MD of UTI AMC on deputation overlooking the fact that professionals were to be appointed through advertisement (JPC report). 13/01/2006 Mr Sinha was appointed as Chairman and Managing Director and the entire Board of UTI AMC was replaced to suit the Chairman. 01/03/2007 DOPT releases the pay of Additional Secretary to Shri U K Sinha on his representation dated 29/1/07. 09/04/2007 DOPT advised that Mr Sinhas deputation was under Rule 6(2) (ii) of the IAS cadre Rules 06/11/2007 The Prime Minister approved a short extension in tenure of Mr U K Sinha for a period of three months instead of the

proposed 2 years till the issue related to deputation of IAS ofcers under rule 6(2)(ii) is nalized, according to the note signed by Cabinet Secretary. 28/11/2007 The consolidated Guidelines with respect to Rule 6 of the IAS cadre Rules were published 12/12/07 The Ofce Memorandum of the Ministry of Finance to DOPT requesting the extension of tenure for the balance period of 1 year 9 months beyond 2 Feb 2008 under Rule 6 (1) 1,2,3 Posts to Central PSUs of the DOPTs policy guideline dated 27/1/107. The request for further extension of tenure under Rule 6 (1) had the approval of the Finance Minister. 02/01/2008 The Note prepared by the Section ofcer for further extension under Rule 6(1) was moved and though the Director Services recommended that the approval should be under Rule 6(2) (ii) because it was initially so approved, the same was turned down by the Establishment Ofcer on the ground that according to the latest instruction further deputation would come under Rule 6(1). 09/01/2008 The prospectus for public issue was led with SEBI making various disclosures.

10/03/2008 The Appointment Committee of the Cabinet approved the extension of tenure of Mr Sinha as CMD, UTIAMC till 31/5/08 after which he was to return to his cadre and the Department of Economic Affairs was directed to identify a suitable replacement by then. 03/04/2008 The SBI Chairmans letter to the Finance Secretary, on behalf of other shareholders, misrepresenting that the tenure of Mr Sinha was not extended due to rules of deputation and the only alternative for Mr. Sinha to continue under existing government rules was to take voluntary retirement. Further he was given to understand that as per government instruction, Mr. Sinha would be entitles to salary according to the decision of compensation committee. He therefore, proposed a term of four years four years after voluntary retirement. No rules or government instructions were referred to by the Chairman of SBI. 11/04/2008 The company secretary of UTI made an offer on behalf of shareholders of UTI AMC to Mr Sinha of a salary of Rs one crore with performance related payments and perquisites on his continuance in the post after taking

voluntary retirement. 15/04/2008 Mr Sinha wrote to Bihar government seeking voluntary retirement with effect from 15/5/2008 to enable him to join UTI AMC on a regular basis as its CMD. Mr Sinha wrote to the DOPT seeking permission to join the company post retirement. The application is in Schedule L under Rule 26(1) (2) of All India Services (Death-cum-Retirement Benets) Rules, 1958. Under item no 5 Mr Sinha stated that the pay scale of the post and the pay drawn by him at the time of retirement as 23,450 and also that such high level posts are not advertised and that the remuneration offered are a xed pay of one crore per annum with performance related payouts. 17/04/2008 The matter was sent to department of Economic Affairs, Ministry of Finance for comments. 30/04/2008 The Bihar government sanctioned Mr Sinhas voluntary retirement w.e.f. 15 May 2008. 17/05/2008 Mr Sinha signed the balance sheet of UTI which shows that he has taken remuneration of Rs 2 crores for the year 07-08 for the period of deputation and an additional amount of 44 lacs for three months for the year 06-07.

17/06/2008 The note of section ofcer dated 9/5/08 of approving the appointment of Mr Sinha under Rule 26(1) (2) of All India Services (Death-cum-Retirement Benets) Rules, 1958 by designating as a commercial employment was advised to the Bihar government after obtaining the approval of the Minister of State. 2009-2011 Mr Sinhas remuneration according to the balance sheet for 08-09 was 2.15 crores, for 09-10 was 2.35 crores and for and 2011 -12 over 4 crores ( 3.62 crores for 10.5 months). 23/07/2009 The Terms and Condition of Services of Chairman and Members Rules 1992 amended to increase the tenure of Chairman and Whole Time member from 3 years to 5 years 08/09/2009 On the extension of tenure suggested by the Finance Secretary in accordance with the above amendment, the Finance Minister stated that before offering extension in tenure of the Chairman/WTM their performance should be appraised. 19/10/2009 The Finance Secretary approved the extension on the appraisal of the concerned ofcers by the Finance Secretary. 20/11/2009 The letter from the Secretary, Department of Economic Affairs was written to the Establishment Ofcer, DOPT for

obtaining approval of the ACC for the extended tenure of Chairman and WTM of SEBI. 30/11/2009 The then Advisor to the Finance Minister saw the le after desiring to do so on 25/11/09. 21/12/2009 After desiring to see the le again on 5/12/09, the then Advisor to the then Finance Minister drew the attention of the then Minister to the tenure of the ofcers. 22/12/2009 The then Finance Minister ordered that the extension be considered six months before the present tenure comes to an end. 17/01/2010 The Finance Secretary conrmed that the recommendation made to DOPT is to be withdrawn. 10/08/2010 On the query as to by the Director as to whether the existing Chairman/WTM were to be given extension in tenure or fresh recruitment made, the Minister claried that the process for selection of SEBI chairman be initiated. 20/08/2010 The Finance Secretary suggested the names of four experts (two from the earlier committee) for selecting two experts for the Search cum Selection Committee to select the SEBI chairman and marked the le to the then Finance Minister. 23/08/2010 The le was sent to the then Advisor who asked the DG (DOC) to discuss on 23/8, the DG (DOC) after reiterating the

existing Rules marked the le to the Advisor who in turn suggests her own experts and Secretary Financial Services for the selection of the post on 25/8 and the same is approved by the then Minister on 26/8/08. 18/09/2010 An advertisement was issued in newspapers for the post of SEBI chairman. Earlier communication was sent to all Secretaries and Chief Secretaries relating to the vacancy of the post and the job prole. 07/10/2010 Rule 3 of SEBI (Terms and Conditions of Service of Chairman and Members) Rules was amended to give the Finance Minister the discretion to appoint two other persons (apart from two experts) so as to ensure that the recommendation of the Advisor to include Secretary, Financial Services in the Search cum Selection Committee was given effect to. 2/11/10 First Meeting of the Search cum Selection Committee held. Five candidates from the nineteen applicants are shortlisted. The Committee also decided to invite Shri U K Sinha as a candidate. 13/12/10 The second meeting of the Search and Selection Committee took place and the Committee interacted with the six candidates including Mr Sinha and recommends the names of Mr Sinha and Mr Himadri Chaterjee in that

order for the post. The Minister selected the name of Mr U K Sinha for a period of three years and directed that the same may be put up for the approval of the ACC. 13/12/10 The Joint Secretary, Capital Market forwarded the candidature of Shri Sinha to the Establishment Ofcer, DOPT for the approval by the ACC and concealed the scale of pay of Mr Sinha by stating it to Not Available in the relevant column. The total emoluments were around four crores per annum for the year 2010-11. Feb 2011 The ACC approved the appointment and Mr Sinha took charge from 18/2/10. 1/6/2011 The Whole Time Member of the SEBI sent a complaint to the Prime Minister against Mr Sinha and others in the Finance Ministry trying to inuence decisions on matters relating to corporate like Sahara, Reliance, MCX and Tayals of Bank of Rajasthan. 23/6/11 The WTM passed the order against Sahara on the matter being referred by the Supreme Court. From March 2011 The post of CMD UTIAMC remained vacant with reports in the press appearing from April 2011 that the vacancy could not be lled up because the Finance Ministry wanted the brother of the Advisor in the

Finance to be appointed even though he was not short listed as a suitable candidate. 10/9/11 The Complaint was addressed by the Petitioner to the CVC on the Rs 2,000 crore Reliance case. 7/05/12 The Times of India reported that the brother of the Advisor has opted out of the race for the post of UTI AMC. 25/5/12 28/5/12 The consent order circular of the SEBI was revised. The complaint was led by the Petitioner to the CVC on the Consent Order circular to help Reliance in the Rs 2000 crores case. 4/6/12 An advertisement was issued in newspapers for the recruitment of CMD of UTI AMC. 21/6/12 A complaint was sent by the Petitioner to the Cabinet Secretary on the appointment of Mr Sinha as SEBI Chairman. But the govt. has not responded so far to the complaints of the Petitioner. /08/12 Hence, the instant writ petition.

