Former NSE CEO Chitra Ramkrishna Asked to Deposit Half of Penalty Amount
The Supreme Court has instructed Chitra Ramkrishna, the former managing director and CEO of the National Stock Exchange (NSE) of India, to deposit half of the Rs 25 lakh penalty amount that was confirmed by the Securities Appellate Tribunal (SAT) in the dark fibre and leased line connectivity case. The court has issued a notice to the Securities Exchange Board of India (SEBI) and stated that there will be a stay on any coercive measures to recover the penalty as long as Ramkrishna deposits Rs 12.5 lakh within six weeks. The apex court has also combined this case with another similar one that is pending before it.
Chitra Ramkrishna Challenges Penalty Imposition
Ramkrishna has challenged the penalty imposed on her by the sectoral tribunal in December. She argues that holding her responsible for the acts and omissions of NSE based on moral responsibility is unjustifiable and goes beyond what SEBI and other laws allow. Her legal counsel argued that neither the Sebi Act nor the Securities Contracts (Regulation) Act impose any moral responsibility on company directors for their company’s actions. They believe that the SAT order confirming the penalty should be set aside on this basis alone.
Discrepancy in Penalties
Ramkrishna’s legal team also pointed out a discrepancy in the penalties imposed. While she was fined Rs 25 lakh as the MD and CEO of NSE, no penalty was imposed on NSE itself for its negligence and lack of due diligence in verifying Sampark Infotainment’s license. This inconsistency raises questions about imposing a penalty on Ramkrishna for the same actions.
Background of the Case
The case revolves around allegations that NSE provided preferential access to Way2Wealth Brokers and GKN Securities by allowing them to use the services of an unlicensed telecom service vendor, Sampark Infotainment, to connect their co-location servers in NSE with those of BSE. The SAT found that NSE was negligent and lacked due diligence in not verifying the license of Sampark Infotainment. However, it set aside the total penalty of Rs 7 crore imposed by SEBI on NSE for fraud and breach of norms. Additionally, Ramkrishna’s penalty was reduced from Rs 5 crore to Rs 25 lakh. Nevertheless, the tribunal held her morally responsible for the lack of due diligence and negligence committed by NSE and imposed a cumulative penalty on her.
Ramkrishna Denies Responsibility
Ramkrishna denies any involvement in granting permission to Sampark Infotainment to provide P2P connectivity. She argues that by the time she became the MD of NSE, there was a clear corporate structure in place, with functional heads responsible for day-to-day operations in their departments. She claims to have been unaware of any irregularities regarding Sampark’s license and criticizes the SAT order for disregarding the facts presented.
Hot Take: Former NSE CEO Fights Penalty Imposition
Chitra Ramkrishna, the former CEO of NSE, finds herself challenging a penalty imposed on her by the sectoral tribunal. As a crypto enthusiast, you may be interested in understanding how this case unfolded and its implications for corporate responsibility. Here are some key takeaways:
– The Supreme Court has asked Chitra Ramkrishna to deposit half of the penalty amount confirmed by the SAT.
– Ramkrishna argues that holding her morally responsible for NSE’s actions goes beyond what SEBI and other laws permit.
– Her legal team points out that no penalty was imposed on NSE itself for its negligence in verifying Sampark Infotainment’s license.
– The case raises questions about the discrepancy in penalties and the extent of individual responsibility in corporate settings.
– Ramkrishna denies any involvement in granting permission to Sampark Infotainment and claims that the SAT order ignores the facts presented.
As this legal battle continues, it will be interesting to see how the Supreme Court addresses these issues and clarifies the boundaries of corporate responsibility.
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