In a significant development, a Delhi court on Saturday, February 5, dismissed the pre-arrest bail plea of former CEO of National Stock Exchange (NSE) Chitra Ramkrishna in the NSE co-location case, pulling up the CBI for inaction and being lackadaisical in the probe against the accused in the last four years. Special Judge Sanjeev Aggarwal also observed that market regulator SEBI has been "too kind" to the accused as he dismissed the anticipatory bail application of Ramkrishna, noting that she is facing grave allegations and her sustained custodial interrogation would be required to dig out the truth.
He said the investigation in the state is at the most nascent stage. "As no action seems to have been taken against main beneficiaries of the present co-location scam, (the names of some of whom are mentioned in the FIR itself) and others for almost four full years, who seems to be enjoying merrily at the expense of common citizenry for the reasons best known,” the judge said.
“No doubt SEBI has the power to launch serious criminal proceedings under Section 24 of the SEBI Act, however, the scope of the proceedings before the SEBI being a market regulator is totally different from the scope and nature of the present criminal proceedings launched in the present RC/FIR,” the judge noted.
The court said that it could not be said prima facie at this stage that the role of Ramkrishna was not under the scanner. It further appeared prima facie that the accused had introduced a non-existing person to mislead the investigating agency, which may also prima facie show her connivance in the matter. The very appointment of Anand Subramanian without following due process at a very exorbitant salary, prima facie shows that all of them may have been acting in tandem with each other in carrying out or in furtherance of the objectives of the co-location scam, it further said.
Further prima facie this kind of co-location swindle could not have been possible without the knowledge and active connivance of all the functional heads of the NSE at the relevant time, this period can be considered as a “dark period” in the history of NSE, the court said.
The court dismissed the bail application, saying economic offences had deep-rooted conspiracies involving huge loss of public funds.
“Since in the present case huge loss of public money may be involved, it needs to be viewed seriously and considered as grave offence(s) affecting the economy of the country as a whole and thereby causing serious threat to the financial health of the country," it said. The court also added that the matter of bail for economic offences must be approached differently, as they involve huge loss of public funds.
It said that the chances of the accused fleeing from justice were remote, however, being in pole position in the NSE earlier, there were strong chances that she may influence and tamper with the evidence, as she was joint MD as well as MD and CEO of the National Stock Exchange, the role of which is under investigation under the co-location scam.
The judge said that the magnitude of the present case may be huge, as due to this financial skulduggery huge loss may have been caused to adherent stockbrokers, institutional investors, foreign institutional investors and honest investors, whose faith in this premier financial institution may have been severely shaken and dented.
“Considering the overall facts and circumstances of the case and in view of the grave and serious allegations against the applicant/accused as above, no ground for anticipatory bail is made out at this stage. The same stands dismissed,” the judge said.
The judge further noted that the co-accused Anand Subramanian has already been arrested by the CBI and was in police custody, and said, therefore, sustained custodial interrogation of the present applicant would also be required to dig out the truth, as also by confronting her with the said accused.
The CBI had recently questioned Ramkrishna in the matter. The Income Tax (IT) Department earlier raided various premises linked to Chitra Ramkrishna in Mumbai and Chennai.
Ramkrishna has also been on the radar of the market regulator Securities and Exchange Board of India (SEBI).
Recently, the CBI court had sent Anand Subramanian, former Group Operating Officer and advisor to former MD of National Stock Exchange Chitra Ramkrishna, to CBI custody.
The arrest was made in the case related to the co-location scam, the FIR for which was registered in May 2018, amid fresh revelations about irregularities at the country's largest stock exchange.
The CBI is probing the alleged improper dissemination of information from the computer servers of the market exchanges to the stockbrokers.
Ramakrishna and another former CEO Ravi Narayan as well as two other officials have been penalised by the SEBI for lapses in recruitment at the senior level.
Ravi Narain was the MD and CEO of the National Stock Exchange from April 1994 till March 2013, while Chitra Ramkrishna was the MD and CEO of the NSE from April 2013 to December 2016.
The market regulator observed that the NSE and its top executives violated securities contract norms relating to the appointment of Anand Subramaniam as group operating officer and advisor to the managing director.