IN THE SUPREME COURT OF INDIA (CIVIL WRIT JURISDICTION) WRIT PETITION (CIVIL) No. OF 2012

(Under Article 32 of the Constitution of India)

IN THE MATTER OF:: Arun Kumar Agrawal T8 Eagleton Golf Village 30km Bangalore Mysore Versus Highway Bidadi Bangalore-5621 09

.Petitioner

1(a)

Union of India through its Secretary, Ministry of Finance Department of Economic Affairs IES Cadre Controlling Authority North Block, New Delhi-110 001

1(b)

Union of India Through its Secretary Ministry of Personnel, Public Grievances & Pensions, Through its Secretary (Personnel), Department of Personnel & Training, Govt. of India, Sardar Patel Bhavan Sansad Marg New Delhi- 110 001.

2.

Securities Exchange Board of India, Through its Chairman Plot No. C4A,'G' Block, Bandra Kurla Complex, Bandra (East), Mumbai 400051

3.

Central Vigilance Commission Through The Chief Vigilance Commissioner, S atar kata Bhawan New Delhi

4.

5.

Shri U. K. Sinha, Chairman, SEBI, Plot No. C4A,'G' Block, Bandra Kurla Complex, Bandra (East), Mumbai 400051 Central Bureau of Investigation, through the Director, Block No.3, Ground Floor, C.G.O Complex, Lodhi Road, New Delhi 110 003.

WRIT

PETITION

UNDER

ARTICLE

32

OF

THE

CONSTITUION OF INDIA To, The Honble the Chief Justice of India and His Companion Justices of the Honble Supreme Court of India. The Humble petition of the petitioner above-named

MOST RESPECTFULLY SHOWETH: That the present writ petition is being led in public interest under Article 32 of the Constitution of India to challenge the appointment of Respondent No. 4, Mr U K Sinha as Chairman of SEBI on the grounds of his not being a person of integrity which was one of the eligibility conditions as laid down in Sub-section 5 of Section 4 of the SEBI Act as well as in government communication and also for fraud committed on the Search and Selection Committee and the Appointment Committee of the Cabinet. The fraud relates to concealing from the Committees the unheard emoluments of over Rs four crores per annum which he wrongfully earned while working for a PSU by declaring the post of the CMD, UTI AMC as commercial appointment. The information relating to emoluments was mandatory information and it had a material bearing on the selection to a post of high

integrity that Shri Sinha failed to fulll. Moreover, the facts regarding Shri Sinhas illegal appointment as the CMD of the UTI AMC (i.e. the post which he held before joining the SEBI), after his extension to the deputation in UTI AMC was denied by the ACC, by taking VRS from the govt. and immediately thereafter joining the UTI AMC as a commercial appointment was not placed before the Search-cum-Select Committee. Mr Sinha illegally also gave himself emoluments of over Rs 2 crores per annum for the period of his deputation from the IAS to the UTI AMC retrospectively. The developments subsequent to the appointment of Shri Sinha as the Chairman SEBI show that it was done for extraneous consideration to benet some of the big corporates like Reliance, Sahara against whom action after investigation was pending before the SEBI. The Petitioner is, therefore, also seeking an investigation into the entire process of the appointment of Shri Sinha as CMD, UTI AMC as well as Chairman, SEBI. The Petitioner herein is a nancial expert and a lawyer. He has led several notable public interest petitions that have unearthed corruption and nancial irregularities. His PIL against Cogentrix prevented a loss worth approximately rupees 30,000 crores to the exchequer, and one against

Prasar Bharti beneted the organization by about Rs. 20 crores. He was the complaint of the petitioner in the 2G spectrum scam that eventually led to the registration of the FIR by the CBI, as has been noted by this Honble Court in the 2G case. He has led several notable PILs against the Karnataka mining scam in the Karnataka High Court. This Honble Court has recently admitted his PIL against the Cairn-Vedanta deal.

The Petitioner has obtained the enclosed documents through the RTI Act. He has also complained to the concerned authorities at various points of time which are placed as Annexure P30 & P36.

Facts of the case: Illegality in not granting extension as per the amended notication in the Rules to the earlier Chairman and then members of the SEBI

The Chairman and Whole Time Members of the SEBI are appointed by the Central Government under section 4 (4) SEBI Act 1992. Rules framed under section 29 of the SEBI Act titled as SEBI (Term and Condition of Service of Chairman and Members) Rules lay down the pay, tenure, allowances leave of the Chairman and the WTM. The SEBI (Term and Condition of Service of Chairman and Members)

Rules were amended vide notication no. 2/106/2006-RE dated 23/7/2009 to extend the term of the Chairman and the WTM from three to ve years. Copy of the notication dated 23/7/2009 amending the Rules for term and condition of service is annexed hereto as Annexure P1 (From Page NOs. ______to _______). The Director of Capital Market Division put up a proposal on 2/9/09, for aligning the terms of the Chairman and WTM by giving two years extension and the same was endorsed by the Finance Secretary. Copy of the proposal of the Director of Capital Market Division dated 02/09/09 is annexed hereto as Annexure P2 (From page nos. _______to ________). The then Finance Minister stated that before the extension is offered the performance of the concerned ofcers should be appraised. Copy of the noting dated 08/09/09 of the then Finance Minister is annexed hereto as Annexure P3 (From page nos. _______to ________). The Finance Secretary vide his noting dated 8/10/09 justied the decision for proposing the extension as the performance of the concerned ofcers was considered good in terms of the extent of the activities SEBI had undertaken and the quality of delivery of those activities and the same was approved by the Finance Minister on 19/10/09. Copy of the noting dated 08/10/09 of the Finance Secretary is annexed hereto as Annexure P4 (From page nos. _______to ________). Thereafter, consent for the

extension of the concerned persons was taken and the proposal for extension of tenure was recommended to the DOPT by the Director Capital Market Division vide his letter dated 16/11/2009. Copy of the letter dated 16/11/09 for the proposal of extension by the Director Capital Market Division is annexed hereto as Annexure P5 (From page nos. _______to ________). It was at this point that Ms Omita Paul, the then Advisor in the Finance Ministry desired to see the le on 25/11/09. The le was sent to her by the Finance Secretary on 27/11/09, and was seen by her on 30/11/09. The le was once again sent to the Advisor for her perusal on 16/12/09 and noting was made by her on 21/12/09 drawing the attention of the Finance Minister to page 22 regarding the composition of the SEBI Board and the present tenure of the Board. Copy of the relevant pages of the le notings of the aforementioned dates is annexed hereto as Annexure P 6 (From page nos. _______to ________). This document was already there on the le and was brought to the attention of the then Finance Minister at the time the extension was proposed on 2/2/09. It was on the noting of the then Advisor that the then Finance Minister reversed his earlier decision to accord extension to the then Chairman and the Whole time Members by stating that the tenure of the then Chairman was upto Feb 2011 and the ACC was to be moved for extension six months before the tenure came to an end. Copy of the relevant le noting dated

