SAT stays Sebi's order against NSE's ex-boss Ravi Narain in management lapses case

Securities Appellate Tribunal (SAT) has stayed an order passed by the Securites and Exchange Board of India (Sebi) against NSE chief Ravi Narain relating to governance lapses at the bourse, a PTI report said. 

SAT, in an order passed on May 6, 2022 said that Narain must deposit Rs 50 lakh within four weeks with Sebi.

In addition, it said that the amount deposited would be kept in an interest-bearing account by Sebi, depending on the outcome of the appeal.

In an order dated February 11, the capital markets regulator barred Narain from associating with any market infrastructure institution or any Sebi-registered intermediary for two years. A penalty of Rs 2 crore has also been imposed on him.

Until March 31, 2013, Narain served as Managing Director and Chief Executive Officer (MD and CEO) of the National Stock Exchange of India Limited (NSE), and from April 2013 until June 2017, he served on the board as a non-executive director and vice chairman.

Anand Subramanian was allegedly appointed as personal advisor in the show-cause notice by Chitra Ramkrishna, who took over from Narain as MD and CEO. Subramanian was delegated substantial powers by Ramkrishna despite not being considered a 'key managerial personnel.

Also, Ramkrishna is alleged to have shared confidential information with unknown parties, this report said.

Upon receiving the complaint, Subramanian and Ramkrishna resigned, and their excess leave was encashed by the board of directors, who appreciated Ramkrishna's service in the past.

In the case of Narain, the specific allegation against him is that he was one of the ten directors who passed the resolution by which powers were delegated to Subramanian and Ramkrishna's resignation was accepted and the board meeting minutes did not record the actual discussion, this report said.

Narain did not report to Sebi about the lapses at NSE and that he made an incorrect statement to the capital markets regulator that Subramanian was appointed by Ramkrishna after he left as MD and CEO, when, in fact, it was Ramkrishna who appointed Subramanian during his tenure as MD and CEO, the report further said.

In its order, SAT prima facie found that Narain alone has been targeted for the passing of various resolutions by which powers were delegated to Subramanian and acceptance of resignation of Ramkrishna.

"Prima facie, singling out the appellant (Narain) appears to be arbitrary as well as discriminatory in as much as a resolution of the board of directors is a collective decision of the board of directors and is not an individual decision of the appellant. The penalty imposed upon the appellant for the aforesaid violation also appears to be excessive," it added.

Accordingly, the tribunal directed that the effect and operation of the impugned order insofar as it relates to Narain will remain stayed provided he deposits Rs 50 lakh before Sebi within four weeks.

It also directed Sebi to submit its reply within three weeks and listed the case for hearing on June 30.

Ramkrishna was required to deposit Rs 2 crore by SAT last month in response to a Sebi order relating to governance lapses at the bourse.

In addition, the appellate tribunal ordered NSE to deposit more than Rs 4 crore toward Ramkrishna's leave encashment and deferred bonus in an escrow account, contrary to the directions made by Sebi.

(With Inputs from PTI)