sebi:BOARD/SEBI/1/2010
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Facts / Headnote
Ad interim ex-parte Order-cum-SCN dated April 27, 2006 against NSDL disposed of; none of the directions in the 1st Interim Order affirmed; no further directions issued
Provisions invoked
- s. 19
- s. 15I
- s. 19G
Parties
- NSDL
Holding
The Board disposed of the ad interim ex-parte Order-cum-SCN dated April 27, 2006 against NSDL, holding that none of the directions issued under the 1st Interim Order needs affirmation and no further directions are required against NSDL.
Full text
Page 2 of 9 a. NSDL to ensure that the dematerialized accounts which served as conduits for the 24 specified persons are not utilized for manipulation of IPO allotment in future by taking such action as may be appropriate; b. NSDL to conduct inspection of 27 specified DPs and submit a report within one month from the date of the Order to verify whether all the demat account holders of these DPs are genuine and KYC norms laid down by SEBI have been duly complied with, and take appropriate action against suspect accounts on verification; c. The promoters of NSDL, without further loss of time, to take all appropriate actions including revamping of management which clearly has allowed matters to come to such a sorry pass; and d. NSDL to ensure that all the above directions are strictly enforced.
Page 3 of 9 Order, the Hon’ble SAT stayed its operation. Vide its Order dated November 22, 2007, the Hon’ble SAT set aside the 2nd Interim Order with the following observations: “We do not think that the Board could direct the appellants to disgorge the aforesaid amount without first determining their guilt and whether they had made any illegal gains. Again, it is not that every erring entity is held liable to disgorge the amount. Persons who have made illegal or unethical gains alone could be asked to disgorge their ill gotten profits. We are further of the view that all these issues should have been determined only after the passing of the final order holding the appellants guilty of the alleged wrong doings for which proceedings are still pending. In this view of the matter, we have no hesitation in setting aside the impugned order qua the appellants.”
Page 4 of 9 matter pursuant to the SCN and hearing. On August 13, 2008, the SEBI Board established a two member committee for disposing of the quasi judicial proceedings pending against NSDL as on February 18, 2008, (being the date on which the present Chairman of SEBI, who was Chairman and Managing Director of NSDL prior to that, assumed office as the Chairman of SEBI). This Committee that was constituted heard the matter on October 14, 2008 and issued its order on December 04, 2008. The SEBI Board found that the orders of the two member committee in two of the quasi judicial proceedings including the one that is currently the subject of interest in this order, had exceeded the powers delegated to the committee (as the delegate of the Board). The Committee had inter alia entered into findings against SEBI itself which were well outside the scope of what had been explicitly delegated to it. After due consideration of these orders, without in any manner reviewing the findings of the Committee on the role of NSDL in this quasi judicial proceedings, and after carefully considering expert legal opinion including guidance received from the Legal Department of the Government of India on the reference on this matter made to it by the Ministry of Finance, the Board decided to declare these orders of the two member committee non est. The Board also decided that it would collectively, (but excluding the Chairman who had recused himself from the entire proceedings) hear the matter afres
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Source: SecMarx — sebi:BOARD/SEBI/1/2010. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.