22/12/09 of the then Finance Minister reversing earlier decision of the extension is annexed hereto as Annexure P7 (From page nos. _______to ________). The sole reason for the then Advisor intervening was to ensure that senior ofcers who were discharging their duties commendably were denied further extension and they are not reappointed. This would create a vacancy shortly and enable her to have her candidate to the post of Chairman appointed in a years time. This unmistakable conclusion is supported by the fact that extension was never considered at the appropriate time. As the then incumbent were denied extension on the intervention of the then Advisor Ms Omita Paul, the letter for extension of tenure proposed for the then Chairman and WTM to be placed before the ACC was ordered to be withdrawn, and subsequently orders were issued to start the selection process afresh for the Chairman on10/8/10. Copies of the relevant pages of the notings from 11/01/10 to 22/01/10 withdrawing the proposal for extension and noting the Director dated 06/08/10 seeking clarication regarding extension and the nal order dated 10/08/10 of the Finance Minister ordering for fresh selection of the SEBI Chairman are annexed hereto as Annexure P8 (Colly) (From page nos. _______to ________) Suggestion of giving further extension to the existing ofcers made by the junior ofcers, was overruled.

II.

Illegal and arbitrary change in the composition of Search-cumSelection Committee for selecting the SEBI chairman and WTM

Under the Rules there is a Search-cum- Selection Committee for selecting the SEBI chairman and WTM. As per relevant Rules the members of the Committee were the Cabinet Secretary, Secretary Financial Services, Chairman SEBI (for whole Time member) and two experts. At the time of initiation of the process for the selection of a new Chairman of SEBI in place of the existing incumbent, the Director General suggested the names of four persons as experts and the Finance Secretary endorsed the names and stated that any two names could be selected. Two of these experts were from the earlier Selection Committee. Copies of the letter dated 18/08/10 by the Director (PM & RE) as well as le noting dated 20/08/10 are annexed hereto as Annexure P9 (Colly) (From Page nos. ____to _____). Though the le was marked to the Finance Minister by the Finance Secretary, the le was sent to the then Advisor. After discussing the matter with the then Advisor, the DG (DOC) apprised the Advisor about the composition of the Committee for the selection of the SEBI Chairman under the Rules and marked the le to the Advisor, Ms Omita Paul. The Advisor, in her noting added the Finance Secretary to the Committee, did not select any of the four experts (of which two were

existing experts) suggested by the DG/ Finance Secretary, but ordered two

new names of her own to be appointed as experts on the selection committee. Thus three of the ve members of the Search cum Selection Committee were hand picked by Ms Paul. Copies of the noting dated

24/08/10 of the DG (DOC) and the noting dated 25/08/10 of the then Advisor to the FM are annexed hereto as Annexure P10 (colly) (From page nos. ______to ___). The fact that no reasons were given for the rejection of the four experts suggested by the Finance Secretary/DG (DOC) and selecting both the members herself clearly establishes that Advisor had some interest in the composition of the committee which would select the Chairman of SEBI. The Finance Minister appended his signature to the Committee suggested by the Advisor. The Committee nominated by Ms Paul violated Rule 5 of the SEBI (Terms and Conditions of Service of Chairman and Members) Rules. The records show that the ofcers of the Ministry went to great length to amend the Rules in a manner to accommodate all the members nominated by her. This was done by giving the Finance Minister the discretion to nominate two members to the Search cum Selection Committee. In doing so, permanent primacy was given to the Finance Minister in the choice of the members of Search cum Selection Committee, by amending the rules in a manner to give him powers to nominate two more members at his discretion. Thus

four persons would be nominees of the Finance Minister and two/ three members ex ofcio members as against the earlier ratio of two experts and two/three ex ofcio members. Thus the impartiality of the selection process was compromised to the extent that the majority of the members of the selection committee will be the nominees of the Finance Ministry. The amendment notication dated 07/10/10 making change in the composition of the Selection Committee is placed as Annexure P11 (From Page Nos. _______to ______). The documents show that the object of the entire exercise of changing the Rules was to ensure that the Committee desired by the Advisor Ms Paul remains unchanged. It was also done probably to ensure that the ex ofcio Chairman, the Cabinet Secretary remains the only member unconnected with the Finance Ministry. The noting of the Deputy secretary that the amendment at this stage would send undesirable signals was ignored. Subsequent to the notication of the amended Rules, the Finance Minister was asked to nominate one more member to the Selection Committee and he nominated Mr Devidayal an ex-bureaucrat who had joined the Congress Party after retirement. III Introduction of Mr Sinhas candidature through search route and Suppression of emoluments of Sinhas from the Selection Committee and ACC.

The Department of Economic Affairs vide communication dated 10/09/10, annexed her eto as An n exu re P 12 ( F rom p age n os.

________to__________), invited application for the post of Chairman SEBI and one of the criterion among other criteria was: Keeping in view the role and importance of SEBI as a regulator, it is desirable that persons with high integrity, eminence and reputation preferably with more than 25 years of professional experience and in the age group of 50 to 60 years may apply. The application form for the post at item no. 5 had asked the applicants to le the present pay and scale of pay while item no. 8 had column no. 4 for lling in the pay scale with each of the earlier assignment shown in the experience column. A copy of the application form for the post of Chairman SEBI dated nil is placed as Annexure P13 (From Page Nos. _______to ______). The rst meeting of the Search cum Selection Committee was held on 2/11/10. There were a total of 19 application received through advertisement. These included Secretary, Ministry of Corporate Affairs and other senior ofcials. All the serving ofcers had lled the pay column. Of these ve candidates were short-listed. These persons with their salary were: Shri G P Singhal, Principal Secretary, Madhya Pradesh( 79,000pm); Shri R

Bandhopadhyay, Secy. to the Govt of India(, Ministry of Corporate Affairs, Rs80,000pm); Shri Sidhartha Pradhan, Additional Secretary, Department of Disinvestment(67,000-79,000pm); Shri Himadri Bhattacharya, Executive Vice President, Tata Capital Limited (2.37 lacs pm) and Shri R Sridharan MD of SBI ( 77,765-80,000pm). The highest pay scale was that of a senior ofcial working with in the private sector with the Tatas. His pay scale was 2.37 lacs which would be around 30 lacs per annum. One candidate, Mr U K Sinha, was invited by the Committee. The minutes do not mention the name of the member who suggested the name of U K Sinha CMD UTI AMC. Copy of the minutes of the rst meeting of the Search-CumSelection Committee dated 02.11.2010 along with the document showing pay scales of other candidates are placed at Annexure P 14 (Colly) (From Page nos. ______to _____). The second meeting of the Committee was held on 13 th December 2010.

