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| Sebi CGM challenges 'sealed cover' decision |
| Ashish Rukhaiyar / Mumbai May 19, 2010, 00:08 IST |
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Denied promotion after CBI probe, officer moves court; HC ruling may impact appointment of ED.
The legal battle between the Securities and Exchange Board of India (Sebi) and one of its chief general managers (CGMs) can potentially impact the appointment of two new executive directors (EDs). People familiar with the development say Nagender Parakh, the CGM concerned, was promoted to the post of an ED in 2008.
But his appointment was kept in a ‘sealed cover’, pending a Central Bureau of Investigation (CBI) probe related to a disproportionate assets case. Parakh has challenged the Sebi decision in the Mumbai High Court.
Parakh, the seniormost CGM, filed a writ petition against Sebi in the Mumbai High Court for denial of promotion on three occasions —in 2006, 2007 and 2008. The petition also challenges Sebi’s decision to use the ‘sealed cover’ procedure while promoting him in December 2008.
According to people familiar with the development, the ‘sealed cover’ was used as Parakh, who worked in the Department of Economic and Policy Analysis, was allegedly found to own assets disproportionate to his income after CBI initiated a probe against him in 2004.
“Parakh got embroiled in a CBI probe related to disproportionate assets in 2004 and, since then, has been denied promotion,” said a person who did not wish to be named. “The CBI, however, is yet to file a chargesheet or serve summons in the matter. Sebi, on its part, has also not initiated any departmental inquiry,” he added.
And this is what is being contested in the high court petition. According to lawyers, the Supreme Court has clearly ruled that the ‘sealed cover’ procedure can be used only if a chargesheet has been filed or if any disciplinary action has been initiated against the employee in question.
Meanwhile, according to another theory, Sebi does not want to attract criticism, in any manner, by promoting a person who is being probed by the central investigation authority.
While it is believed that the regulator, in 2009, did sanction CBI’s prosecution of Parakh, this could not be independently confirmed from Sebi. A CBI prosecution of any employee belonging to a government or a quasi-government body requires the permission of the organisational head.
An email sent to the Sebi spokesperson did not elicit any response. Another email sent on Monday to whole-time member M S Sahoo, who is in charge of the legal affairs department, also remained unanswered. Parakh also could not be reached for comment.
If the court rules against the regulator, it will have an impact on selection of EDs, as reports suggest that Dr Pradnya Saravade, an officer on special duty handling investigations & vigilance, and S Ravindran, a CGM in the mutual fund division, have already been short-listed for the post. Sebi will have to promote Parakh if he wins the court battle.
Sebi invited applications for the post in December 2009 and zeroed in on the two officers after interviewing around 19 candidates.c
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