Regulators waiting for their turn

Regulator's wait to question Rajus continues


The market regulator will have to wait at least for 10 more days to question disgraced Satyam Computer founder B. Ramalinga Raju and his brother B. Rama Raju in the Rs.70-billion (Rs.7,000-crore/$1.43-billion) accounting fraud as the Andhra Pradesh High Court Friday adjourned the hearing on its petition to Feb 9.

Justice Seshasayana Reddy Friday heard initial arguments on the plea by Securities and Exchange Board of India (SEBI), seeking permission to record statements of the Raju brothers.

The court issued notices to the two Rajus and Chanchalaguda prison superintendent where they are lodged. They have to respond by Feb 9.
Solicitor general of India Goolam E. Vahanvati, appearing for SEBI, sought an ex-parte interim order to allow the regulator to interrogate the Rajus, but the judge did not accept this.

"The judge said he will not pass the order without hearing them (the Rajus and the prison superintendent)," Vahanvati told reporters. "This request will also be considered on February 9," he said.

The court is likely to hear arguments Feb 9 on the maintainability of the writ petition and consider the request for interim order.

SEBI roped in India's top law officer after the sixth additional chief metropolitan magistrate dismissed its similar petition last week.

The market watchdog had moved the High Court Wednesday challenging the order of the lower court. Justice Reddy, who began the hearing Thursday, asked the solicitor general to argue the maintainability of the petition.

The judge wanted to know why the writ petition was moved under Article 226 of the Constitution when an alternative remedy (provision under section 397 of the Criminal Procedure Code) was available to challenge the lower court's order.

The solicitor general argued that the order of the lower court was in violation of fundamental right and the principles of natural justice and that there was an error of jurisdiction.

Vahanvati also argued that SEBI was a statutory body and should be allowed to record statements of the accused as the interests of tens of thousands of investors were involved.

SEBI wanted to record statements of the Raju brothers for alleged violations of security laws, including fraudulent and manipulative practices.

SEBI's petition said there were several allegations including a strong likelihood of insider trading prior to Jan 7, when Ramalinga Raju confessed to the massive fraud.

Though it is more than 20 days since the scam came to light, the market regulator has had no access to the key accused to record their statements. SEBI had summoned them Jan 9, but they sought a day's time leading to the adjournment of the proceedings till Jan 10.

"In a strange coincidence, they were arrested (by the CID) on January 9 night," SEBI said adding that they were remanded to judicial custody that was being extended from time to time.

A SEBI lawyer had earlier gone on record that Rajus were trying to avoid grilling by the market watchdog.