There were forty days for the ofcials to have the particulars of U K Sinha lled up as per the application form. In particular the emoluments or the pay scale of Mr Sinha for the present and earlier assignments could have been ascertained and lled in. The emoluments of Mr U K Sinha, which could have been very easily found by either asking him, or found from the four government companies which held majority stake in UTI AMC, or by looking it up on the web site. This omission was not by accident but by

design. Mr Sinhas total emoluments for the year 2010-11 were at over 4 crores per annum while working in a PSE (3.62 crores for 10.5 months) Copy of the relevant page of the Notes forming part of the Accounts for the year ended march 31, 2011 showing Shri Sinhas remuneration in UTI AMC is annexed hereto as Annexure P15 (From page nos. ______to ______). The emoluments also had to be concealed because UTI AMC was a PSU and could not pay the emoluments that were being paid to Mr Sinha. The emoluments paid to Mr Sinha was almost 30 times more than paid to those occupying very high position in the government. It was also more than what the bureaucrats senior to him and involved in the selection process were paid by the Government in their entire career. It appears that it was for this reason that Mr Sinha did not apply through the advertisement route because had he done so he would have to reveal his salary. It was for the same reason that his name was proposed through the search route, so that his salary need not be revealed. It was for this reason that the Selection Committee was hand picked by the Advisor, Ms Omita Paul. The Committee at its second meeting recommended two names, that of Shri Himadri Bhattacharya, Executive Vice President, Tata Capital Limited the only candidate from the private sector, and Mr U K Sinha (supposedly from

the Public Sector). Mr U K Sinhas name was selected by the then Finance Minister, and his name was directed by the Minister to be sent to the ACC for approval. Copies of the minutes of the second meeting of the SearchCum-Selection Committee dated 13.12.2010 along with approval of the then Finance Minister Dated 13.12.2010 are placed at Annexure P16 (Colly) (From page nos. ______to ________). The selection of Chairman of SEBI requires the approval of the Appointment Committee of the Cabinet (ACC). The appointments recommended to the ACC have a standard performa and annexures which are to be lled in by the Ministry recommending the appointment. The recommendation is routed through the Establishment Ofcer of the DOPT. The proposal for the appointment of Mr U K Sinha was put up to the ACC by the Finance Ministry vide its condential letter no D.O. No 2/23/2007RE dated 13/12/2010 wherein the Performa for the ACC was lled up. In Annexure 1 item no. 4, it was shown that the post presently held was that of CMD UTI AMC and against the scale of pay it was mentioned: Not Available. Copy of the letter dated 13.12.2010 of the Joint secretary, Capital Markets along with Annexures is placed at Annexure P 17 (From page nos. ______to ______). For reasons mentioned above this was done deliberately as the facts of the salary/emoluments were not to be revealed, and a false impression was to be

created that Mr Sinha was getting the normal pay that a CMD of any PSU gets, the highest being Rs1.25 Lacs as per the recommendation of the second pay commission. V Illegality in the deputation and appointment of Mr. Sinha as the CMD of UTI MAC The Department of Public Enterprise vide its DPE OM No DPE/ 11(47)2006-Fin dated 4 th December 2007 claried the Public Sector

Mutual Fund means the Mutual Fund registered with and regulated by SEBI where the Government of India, its nancial institutions and public sector banks holds/hold individually or collectively more than 50% of equity/shares in the Asset management Company of the Mutual Fund. th Copy of the DPE OM No DPE/11(47)2006-Fin dated 4 December 2007 is annexed heretoAnnexure P 18 (From page nos.________ to ______) The UTI MF had led a prospectus with SEBI for a public issue. At various places it had claimed to be a government controlled entity. The relevant extracts of the prospectus dated 09.01.2008 of UTI is placed as Annexure P19 (From page nos.________ to ______). The document is dated January 9, 2008 and shows the salary of Mr Sinha, the CMD as on January 2008 with basic pay as Rs 23,450 per month etc. Mr Sinhas history of his deputation to UTIAMC dated back to the period

when he was posted as Joint Secretary in the Finance Ministry overlooking affairs of UTI and was also on the Board of UTIAMC. He got appointed to the post of CEO of UTI AMC by concealing the recommendation of the JPC mentioned below (Para 44, Annexure P 31), and also by overlooking the policy of not seeking deputation in an organization which he had overseen in the Ministry. The rst deputation was for a period of two years ending on 2/11/07. The deputation was wrongly approved as being under section 6 (2) (ii) of the IAS cadre rules from 27/12/2206 to 2/11/ 07. A deputation under Rule 6 (2) gives the choice to the deputed person the option to draw the pay of the organization to which he is deputed or his cadre pay. However, Mr Sinha continued to draw the pay scale to which he was entitled and got his pay revised to that of additional secretary in the pay scale of Rs 22400-525-24500 with effect from 10/2/2007, the date of appointment of his junior as Additional Secretary. Copy of the representation dated 29.01.2007 of Shri Sinha to the Special Secretary, DOPT regarding his terms and conditions as CMD, UTI AMC and copy of the letter dated 01.03.2007 of the Desk Ofcer in DOPT to Shri Sinha are annexed hereto as Annexure P 20 (Colly) (From page nos. ______to _______). His predecessor too had drawn the salary of an IAS ofcer for the entire period that he was on deputation.

It was decided by the four public sector entities which owned UTIAMC and the government to give another extension of two years to Mr Sinha, and the recommendations were sent to DOPT with the approval of the Finance Ministry. When the matter of deputation was put up to the Prime Minister, Mr Sinha was given interim extension for three months upto 2/2/08 on the grounds that his deputation was coming to an end and general matter of policy regarding deputation of IAS ofcers under section6(2)(ii) were to be decided. The Consolidated Deputation Guidelines for All India Services was circulated by the Ministry of Personnel on 28/11/07 and under the Guidelines the deputation of Mr Sinha was determined to be under Rule 6(1) and not under Rule 6(2)(ii) as was wrongly decided earlier. UTI AMC was a central PSU as per clause 1.2- 1.2.3 of the Guideline. Copy of the letter dated 28.11.2007 of the Director (Service) enclosing guideline and the noting of the Cabinet Secretary dated 6.11.2007 relating to extension of deputation by three months by the Prime Minister are placed atAnnexure P 21 (Colly) (From page nos.________ to ______). The Finance Ministry, Department of Economic Affairs vide its OM dated 12/12/2007 requested the DOPT to extend the deputation by the balance one year and nine months under Rule 6 (1). Copy of the OM dated 12/12/2007 regarding extension of deputation is placed atAnnexure P22 (From page

nos.________ to ______). In the note prepared by the section ofcer of DOPT, it was stated that the recommendation of the Department of Economic Affairs for further deputation under section 6(1) be referred to the EO Division. The Establishment ofcer ordered that in view of the latest instructions his ( Mr Sinhas) further deputation will come under Rule 6(1) and a note be prepared for the Cabinet Secretary for extension under Rule 6 (1) mentioning the cooling off period between the two deputation. Copy of the note dated 2/1/08 of the Section Ofcer along with noting of the Establishment Ofcer dated 4/1/08 is annexed hereto asAnnexure P23 (From Page NOs. _______to _______). The Appointment Committee of the Cabinet vide its letter dated 10/3/2008 advised the Finance Ministry (Department of Economic Affairs) that extension of tenure as CMD of UTI AMC to Mr Sinha had been granted till 31/5/2008 and thereafter he would return to his parent cadre (Bihar) and directed the Ministry to nd a replacement by then. Copy of the letter dated 10/3/2008 by the Appointment Committee of the Cabinet is placed at Annexure P 24 (From Page NOs. _______to _______). Instead of accepting the order of the Appointment Committee of the Cabinet, and conceding that there was no way out but to comply with the orders of the ACC, a conspiracy was hatched between Mr Sinha, the SBI chairman, Finance Ministry ofcials and the DOPT to defy the Cabinet

committee in a manner that Mr. Sinha could continue in the post without either informing or taking approval of the ACC in the following manner: Mr. Sinha would seek voluntary retirement, SBI Chairman would make a fresh offer. Mr. Sinha would seek permission for post retirement commercial employment, The Ministry of Finance would recommend the re- employment as commercial employment, The DOPT would approve it and waive the post retirement waiting period before accepting the commercial employment. All the concerned persons in the decision making process would ignore the meaning of commercial employment as stated in the section and designate employment with the PSE as commercial employment. The le would not be sent to the PMO or the ACC for information or approval. Copy of the letter dated 03.04.08 of the SBI Chairman to the Finance Secretary requesting the govt. to approve the proposal of extension for two years, copy of the letter of the Company Secretary dated 11.04.2008 to Shri Sinha regarding compensation in case of his continuing in UTI AMC after taking VRS, copy of the letter dated 15.04.2008 of Shri Sinha to the Chief Secretary, Govt. of Bihar for

