The Securities Appellate Tribunal (SAT) has accepted former NSE chief Chitra Ramakrishna’s plea against the SEBI order regarding governance lapses.
Appellate Tribunal also directed NSE to deposit more than 4 crore as holiday encashment and deferred bonus of Ramakrishna in an escrow account against SEBI direction where the amount was to be kept in Investor Protection Fund Trust.
“Having taken into account the facts and circumstances brought on record and in order to balance the balance of equity as well as facility, we direct NSE to
Notice no. 2 To deposit Rs. “4.73 crore as leave encashment and deferred bonus of the appellant in the escrow account instead of crediting it to the Investor Protection Fund Trust,” said SAT.
Further, SAT has asked the appellant Ramakrishna to deposit an amount of 2 crore within six weeks.
In an order dated February 11, which had wide-ranging ramifications, SEBI imposed a fine of 3 crore for alleged governance lapses on Ramakrishna in a case related to the appointment of Anand Subramaniam as Group Operating Officer and Advisor, when she was the Managing Director and Chief Executive Officer of NSE.
Further, the watchdog had asked NSE to forfeit the excess holiday encashment 1.54 crore and deferred bonus 2.83 crore to Ramakrishna, and the amount was to be deposited in the Investor Protection Fund Trust.
Passing the four-page order on April 11 after admitting an appeal filed by Ramakrishna, SAT said various questions raised at the time of hearing of the appeal would be considered.
It also directed SEBI to file its reply within four weeks. SAT has listed the matter for hearing on June 30.
It was also noted that such deposits in the escrow account would be subject to the outcome of the appeal.
Further, SAT directed Ramakrishna to deposit an amount of 2 crore within six weeks from today (April 11). “If such amount is deposited, the balance amount will not be recovered during the pendency of the appeal,” it noted and dismissed the stay application.
Ramakrishna’s counsel CS Vaidyanathan opposed Sebi’s decision to impose penalty under Section 23A of the Securities Contracts Regulation Act (SCRA).
They argued that this provision, being probable, could not apply to any contravention committed before the Amendment Act and hence the penalty under this head was “wrong and could not be sustained”.
According to the lawyer, SEBI passed the order without giving an opportunity of being heard which was in violation of Article 14 of the Constitution of India.
Further, he argued that the regulator had no power to interfere with the autonomy or internal management of NSE Ltd.
Besides penalizing Ramakrishna for lapses in governance, SEBI also imposed fines on Ravi Narayan, Ramakrishna’s predecessor, and others.
Further, Ramakrishna has been barred from associating with any market infrastructure institution or any intermediary registered with SEBI for a period of three years, while it is two years for Narayan.
In its 190-page order passed on February 11, SEBI found that the appointment of Subramaniam to Ramakrishna was directed by a yogi living in the Himalayan ranges.
Ramakrishna referred to Yogi as ‘Siromani’ and according to him, Yogi is a spiritual force who has been guiding him on personal and professional matters for the last 20 years.
In addition, Ramakrishna had shared some internal confidential information including financial and business plans of NSE, dividend outlook, financial results with Yogi and even consulted him on the performance appraisal of employees of the exchange. PTI SP Ram