SC seeks Sebi stand on accepting IPO scam report

The Supreme Court today asked the market regulator Sebi to clarify its stand on whether it was going to accept the report of a high-powered committee, which had probed IPO scam of 2006 and the role of NSDL in it.

A bench of Justice R V Raveendran and Justice A K Patnaik asked the Securities Exchange Board of India to take a decision over the admission of the report, which has also passed some remarks over functioning of the market regulator during the scam.

It further asked "Sebi to consider whether its board will reconsider the special committee's December 4 order in respect of National Securities Depository Ltd (NSDL) and DSQ securities and to pass an appropriate resolution and place before this court".

The Supreme Court also pulled up Attorney General Goolam Vahanvati appearing for Sebi for not giving any stand in this matter.

It was also not satisfied with his reply that the board of Sebi has already taken a decision on the report of the committee, which had declared it as "non-est(does not exist)."

After the IPO scam, Ministry of Finance had constituted a committee consisting of two Sebi members G Mohan Gopal, presently Director of National Judicial Academy, and V Leeladhar.

The Committee in its report 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, on February 21, during the last hearing, the apex court had expressed its concerns over Sebi's outright rejection of the report and had asked the market regulator to give its stand within two weeks.

It had further remarked that as Committee comprised senior Sebi officials, it should have been considered by the regulator.

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

The bench had shot back, "we would like to see. Show us a single order given by the committee in NSDL matter (where it) exceeded its jurisdiction.

"Whatsoever they (committee) said (against Sebi) was self retrospection and this is not wrong. You could not have ignored," the bench had said.

The committee passed three orders and found that NSDL had failed in its duty of supervising, investigating, monitoring data and directed (it) to conduct an independent inquiry to establish individual responsibility.

Moreover, the committee had given serious remarks over the manner in which Sebi was functioning and handled the entire episode. It noted that the Sebi had failed to carry out its' regulatory role adequately and recommended the market regulator to make a Code of Conduct for depositories.