VRS, copy of the application dated 15.04.08 of Shri Sinha seeking VRS in the prescribed format under Schedule L, copy of the letter dated 30.04.08 regarding Sinhas sanction of VRS w.e.f. 15.05.08, copy of the OM dated 01.05.08 regarding Shri Sinhas reemployment in the same position after VRS and copy of the letter dated 17.06.08 of DOPT to of the Chief Secretary, Bihar granting permission for post VRS commercial employment with UTI AMC are annexed

hereto as Annexure P25 (Colly) (From Page Nos. ______ to ______). This omission was not accidental but deliberate as it was the only way out for Mr Sinha and those interested in his continuation for reasons unsaid to retain him as CMD of UTI AMC inspite of the orders of the ACC headed by none other than the Prime Minister. The note prepared by the Section Ofcer in the DOPT was approved by every authority right upto the Minister even though Rule 26 was reproduced in its entirety in the note. Further, the DOPT also apparently ignored the fact that the declaration given by Shri Sinha under Rule 26 (3) (ii) of AIS Death cum Retirement Benet Rules that in the last three years of his ofcial career he has not been privy to sensitive or strategic information of UTI AMC could not be true as he was already in deputation in the same organization at the time of taking VRS. The text of the relevant portion of Rule 26 is reproduced

which states as to what commercial employment means: `Commercial Employment means: (i) an employment, whether paid or honorary, in any capacity including that of an agent under a company, rm, co-operative society, body or individual engaged in trading, commercial, industrial, nancial or professional business, and includes a directorship of such company or partnership of such rm but does not include employment under a body corporate, wholly or substantially owned or controlled by Government. Copies of the note dated 17.04.08 and Note of Section Ofcer dtd 09/05/08 containing Rule 26 (3) (ii) of AIS Death cum Retirement Benet Rules and note of MOS dated 17/6/08 are annexed hereto as Annexure P26 (Colly) (From Page Nos. ______ to ______). Mr Sinha in column 5 of his application to the Special Secretary, DOPT, dated 15/4/2008 led in Schedule L under Rule 26 for seeking permission for taking commercial employment post retirement stated that the pay scale and the pay drawn by him at the time of his retirement was 22400-525-24500 and present pay as Rs23,450. In column 7(f) relating to the details of the commercial appointment, against the question as to whether the post was advertised, and if not as to how the offer was made;

Mr Sinha wrote that such high level posts are not advertised. This assertion was wrong in light of the assurance of the government given to the JPC as mentioned below (para 44). Further the application under Rule 26 was in violation of the meaning of commercial employment. The records show that the proposal for further extension of deputation of Mr Sinha as CMD UTIAMC was denied on 10/3/2008. His application for voluntary retirement and permission for commercial employment is dated 15/4/2008. His retirement was accepted from 15/5/2008 but the permission of the Central Government for the post retirement commercial employment to take up employment with UTI AMC was given only on 17/6/08. Though he was reemployed in the same organization he was occupying the post illegally for a period of one month. The illegal increase in emoluments with retrospective effect and the signing of the balance sheet of UTI AMC on 17/5/08 took place on dates on which he should not have been ofce. The implication of this mischief of illegal commercial re-employment of Mr Sinha was that he could draw full pension for over 30 years of service as an IAS ofcer and rake in crores while working for the same PSU to which his deputation was denied by the ACC headed by the Prime Minister. Though Shri Sinha remained in the same position and the organization remained the same, the character of the employment changed from that of a government servant on deputation to a PSU to that of a retired bureaucrat

having taken up commercial employment. Within a period of a day the emoluments too increased from around six lacs per annum to one crore per annum. Later on these emoluments were made over two crores and then four crores. Mr Sinha also gave himself emoluments of over Rs 2 crores per annum for the period of his deputation from the IAS to the PSU retrospectively on a date on which he could not be occupying the ofce of CMD UTI AMC. Mr Sinhas voluntary retirement was with effect from 15/5/08 while the permission for commercial employment under Rule 26(1) of the AIS (DCRB) was given on 17/6/08 and hence he could not be occupying the ofce from 16/5/5/08 to 16/6/08. The fact that the emoluments were in crores, were with retrospective effect and was done when he was not entitled to be in ofce or sign the balance sheet reects adversely on his integrity. He also put in his papers for voluntary retirement and got himself re-employed in the same PSU when the extension of his deputation was turned down by the ACC. His re-employment was against the relevant Rules. All this crucial information, having a bearing on his integrity, had to be concealed from the Chairman of the Selection Committee who as Cabinet Secretary was aware of the deputation history of Mr Sinha in 2007-2008. It is undisputed through various documents, the ling of prospectus, performa of his application for post retirement employment etc, that Sh.

Sinha was drawing a pay in the scale of Rs 23,450 per month till the point of his retirement, and was to draw one crore thereafter, that is from 17/6/2008 according to offer made to him by the Company Secretary and approved by other authorities. In the form lled on 15/4/2008, Shri Sinha had shown his pays scale as Rs 23450. Mr Sinhas commercial employment commenced from 17/6/2008. His voluntary retirement was from 15/5/2008. The balance sheet for the year ending 31 st March 2008 dated 17 th May 2008 (a Saturday) shows that the

remuneration in the form and salary and allowances (including perquisites) paid to Mr Sinha by UTI AMC was Rs 2 crores for 2007-08, and in addition he was paid a sum of Rs 44 lacs for three months and three days in the previous year (2006-2007) Copy of the relevant page of the balance sheet dated 31/03/2008 is annexed hereto as Annexure P 27 (From Page Nos. ______ to ______). The rst act that Mr Sinha did on 16/05/08,

when he should have been in retirement and not the CMD, as the CMD was to give himself a handsome pay hike many more times than every other person of the government be it in the executive, the judiciary, the PSU or in any other position. Even a promoter of a privately owned company does not act in the manner Mr Sinha did of giving himself a raise of 30 times with retrospective effect. This hike pertained to the period for which he was on deputation as an IAS ofcer in the employ of the government, and for

which he had shown his remuneration in various documents as linked to a basic of Rs 23,450. The approval was for emoluments of one crore per annum from 17/06/2008. Mr. Sinha increased his emoluments to four crores in 2010-2011, 2.36 crores, for the year 09-10, and 2.15 crores for 08-09. Copies of the relevant pages of the balance sheet of the year ended March 31, 2009, balance sheet of 2009-10 and 2011 -12 are annexed hereto as Annexure P28 (Colly) (From page nos. _______to ________). Mr Sinha paid himself an excess of over 7.5 crores even after considering his pay of Rs one crore per annum for the post retirement period from May 2008 as legitimate. It is for this reason that the emoluments of Mr Sinha had to be concealed from the Cabinet Secretary, the Chairman of the Search cum Selection Committee who also had knowledge of Mr Sinhas history of deputation, of extensions, of it being under Rule 6(1) and of it having come to an end. The Cabinet Secretary had not changed between November 2007 to February 2011. As the papers of Mr Sinhas appointment to the ACC would also go through him, hence the emoluments had to be concealed from him and the members of the ACC and the Cabinet Secretary. It was also probably for this reason that the composition of the Selection Committee was changed by amending the relevant Rule so that the Cabinet Secretary,

the Chairman of the Selection Committee is reduced to the minority of one. The history of Mr Sinhas deputation to UTI AMC and the manner in

which he increased his emoluments cannot be described as acts of a person of integrity, much less of high integrity, expected from a person to be appointed as chief of SEBI. The purpose of denying extension to the then incumbents and appointing a manipulative person with questionable integrity to the sensitive post of SEBI chairman by committing fraud on the ACC could not be without a purpose. Mr Sinha forgoing emoluments of Rs 4 crores to serve on a post of Rs36 lacs and losing the pension paid to him as CMD of UTI AMC, too could not be without reason. The promoters of companies who were under investigations by SEBI and who had thousands of crores on stake could be expected to lobby and replace the intransigent ofcers with more pliable and amenable ones. V Post of CMD of UTI AMC was kept vacant for 17 months

