SAT admits Chitra Ramkrishna's plea against SEBI order; directs her, NSE to deposit money

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The Securities Appellate Tribunal (SAT) has admitted former NSE chief Chitra Ramkrishna's plea against a Securities and Exchange Board of India (SEBI) order in relation to governance lapses at the bourse and directed her to deposit an amount of Rs 2 crore. The appellate tribunal also directed NSE to deposit more than Rs 4 crore towards leave encashment and deferred bonus of Ramkrishna in an escrow account as against SEBI's direction where the amount was to be parked in the Investor Protection Fund Trust.

In an order, dated February 11, that had wider ramifications, SEBI slapped a penalty of Rs 3 crore on Ramkrishna for alleged governance lapses in a case related to the appointment of Anand Subramanian as the Group Operating Officer and Advisor when she was at the helm of NSE as its Managing Director and Chief Executive Officer.

Besides, the watchdog had asked NSE to forfeit the excess leave encashment of Rs 1.54 crore and the deferred bonus of Rs 2.83 crore of Ramkrishna, and the amount was to be deposited in the Investor Protection Fund Trust. Passing a four-page order, dated April 11, after accepting an appeal filed by Ramkrishna, SAT said that various questions raised would be considered at the time of hearing of the appeal.

It also directed SEBI to submit its reply within four weeks. SAT has listed the case for hearing on June 30. "However, considering the fact and circumstances that has been brought on record and to balance the equities as well as balance of convenience, we direct NSE... to deposit Rs 4.73 crore towards leave encashment and deferred bonus of the appellant in an escrow account of instead of depositing it in the Investor Protection Fund Trust," SAT said.

It also noted that such a deposit in the escrow account would be subject to the result of the appeal. Further, SAT directed Ramkrishna to deposit a sum of Rs 2 crore within six weeks from today (April 11). "If such an amount is deposited, the balance amount shall not be recovered during the pendancy of the appeal," it noted and dismissed the stay application. Ramkrishna's counsel C S Vaidyanathan contested SEBI's decision to levy fine under Section 23A of the Securities Contract Regulation Act (SCRA).

He argued that this provision, being prospective, could not apply to any violation which was committed prior to the amending Act and therefore the penalty under this head was "incorrect and could not be sustained".

According to the counsel, SEBI passed the order without granting an opportunity of hearing which was violative of Article 14 Constitution of India.
Further, he argued that the regulator had no power to interfere in the autonomy or internal management of NSE Limited. Apart from penalising Ramkrishna in the governance lapses case, SEBI had imposed penalty on Ravi Narain, who was the predecessor of Ramkrishna, and others.

Further, Ramkrishna has been restrained from associating with any market infrastructure institution or any intermediary registered with SEBI for a period of three years, while the same for Narain is two years. In its 190-page order, passed on February 11, SEBI found that Ramkrishna was steered by a yogi dwelling in the Himalayan ranges in the appointment of Subramanian.

Ramkrishna referred the yogi as 'Sironmani' and according to her, yogi is a spiritual force who has been guiding her for the past 20 years on personal and professional matters. Besides, Ramkrishna had shared certain internal confidential information, including financial and business plans of NSE, dividend scenario, financial results with the yogi and even consulted him over the performance appraisals of the exchange's employees.

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