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Sebi to hear Rathi on Mar 31, allows him to inspect records

The Securities and Exchange Board of India (Sebi) will give a final hearing to former Bombay Stock Exchange president, Anand Rathi, on Wednesday before passing a 'reasoned order' by March 29 on the controversial issue of allowing him or his firms to undertake trading in the bourse, the high court was informed on Monday.

Making a statement to this effect, Sebi's counsel, Goolam Vahanvati, also assured the court that Rathi will be allowed to inspect records on Tuesday on the basis of which he and his firms were prohibited from trading on the exchange.

Accordingly, a bench headed by Justice Ajit Shah adjourned the petition filed by Rathi to March 31 for admission. The judges also allowed liberty to Rathi to amend his petition after the final orders were passed by Sebi.

Rathi's petition challenges Sebi's decision of March 13 to prohibit him from trading and also challenges Sebi's order to stop him from acting as member director of BSE.

Rathi's counsel, Abhishek Sanghvi, submitted that Sebi's order was passed without following the principles of natural justice. He also contended that the post-decision hearing was given to his client after ten days, thereby making it a nullity. If Rathi was not allowed to trade, his business would be badly affected.

Vahanvati argued that there was no question of following the principles of natural justice because due to Rathi's alleged actions the confidence of the investors had been shaken.

The High Court also perused the text of telephonic conversation Rathi had with BSE surveillance officer Arun Dandawate on March 2 in which the former made queries on trading of certain scrips.

Rathi contended that he was not a beneficiary to any insider information and had nothing to do with the recent capital market crisis.

Rathi said he had called up the BSE surveillance officer to find out why the market had fallen because as BSE president he was very much concerned to know the reasons.

A Sebi official, Anupam Tandon, filed an affidavit urging the high court not to entertain Rathi's petition as he had an alternative remedy under Sebi Act to file an appeal before Securities Appellate Tribunal against Sebi's orders.

He submitted that Sebi had issued a circular on May 25 last year putting the surveillance department of BSE under the direct control of its executive director because of sensitive information it was dealing with.

The circular clarified that no member broker or any other vested interest could interfere with the functioning of this department.

The Sebi official alleged that Rathi was fully aware of this circular and yet sought sensitive market information from the surveillance officer in the absence of BSE's executive director and the general manager.

In this way, he had 'abused' his position as the BSE president, Sebi alleged.

Sebi also said that the petitioner was trying to confuse issues by relying upon the timing of conversation and alleging that by the time the telephonic talks were held the index had already fallen.

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