Shortly after the appointment of Mr. Sinha in mid February reports started appearing in the press from April 2011, that the brother of Ms Paul, Jitesh Khoshla, though not considered suitable for the post of CMD by a Committee was nevertheless the front runner for the post of UTI AMC because he had the backing of the Finance Ministry and the state owned nancial institution, which owned the majority shares of UTI AMC. These

reports stated that the Finance Ministry was insistent that Mr Khosla be appointed as CMD but this was being resisted by a foreign investor who had 26% shares in UTIAMC (due to a subsequent divestment through a controversial private placement) and whose consent was necessary. Copy of the article dated 09/06/2011 published in India Express, the article 13/06/2011 published in The Economic Times and the article dated 23/01/2012 published in the First Post are placed as Annexure P 29 (colly) (From Page Nos. ____to _____). Specic complaints were led by the petitioner with the Prime Minster on 30/5/2011, 12/9/2011 and 10/11/2011, which are placed at Annexure P 30 (colly) (From Page Nos. ____to _____), against Omita Paul. The practice of forwarding the complaint to the Ministry for their comments would have been followed but it too did not have any effect. The post of CMD UTIAMC continued to remain vacant for seventeen months because the brother of Ms Omita Paul could not be appointed to the post and the government remained indifferent to the fact that the fund had a corpus of around Rs 60,000 crores and government sources and pension schemes. The massive losses incurred by the government, the investors and the tax payers in the two UTI scams leading to setting up of JPC and its recommendations accepted by the government were ignored by those having a large part of it came from

their petty interests in the post of CMD of UTI AMC. The overriding public interest of the government and the PSU which had invested its funds, the pension funds and investors who too had invested their money amounting to Rs 60,000 crores was ignored for the sake of the massive illegal emoluments that IAS ofcers could milk the organization while on deputation/commercial employment by treating it as their efdom. UTI had been involved in a major scam in which ordinary investors lost huge sums of money. In 1998 when the fund crashed a Rs 3500 crore

government bailout plan rescued it. Then it crashed again in 2001 due to a political appointee being made its head and the fund lost almost half of its money, asset value of Unit 64 became Rs 8 instead of Rs 14 (the traded value) and the government agreed to make it Rs 10 so that the investors would incur only a 30% loss. The government announced a Rs 14,500 crore bailout programme, which was paid for by the tax payer. A Joint Parliamentary Committee went into the entire scam and submitted its report. Para 21.9 (v) of the report is placed as Annexure P 31 (From

Page Nos. _______to ______) and is reproduced below: (v) Government has stated that a professional Chairman and Board of Trustees will manage UTI-II and that advertisements for appointment of professional managers will be issued. The Committee recommended that it should

be ensured that the selection of the Chairman and professional managers of UTI-II should be done in a transparent manner, whether they are picked up from the public or private sector. If an ofcial from the public sector is selected, in no case should deputation from the parent organisation be allowed and the person chosen should be asked to sever all connections with the previous employer. This is imperative because under no circumstance should there be a public perception that the mutual fund schemes of UTI-II are subject to guarantee by the Government and will be bailed out in case of losses. Neither Mr U K Sinha, the ex CMD of UTI AMC nor Mr Jitesh Khoshla were professionals nor were proposed to be recruited as professionals through an advertisement. Yet they wanted to enjoy the fantastic salaries which they did not merit. Neither of them met any of the ve criteria in the advertisement inserted recently for the post of UTI CMD in newspaper dated 04/06/2012 placed at Annexure P 32 (From Page Nos. ____to _____). The advertisement was released only after the brother of Ms Omita Paul/Advisor opted out of the race because the tenure of Ms Paul/ Advisor was coming to an end on account of it being co terminus

with that of the Minister. Copy of the Times of India report dated 07/05/2012 is annexed hereto as Annexure P 33 (From Page Nos. _______to _______). It was then and only then the advertisement was released, fullling the commitment given to the JPC by the government in 2002. The petitioner had brought to the above mentioned assurance of the government to the JPC to the notice of the Prime Minister and placed it in public domain. VI Complaint of the then Whole Time Member Dr. Abraham against Mr. Sinha and Ms. Paul to the Prime Minister of lobbying for companies against whom the complaints were being examined by the SEBI The allegation of Ms Paul acting on behalf of the corrupt companies and how Mr Sinha was lobbying for them with the WTM was revealed by Dr Abraham as a WTM (Whole Time Member) of the SEBI Board, in a letter written by him on 1/6/2011 to the Prime Minister, after Mr Sinha became the Chairman of the SEBI. The letter is a telling expose on extraneous forces inuencing the functioning of the regulator of the capital market. In the letter the WTM alleged that Mr Sinha tried to inuence him on four cases and invoked the name of Advisor while doing so. One of the cases related to securities fraud of Reliance group, and others related to Tayals of Bank of Rajasthan, Sahara, and MCX. While trying to inuence him, Mr

Sinha had stated that these matters were engaging the attention of Union Minister for Finance, or Mrs Omita Paul, Advisor to the Finance Minister,. This letter dated 1/6/12 came in the public domain through a RTI query and is placed at Annexure P 34 (From page nos. ____ to _____). The events subsequent to the writing of the letter to the Prime

Minister show that there was great substance in the allegations and given the credibility of the WTM as against that of Sinha and Ms Paul, the former was speaking the truth. Sahara was a company taking deposits from small un bankable people. From 2008 onwards, it violated the deposit norms under section 58 A of Companies which allowed it to collect unsecured deposits from debentures up to 10% of its owned fund. By the Acceptance of Deposit Rules, it could have collected only Rs 230 crores but went on to collect over Rs 20,000 crores. Copy of the relevant portion of the balance sheet of Sahara year 01/07/2010 to 30/06/2011 is placed as Annexure P 35 (From page nos. ____ to _____). Almost the entire money collected was siphoned out and virtually there were negligible assets in the company in whose name deposits were taken from the public so that the group could not be compelled to refund the amount. It was the largest ponzi scheme involving 2 crore poor people. These deposits were being shown as OFCD (optionally fully convertible debentures) and no public issue had been made though the

inated number of depositors were said to be two crores. The WTM had detected the scam in a public issue proposed by the group for a real estate company and showed great courage in taking on the group as the ongoing scam was going on for decades and no authority dared to cross swords with the Sahara group. The WTM had passed orders against the company which was contested by Sahara in the High Court at the time he wrote the letter to the Prime Minister. However, by a freak chance the matter came before him for adjudication because this Honble Court referred the matter to SEBI. He adjudicated the matter at the fag end of the tenure (23/6/11). In a well reasoned order, he directed the group to refund the entire money to the investors. His order was upheld by the Securites Appellate Tribunal and an appeal against the said order is pending before this Honble Court. In fact, the matter has been heard and judgment is reserved. The second case that interested the Advisor to the Finance Minister and Mr Sinha was the securities fraud of Rs 513 crores of Reliance group (Mukesh Ambani group). Reliance Petroleum shares were short sold for Rs 290 by the group and later bought back when there was a hefty fall in price when the group sold the shares in the cash segment. The Reliance group made Rs513 crores in ve days .The securities fraud took place in Nov 2007. Such a blatant act of securities fraud is by the promoter was unprecedented

