November
09, 2009
PR No. 345/2009
Proceedings against NSDL
The Board, in its meeting on August 13, 2008, had constituted a committee of two of its members to take over and dispose of the on-going proceedings as on February 18, 2008, against NSDL. The committee accordingly took up three proceedings pending against NSDL as on February 18, 2008 and concluded them vide three separate orders dated December 4, 2008.
These orders were placed before the Board in its immediate next meeting held on January 21, 2009 seeking its guidance. The Board after discussion in the matter, in its meeting on February 2, 2009 and thereafter in its meeting held on April 13, 2009, decided, with one member dissenting, that it would seek the opinion of an eminent legal counsel on the issue of whether it has the legal authority to examine whether the committee appointed by the Board had acted within the framework and terms of reference established by the Board. This was done because prima facie it appeared that the orders went beyond the terms of reference. Pending that, the Board decided, with one member dissenting, to withhold the orders of the committee. It also decided that three non-whole time members would decide on the counsel and finalise the issues on which opinion was necessary.
Accordingly the three members obtained the legal opinion and placed it before the Board in its meeting on August 26, 2009. In the said meeting, the Board considered the legal opinion and based on the legal opinion prima facie held as under:
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The Board had delegated its authority to the committee to dispose of three quasi-judicial proceedings pending against NSDL.
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The committee, however, entered findings that the Board failed as a regulator, while disposing of two matters relating to IPO Irregularities and DSQ Software Ltd.
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These findings against the Board are outside the confines of delegation and therefore, these are without the authority of law.
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These findings, which have vitiated these two orders, cannot be severed from the rest of the orders. Hence these orders are null and void and are non est.
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The third order (in the matter of Rajnarayan Capital Market Services Limited) is in order since it does not have similar findings.
The Board decided that the above matter would be considered again in the meeting held on September 22, 2009 to have the benefit of views of the members who were absent. As some members were absent in the meeting on September 22, 2009, the matter was deferred to the next meeting.
The Board in its meeting today, in continuation of its earlier discussions, decided to confirm the findings of its meeting held on August 26, 2009. In view of the above, the Board declared the two orders (relating to IPO Irregularities and DSQ Software) as non est. However, in the interest of transparency, it decided to make public the two non-est orders. It also decided that the Board as a whole (excluding Chairman Mr. Bhave) would dispose of these two matters afresh.
The Board decided to release the order (relating to Rajnarayan Capital Market Services Limited) with a direction that it be served on the affected parties.
Mr. C. B. Bhave, Chairman of SEBI, did not participate in these deliberations.
Mumbai
November 9, 2009
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