The finance ministry on Friday defended the appointment of current Securities and Exchange Board of India (Sebi) chairman UK Sinha but has questioned the appointment of his predecessor CB Bhave.
The ministry in an affidavit to the Supreme Court said Bhave was appointed as chairman ?notwithstanding the (unanimous) recommendation of Shri UK Sinha by the selection committee?.
The affidavit was in a response to a public interest litigation that had questioned the appointment process for the post of Sebi chairman.
?The then finance minister had approved a high-powered search committee (for shortlisting names for the Sebi chairman)… The committee shortlisted two names in the following order: Shri UK Sinha and Shri J Bhagwati,? the affidavit notes.
It also adds that Bhave had informed the committee he did not want to be considered for the post. Yet ?Bhave was appointed as chairman, Sebi, on 15 February 2008. It may be mentioned that the recommendation of the committee in relation to UK Sinha was unanimous.?
The affidavit claims that present finance minister Pranab Mukherjee had instead followed the correct procedure, vetted by the ministry of law, to choose a successor to Bhave. In the process, the selection committee again gave top billing to Sinha, who was therefore appointed.
Last week, an apex court bench headed by Chief Justice SH Kapadia had decided to hear the PIL on November 21. Attorney general GE Vahanvati had then told the court that the Centre will file an affidavit within two weeks on the issue.
Responding to the various allegations in the media and elsewhere over these issues, the ministry affidavit has also claimed there was no mala fide in the denial of extension to Bhave.
Instead, Bhave was apparently rejected because of the National Securities Depository Ltd (NSDL) issue relating to the IPO scam. Bhave was chairman of NSDL when the scam happened.
The affidavit notes that the proposal for extension of tenure for Bhave as Sebi chief was put up to the finance minister on December 22, 2009. ?The finance minister being fully aware of the controversy (about Bhave), noted on file on that date that the question of granting an extension to Mr Bhave need not be processed further…this was the most appropriate course of action.?
The affidavit filed through Amit Bansal, undersecretary in the finance ministry, said the petition does not appear to be bona fide ?but seeks to espouse the cause of certain disgruntled ex-officers of Sebi?.
Seeking dismissal of the PIL, it said that the petition does not appear to have been filed in public interest, but to espouse their cause.
The ministry names former Sebi board member KM Abraham to allege that he made charges against Sinha and the finance minister’s interference in the working of the regulator ?only after he knew that he may not succeed in getting extension as whole-time member and he lost hope of being appointed as director of NISM ( a securities market related institute)?. It further charges that Bhave had violated rules in recommending Abraham for the post, as a panel was supposed to select the director of NISM.