and only the Reliance group could have committed it. The penalty under the law is three times the amount of the fraud and the total amount involved was 2000 crores along with criminal prosecution. Reliance tried to settle the matter by paying a ne of only Rs two crores and then eight crores through consent order. It was not even willing to pay back the fraud amount of Rs 513 crores. These meager offers of settlement were made by Reliance to buy time so that the honest ofcers of SEBI could be replaced by an amenable Chairman like Mr Sinha. Mr Sinha has changed the circular on the consent order (25/5/2012) in a

manner to favour Reliance group and continues the settlement of the criminal offence through a consent order. The circular was issued without the consent of the Board and seeks to undo the provisions of the ACT and would not stand legal scrutiny. Deliberate loophole was left in clause 25 of the circular to give relief to the group. Copies of the circular on consent order dated 25.12.12 along with the two complaints dated 10/09/2011 & 28.05.2012 led by the petitioner with the CVC on the Rs 2000 crore scam as well as complaint dated 21/06/2012 to the Cabinet Secretary regarding Shri Sinhas appointment are placed as Annexure 36 (Colly) (From Page Nos. ______to ______). The attempts to get information under RTI have been denied and even an application to reveal the names of the thirteen entities which were involved in the scam was turned down in Appeal by

SEBI. The third case related to the Tayals of Bank of Rajasthan in whose favour the outgoing member Prashant Saran passed a favourable order so that he could be re appointed. The order only conrmed the allegation of Dr Abraham. Similar conclusions were made by the media. Copies of the Articles in Mint dated 02/04/2012 and Financial Express dated 22/07/2012 on Mr Sarans order are enclosed as Annexure 37 (From page Nos. ______to _______). The fourth case related to MCX which wanted permission to trade in securities (cash and derivatives) in its stock exchange. The previous regime of SEBI had denied the permission and had passed an order against MCX. The issues relating to operations of Stock Exchnages were referred to a committee by the then management of SEBI. The committee was headed by Dr. Bimal Jalan, former governor RBI. The committee submitted its report, however the Ministry ensured that Dr Bimal Jalan Committee report is taken up by SEBI only after Mr. Sinha became the Chairman so that it can ensure that only those recommendations, which suits MCX and others are accepted, and other recommendations are rejected. This would enable MCX to operate as a full edged stock exchange list the shares of the proposed stock exchange and help in giving market value to the MCX license. Further the terms for complying with as this other norms too have been diluted after

Mr. Sinha took charge. Further damage was done to the institution of SEBI in that when two of the three WTMs of SEBI along-with with three Executive Directors refused to apply afresh on Mr Sinhas appointment, reportedly on integrity issues, as stated by one of the WTMs in his letter to the Prime Minister. These posts remained unlled for quite some time and the post of one WTM for over a year. It could also be on account of giving Mr. Sinha greater powers in selecting WTM of his choice so that they would not pose problems in ruling in favour of corporates. The Selection Committee had formed a sub committee under the Chairmanship of Mr Sinha to select WTM. There is every reason to believe that the purpose of appointing Mr Sinha through a fraud was not only wrong but was motivated by extraneous factors which were not in public interest or in keeping with the object of SEBI. That the Petitioners have not led any other petition before this Honble Court or any High Court, seeking the same or similar relief. The Petitioners have no other equally efcacious alternative remedy than to approach this Honble Court by way of this petition.

Grounds Because the act of the Respondents in appointing Shri Sinha as the

Chairman SEBI is arbitrary and hence, in violation of Article 14 of the Constitution. The information regarding Shri Sinhas getting about Rs. 4 Crores per annum as emoluments as the CMD of UTI AMC and also the facts regarding his deputation in the UTI AMC and when denied extension how he took VRS and immediately thereafter illegally joined UTI AMC and got his salary increased to Rs. 4 Crores per annum were not placed before the Search-cum-Select Committee. This Honble Court in the case relating to the challenge to the appointment of Shri P. J. Thomas as the CVC in CPIL Vs. UOI & Ors. (2011) 4 SCC 1 held The decision to recommend has got to be an informed decision keeping in mind the fact that the CVC as an institution has to perform an important function of vigilance administration. If a statutory body like the HPC, for any reason whatsoever, fails to look into the relevant material having nexus to the object and purpose of the 2003 Act or takes into account irrelevant circumstances then its decision would stand vitiated on the ground of ofcial arbitrariness (see State of A.P. v. Nalla Raja Reddy5). The post of the Chairman, SEBI is a very important position having a bearing on the ow of investment, Indian and Foreign, economic growth and the safety of funds invested by large and small investors. Therefore, it was important that the complete facts particularly those

having direct bearings in deciding the question of integrity should have been placed before the Search-Cum- Selection Committee. The consent of the ACC too was obtained through fraud by suppressing the information relating to the emoluments. Because the appointment of Shri Sinha as the Chairman of the SEBI is not only arbitrary but also illegal as he failed to fulll one of the eligibility conditions as laid down in Sub-section 5 of Section 4 of the SEBI Act as well as the advertisement. Sub-Section (5) of Section 4 of the Act provides that the Chairman shall be person of integrity. Further, the advertisement provided that the person should be of high integrity. In the present case, the manner in which the facts regarding Shri Sinhas getting about Rs. 4 Crores per annum as emoluments as the CMD of UTI AMC were suppressed before the Selection Committee and also the facts regarding his deputation in the UTI AMC and when denied extension how he took VRS and immediately thereafter illegally joined UTI AMC and got his salary increased to Rs. 4 Crores per annum clearly raise serious question about his integrity. Moreover, Mr Sinha illegally also gave himself emoluments of over Rs 2 crores per annum for the period of his deputation from the IAS to the UTI AMC retrospectively after . Because the appointment of Shri Sinha as the Chairman SEBI is not only arbitrary but also malade considering the manner in which the advisor to

the Finance Minister ensured that the earlier Chairman could not get further extension though he was entitled to get extension of two years as per the amended notication and also the manner in which the composition of Search-cum- Selection Committee for selecting the SEBI Chairman and WTMs was changed illegally to give primacy to the Finance Ministry so that Shri Sinhas appointment could be ensured. It was probably also done to reduce the Cabinet Secretary, who was ex ofcio Chairman of the Committee, to a minority as he was aware of the deputation history of the candidate to be selected and the emoluments drawn by him would have shocked him and alerted him to the illegalities involved. Because the appointment of Shri Sinha as the Chairman SEBI was done by abusing the ofcial position for extraneous consideration as it was the result of deep conspiracy to benet some of the big corporates against whom the complaints were pending before the SEBI. One of the earlier WTMs in his complaint to the Prime Minister made serious charges against the Advisor to the Finance Minister and Mr. Sinha of acting on behalf of the corrupt companies. The letter is a telling expose on extraneous forces inuencing the functioning regulator of the capital market. In the letter the WTM alleged that Mr Sinha tried to inuence him on four cases and invoked the name of Advisor while doing so. One of the cases related to securities fraud of Reliance group, and others related to Tayals of Bank of Rajasthan,

