Sebi selection: Centre to reply in 2 weeks

The Supreme Court on Friday gave the central government two weeks’ time to respond to a public interest litigation seeking to quash a 2010 notification that allegedly subverts the process of selection of members of the Securities and Exchange Board of India (Sebi). The case will now come up for hearing on November 21.

A bench headed by Chief Justice S H Kapadia deferred the hearing of the case after Attorney General G E Vahanvati said the Centre would file an affidavit after two weeks. The court did not issue notice to the government.

According to the petition, the amended provision of the Sebi (Terms and Conditions of Service of Chairman and Members ) Rules 1992 authorised the finance minister — not the government — to appoint any two persons for the board. This change in the constitution of the search-cum-selection committee for recommending the name of the chairman and whole-time members has “altered the crucial balance” and “compromised the role” of Sebi as a watchdog. “It is the only instance of its sort,” the petition said.

Counsel Gopal Subramaniam, as representative for the petitioners who included former Chief of Air Staff S Krishnaswamy and ex-DGP Julio Ribeiro, told the court that the petition was not against any individuals; instead it raised important questions of law. The bench agreed to this, and granted an early hearing on November 21.

The petition added that the new rule would enable the authorities to handpick persons without any expertise in the field. It further alleged that the reluctance of the government to extend the term of the chairman and members recently appeared to be “motivated and guided to extend murky protection to certain corporate houses”. The court was urged to intervene expeditiously and ask the government to explain its “dubious conduct”.

The petition first came in the limelight in August, when it included direct allegations against finance minister Pranab Mukherjee. The court directed the petitioners to withdraw and re-file the matter without the allegations.

The matter, which related to a Sebi chairman’s tenure (now three years) and any form of extension, did attract a lot of attention since the start of the current calendar year.

The three-year term of former chief C B Bhave ended in February amid speculations whether he would get an extension.