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SUPREME COURT OF INDIA
Surinder Singh Nijjar, Pinaki Chandra Ghose, JJ.
Arun Kumar Agrawal ...Petitioner
Versus
Union of India & Ors. …Respondents
WRIT PETITION (CIVIL) NO.374 OF 2012
Decided On : 01-11-2013
(2011) 4 SCC 1; (2013) 1 SCC 1 - Relied upon
(2011) 7 SCC 639; (2008) 12 SCC 481 - Referred
(b) IAS Cadre Rules, 1952 - Rules 6(2)(i) and (ii) - Respondent's deputation to UTI AMC duly approved by Ministry of Finance, DOPT and the Government of Bihar, wherever applicable - Initially deputation made under Rule 6(2)(ii) - Later on reconsideration converted into one under rule 6(2)(i) - Respondent not responsible for being sent on deputation under Rule 6(2)(ii) - Deputation not in colourable exercise of power. (Para 35)
(c) Constitution of India - Article 32 - Allegation of lack of integrity on ground of furnishing false information in Form L of application for VR - Respondent correctly furnishing his pay drawn considering his lien with Government till acceptance of VR application - Material on record revealing no such false declaration - Challenge not sustainable. (Paras 38 to 40)
(2009) 4 SCC 700; 1992 Supp. (1) SCC 524 - Relied upon
(d) All India Service (DCRB) Rules - Rule 26 - Application for permission for commercial employment post VR - Applicant required to state whether privy to sensitive information relating to the organisation sought to be joined - Applicant already working in the UTI AMC on deputation - As Joint Secretary he was not privy to any sensitive information - No infirmity. (Para 41)
(e) Companies Act, 1956 - Section 617 - UTI AMC - Four Government instrumentalities holding 25% share each - Does not make it a Government Company. (Para 43)
(f) Constitution of India - Article 32 - Mala fides - Allegation of mala fide easy to make but difficult to establish - Denial of extension to previous Chairman due to his involvement is affairs of NSDL - Amendment in Rule 3(5) of Security Exchange Board of India (Terms and Conditions of Service and Members) Rules, 1992 to provide for more participation by expert members - No mala fide established. (Paras 54 and 55)
(2006) 9 SCC 458; (2003) 4 SCC 579; (2011) 12 SCC 18 - Relied upon
(g) Administrative Law - Abuse of power - Respondent drawing higher salary as Chairman UTI AMC accepting post of Chairman SEBI carrying lesser salary - Will not ipso facto lead to conclusion of any ulterior motive. (Para 58)
(h) Indian Penal Code, 1860 - Section 120-B - Charge of conspiracy - Has to be clearly pleaded and established by evidence of very high degree of probative value - Allegations based only on pure conjectures, speculations and interpretation of notings in the official files - Not sufficient. (Para 61)
(i) Constitution of India - Article 32 - Maintainability of writ petition/ PIL - Petitioner unjustifiably attacking the integrity of the entire selection process - Uberrimae fide of the petitioner, essential for maintaining PIL not established - It cannot be accepted that that respondent No.6 was able to influence the decision making process which involves the active participation of the ACC, a high powered Search-cum-Section Committee with the final approval of the Finance Minister and the Prime Minister - petitioner acting as surrogate for some powerful phantom lobbies - PIL liable to be dismissed. (Para 63)
Facts of the case:
In this case the writ petitioner has challenged the appointment of Mr. U.K. Sinha as Chairman of SEBI.
Finding of the Court:
The petition has no merit.
Result : Petition dismissed.
JUDGMENT :
SURINDER SINGH NIJJAR, J.
1. This writ petition has been filed by one Mr. Arun Kumar Agrawal under Article 32 of the Constitution of India; seeks the issuance of a writ of quo warranto or any other direction against Mr. U.K. Sinha, Chairman of the Securities and Exchange Board of India (hereinafter referred to as ‘SEBI’) and his consequential removal from the post of Chairman.
2. Stated concisely, the petitioner challenges the appointment of respondent No.4 on the following grounds :-
a) Mr. Sinha failed to fulfill one of the eligibility condition as laid down in sub-section (5) of Section 4 of the Securities and Exchange Board of India Act, 1992 (hereinafter referred to as ‘SEBI Act’), as well as the qualification contained in Government communication, which required that the Chairman shall be a person of high integrity.
b) The appointment of respondent No.4 is the result of manipulation, misrepresentation and suppression of vital material before the Search-cum-Selection Committee and the Appointment Committee of the Cabinet (hereinafter referred to as ‘ACC’).
c) The appointment of respondent No.4, a Chairman of SEBI, is mala fide.
3. Mr. Prashant Bhushan, learned counsel appearing for the petitioner, has made detailed submissions with regard to the manipulations and the maneuvers indulged in by the petitioner with the active connivance of some other persons to successfully mislead the Search Committee as well as the ACC. He has highlighted that the petitioner does not fulfill the requirements of Section 4(5) of SEBI Act which provides as under:-
“(5) The Chairman and the other members referred to in clauses (a) and (d) of sub-section (1) shall be persons of ability, integrity and standing who have shown capacity in dealing with problems relating to securities marker or have special knowledge or experience of law, finance, economics, accountancy, administration or in any other discipline which, in the opinion of the Central Government, shall be useful to the Board.”
4. Giving the factual background, he referred to the communication dated 10th September, 2010 of the Department of Economic Affairs inviting the application for the post of Chairman SEBI. In paragraph 3 of the aforesaid communication which provided that “keeping in view the role and importance of SEBI as a regulator, it is desirable that person with high integrity, eminence and reputation preferably with more than 25 years of professional experience and in the age group of 50 to 60 years may apply”. Learned counsel submits that Mr. Sinha lacks integrity which is well illustrated by a reference to events leading to his appointment.
5. He points out that Mr. Sinha was Joint Secretary, Banking till May, 2002. He became Joint Secretary, Ministry of Finance in June, 2002. Thereafter, he held the post of Joint Secretary, Capital Market, Ministry of Finance from 1st July, 2003. Whilst working as such he was appointed as Additional Director on the Board of Unit Trust of India Asset Management Company Ltd. (hereinafter referred to as ‘UTI AMC’). Thereafter, on 3rd November, 2005 Mr. Sinha was appointed as CEO and MD of UTI AMC on deputation for two years. According to Mr. Bhushan, Mr. Sinha was wrongly sent on deputation under Rule 6(2)(ii) of the IAS (Cadre) Rules, 1954, which is applicable in case of deputation in an international organization, NGO or body not owned by the Government. Since the equity share capital in UTI AMC is held by the State Bank of India, Life Insurance Corporation, Bank of Baroda and Punjab National Bank, each holding 25% of the shares, it could not be said that UTI AMC was not controlled by the Government. According to Mr. Bhushan, Mr. Sinha ought to have been sent on deputation under Rule 6(2)(i) of the IAS (Cadre) Rules, 1954 which is applicable for deputation of an IAS officer “under a company, association or body of individuals, whether incorporated or not, which is wholly or substantially owned or controlled by the State Government, Municip
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