Sahara and MCX. Because shortly after the appointment of Mr Sinha as Chairman of SEBI, all out efforts were made by the Finance Ministry to appoint the brother of the Advisor as the CMD of UTIAMC, and the post remained vacant for sixteen months as he could not be appointed. His appointment was objected to by a foreign shareholder who had bought a 26% stake because he was not suited for the post. The post continued to remain vacant till such time it became clear that the Advisor will not be continuing in the post and it was only then that the post was advertised and according to the advertisement the brother of the Advisor did not meet even one of the ve the criterion for selection. Thus, the manner in which the post of the CMD UTI AMC where Shri Sinha was last working and getting Rs. 4 crores per annum as emoluments was kept vacant for 16 months to appoint the brother of the Advisor of the Finance Minister, though ultimately could not be done, also shows arbitrariness and malade. Because the deputation to UTI AMC had been approved earlier under section 6(1) of the IAS Cadre Rules. Extension too was sought under section 6 (1) by the Finance Ministry and was approved for part of the period by the ACC through the DOPT. UTI AMC was held to be a Central PSUs by all the authorities in the Finance Ministry, Ministry of Personnel and the Cabinet Secretariat and the Department of Public Enterprise. The

employment under UTI AMC could not become a commercial employment as dened under the Rules. The deputation to UTIAMC could not be a 6(1) deputation as well as a commercial employment at the same time. Further, the DOPT also apparently ignored the fact that the declaration given by Shri Sinha under Rule 26 (3) (ii) of AIS Death cum Retirement Benet Rules that in the last three years of his ofcial career he has not been privy to sensitive or strategic information of UTI AMC could not be true as he was already in deputation in the same organization at the time of taking VRS. Because the manner in which Mr Sinha increased his emoluments was illegal for a PSU as no CMD or a person can receive the emolument that Mr Sinha gave himself. The two crores that Mr Sinha took as emoluments on 16/5/2008 for the nancial year 07-08 and Rs 44 lacs for three months in the previous year for the period that he was under deputation was an act of corruption and misuse of ofce. These excess emoluments needs to be disgorged as the wrong doer cannot prot from his wrongs, nor can crores be paid by wrong interpretation of law. The disgorgement is necessary in order to set an example that public interest is paramount and cannot be sacriced for personal welfare of an individual ofcer. PRAYERS In the interest of justice and for the facts and circumstances stated herein

above it is most respectfully prayed that this Honble Court may graciously be pleased to:

issue a writ of quo warranto or any other direction against Respondent No. 4 (Shri U K Sinha) to remove him from the post of Chairman, SEBI; issue a writ of mandamus or any other direction to initiate criminal investigation into the entire selection process of Respondent No. 4 as the Chairman, SEBI; issue a writ of mandamus or any other direction to initiate criminal investigation into the appointment of Respondent No. 4 as the CMD of UTI AMC and to take consequent action thereupon; and pass such other order or further orders as this Honble Court may deem t in the facts and circumstances of the case;

Filed by Drawn by: (Prashant Bhushan) Drawn on : Filed on : -08-2011 Advocate for the Petitioner

IN THE SUPREME COURT OF INDIA [CIVIL WRIT JURISDICTION] WRIT PETITION (CIVIL) No. ___________of 2012 IN THE MATTER OF:: Arun Kumar Agrawal //Versus// Union of India & Ors Respondents Petitioner

AFFIDAVIT I, Arun Kumar Agarwal, S/o Late Sh. R. S. P. Agrawal, aged about 55 yrs, r/o, T 8 Eagleton Golf Village, 30 km Bangalore, Mysore Highway, Bidadi, Ramnagara 562109, Karnatka, do hereby solemnly state and afrm as under:

That I am the Petitioner in the aforementioned writ petition and being familiar with the facts and circumstances of the case am competent to swear this Afdavit on its behalf.

That I have read and understood the contents of the abovementioned Writ Petition from page no. ______to _______and Synopsis & List of dates

from pages B to _____ and application for interim from page no. _____ to _____and I state that the same are believed to be true and correct to the best of my knowledge on the basis of information received by me and believed to be true. That the Annexures annexed to the Writ Petition are true copies of their respective originals.

DEPONENT VERIFICATION: I, the above named Deponent, do hereby verify that the contents of the above afdavit are true and correct to my knowledge, no part of it is false and nothing material has been concealed therefrom. Veried at ________________on this _______day of July 2012.

IN THE SUPREME COURT OF INDIA [CIVIL WRIT JURISDICTION] WRIT PETITION (CIVIL) No. ___________of 2012 IN THE MATTER OF:: Arun Kumar Agrawal //Versus// Union of India & Ors Respondents Petitioner

APPLICATION FOR INTERIM DIRECTION To, The Honble the Chief Justice of India and His Companion Justices of the Honble Supreme Court of India. The Humble petition of the petitioner above-named

MOST RESPECTFULLY SHOWETH:

That the present writ petition is being led in public interest under Article 32 of the Constitution of India to challenge the appointment of Respondent No. 4, Mr U K Sinha as Chairman of SEBI on the grounds of his not being a person of integrity which was one of the eligibility conditions as laid down in Sub-section 5 of Section 4 of the SEBI Act as well as in

government communication and also for fraud committed on the Search and Selection Committee and the Appointment Committee of the Cabinet. The fraud relates to concealing from the Committees the unheard emoluments of over Rs four crores per annum which he wrongfully earned while working for a PSU by declaring the post of the CMD, UTI AMC as commercial appointment. The information relating to emoluments was mandatory information and it had a material bearing on the selection to a post of high integrity that Shri Sinha failed to fulll. Moreover, the facts regarding Shri Sinhas illegal appointment as the CMD of the UTI AMC (i.e. the post which he held before joining the SEBI), after his extension to the deputation in UTI AMC was denied by the ACC, by taking VRS from the govt. and immediately thereafter joining the UTI AMC as a commercial appointment was not placed before the Search-cum-Select Committee. The developments subsequent to the appointment of Shri Sinha as the Chairman SEBI show that it was done for extraneous consideration to benet some of the big corporates like Reliance, Sahara against whom action after investigation was pending before the SEBI. The Petitioner is, therefore, also seeking an investigation into the entire process of the appointment of Shri Sinha as CMD, UTI AMC as well as Chairman, SEBI. From the facts set out in the accompanying petition, it is clear that the Petitioner has an excellent case and has every hope of succeeding in the petition. It is submitted that irreparable injury would be done to the public interest, if Respondent No. 4 is allowed to continue to function as the Chairman of SEBI which is a statutory regulatory body of the Capital

market particularly when there is serious doubt about his integrity which is one of the eligibility criteria for the said post. Moreover, his appointment is in total breach of rule and hence, illegal. Even otherwise, public interest would be rst casualty if person like Respondent No.4 whose integrity is questionable is permitted to cling on to such an important post. Further, it is essential that an immediate enquiry is ordered into the entire selection process of Respondent No. 4 as the Chairman, SEBI as it was done by misusing ofcial position for extraneous considerations and also to initiate criminal investigation into the appointment of Respondent No. 4 as the CMD of UTI TMC and to take consequent action.

In view of the abovementioned facts it is respectfully submitted that this Honble Court may be pleased to pass the following orders during the pendency of the accompanying writ petition:

PRAYERS

restrain Respondent No. 4 from functioning as the Chairman of the SEBI; direct an immediate enquiry into entire selection process of Respondent No. 4 as the Chairman, SEBI; direct the criminal investigation into the appointment of Respondent No. 4 as the CMD of UTI TMC; and

pass any other or further orders, as this Honble Court may deem t and proper.

Petitioner

(Prashant Bhushan) Through: Counsel for the Petitioner New Delhi Dated:

PAGE \* MERGEFORMAT 69

Das könnte Ihnen auch gefallen