The Securities Appellate Tribunal (SAT) has stayed markets regulator Sebi's order against former NSE chief Ravi Narain in relation to governance lapses at the bourse.
This is subject to the condition that Narain deposits Rs 50 lakh before Securities and Exchange Board of India (Sebi) within four weeks, SAT said in an order passed on Thursday.
It further said that the amount deposited will be kept in an interest-bearing account by Sebi, which would be subject to the result of the appeal.
The SAT order came after the capital markets regulator in an order on February 11 restrained Narain from associating himself with any market infrastructure institution or any Sebi-registered intermediary for two years. Further, a penalty of Rs 2 crore has also been imposed on him.
Narain was the Managing Director and Chief Executive Officer (MD and CEO) of the National Stock Exchange of India Limited (NSE) till March 31, 2013, and thereafter from April 2013 till June 2017, he was on the board of directors as non-executive director-cum-vice chairman.
It was alleged in the show-cause notice that Chitra Ramkrishna, who took over as MD and CEO from Narain, appointed Anand Subramanian as personal advisor on a huge salary when he had no special qualification. Further, substantial powers were delegated to on the behest of Ramkrishna even though Subramanian was not categorised as a 'key managerial personnel'.
It was also alleged that Ramkrishna shared confidential information with unknown persons.
Upon compliant being received, Subramanian and Ramkrishna resigned and were given excess leave encashment and Ramkrishna's previous service was appreciated by the board of directors.
As far as Narain is concerned, the specific allegation against him is, that he was one of the 10 directors who passed the resolution by which powers were delegated to Subramanian and resignation of Ramkrishna was accepted and that minutes of board meeting did not record the actual discussion.
Further, Narain failed to report to Sebi about the lapses in NSE and that he made a incorrect statement before the capital markets regulator that the appointment of Subramanian by Ramkrishna was made after he had left as MD and CEO, whereas the fact remained that Subramanian was appointed by Ramkrishna during his tenure as MD and CEO.
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.
Last month, SAT admitted Ramkrishna's plea against a Sebi order in relation to governance lapses at the bourse and directed her to deposit Rs 2 crore.
The appellate tribunal had also directed NSE to deposit more than Rs 4 crore towards leave encashment and deferred bonus of Ramkrishna in an escrow account as against Sebi's direction under which the amount was to be parked in the Investor Protection Fund Trust.