Mr Rathi had resigned from the presidentship of the exchange after news of his controversial telephone call to the exchange's surveillance department broke out. However, he had not resigned as director. Thereafter, Sebi, invoking its powers under section 11B of the Sebi Act, had restrained him and other broker-directors from functioning in their capacities until further notice. Mr Rathi has challenged the Sebi decision in the Mumbai High Court and the next hearing is slated for March 31.

Mr Rathi was not available for comment, despite repeated attempts by The Financial Express to contact him for his version. His office said he was in a meeting.

CDSL chairman and managing director Madan Gopal Damani said: ``He (Rathi) is a nominee of the BSE on the CDSL board and unless the BSE decides otherwise, he would continue on the board.'' He said in this particular case, the action should come either from the BSE or the Sebi. Sources said the regulator had taken note of the fact that Mr Rathi continued to figure on the boards of CDSL, of which BSE is a promoter, and BoI Shareholding, where the BSE is a 49 per cent shareholder. What is more important, in both companies, the former BSE president is the official representative of the exchange. However, now that he is no longer president and has been restrained from being a director by the stockmarket regulator, the view in market and regulatory circles is that he should not figure in these boards as well.

Sebi appears to be of the view that taking a decision on Mr Rathi's other directorships now, when the case is being heard in the court, would not be the correct step. ``What if the court upholds his plea? Then the first step of debarring him from the board itself will be in doubt. It is better for Sebi to wait for a clear direction from the court before taking up this issue.''u the sources explained.