The Supreme Court on September 15 declined to interfere with the Delhi High Court's refusal to quash proceedings under the Prevention of Corruption Act (PC Act) against former National Stock Exchange (NSE) managing director and chief executive officer Chitra Ramakrishna. According to reports from Business Standard, a Bench comprising Justices JB Pardiwala and K Vinod Chandran stated that Ramakrishna can raise the issue of whether she can be treated as a 'public servant' under the PC Act before the trial court on its own merits. The Court observed that 'no error could be said to have been committed by the High Court in passing the impugned judgment' and clarified that the special court would retain jurisdiction even if it eventually concluded that she was not a public servant. The Supreme Court's order means the CBI proceedings against Ramakrishna will not be quashed at this stage, as reported by multiple sources.
The proceedings against Ramakrishna stem from a February 11, 2022 order passed by the Securities and Exchange Board of India (SEBI), which found her allegedly involved in financial misdeeds related to the fixation and frequent upward revisions of compensation for another former NSE executive, Anand Subramanian. As reported by Business Standard, the Securities and Exchange Board of India (Sebi) had examined the fixation and repeated revision of Subramanian's compensation during Ramakrishna's tenure. The CBI has alleged that Subramanian, while discharging a public duty involving the protection of investors' interests, was part of a criminal conspiracy with other accused that resulted in undue benefits being extended to various trading members and brokers. The investigation has also focused on Ramakrishna's communications with an individual she described as a 'Siddha Purusha' or Himalayan yogi, with the CBI alleging that the person was Subramanian. The co-location controversy surfaced in 2015 after a whistleblower alleged that some NSE members obtained early access to the exchange's trading system because their servers were located on the exchange's premises, allegedly with the involvement of certain exchange officials.
In its verdict, the Delhi High Court had held that the NSE performs a 'vital economic function in the public interest' and its officers are said to be performing public duty for the application of the Prevention of Corruption Act. According to Business Standard, the High Court had examined the fixation and repeated revision of Subramanian's compensation during Ramakrishna's tenure. The High Court rejected Ramakrishna's contention that the statutory definitions of 'public servant' and 'public duty' were vague and violated Articles 14 and 21 of the Constitution. The High Court observed that the inability to frame an exhaustive definition covering every possible situation did not make the provision vague or unconstitutional. The High Court clarified that NSE is a recognised stock exchange, which is not an ordinary business venture but performs vital economic functions in the public interest, including the protection of investors, and that its shareholding is majorly in the hands of government companies. The High Court held that Ramakrishna, by virtue of her position as its managing director and CEO, could not be completely separated from the functions discharged by the exchange, and that whether she was actually in charge of the NSE's day-to-day functioning and policy decisions were matters to be established through evidence at trial.
During the Supreme Court hearing, Senior Advocate Balbir Singh, appearing for Ramakrishna, argued that she did not hold office under any regulatory or government regime and, therefore, the PC Act could not be invoked against her. As reported by Business Standard, Singh submitted that while proceedings under the Indian Penal Code (now BNS) could continue, the corruption case could not be sustained. The Court asked whether Ramakrishna had moved a discharge application before the trial court and observed that 'it's not as if a special court loses jurisdiction if they find that you're not a public servant'. The plea further argued that the authority competent to remove Ramakrishna as managing director and CEO was the NSE's shareholders and not its board, making the sanction granted by the board legally unsustainable. The Centre opposed the challenge, arguing that Ramakrishna occupied a position with a significant bearing on public interest and financial markets and that the functions performed by her consequently amounted to a public duty. The CBI submitted that it was not necessary to determine whether the NSE itself was a public authority, with the relevant question being whether Ramakrishna performed a 'public duty' and consequently fell within the definition of a 'public servant' under the PC Act.
Ramakrishna was appointed as joint MD in 2009 and remained in the position till March 31, 2013. She got elevated as MD and CEO on April 1, 2013. The CBI arrested Ramakrishna on March 6, 2022, in connection with the case registered in 2018. She was granted bail by the High Court in September 2022. The NSE co-location scam refers to the alleged abuse of the algorithm and the co-location facility by certain brokers in conspiracy with some unknown officials to make windfall profits between 2010 and 2014 when the petitioner was managing its affairs. According to the CBI chargesheet, Ramakrishna shared information about the switching-on time of NSE servers and facilitated access to the latest and least-crowded servers for certain brokers, while also arbitrarily appointing Subramanian and repeatedly increasing his remuneration without the approval of the NSE's nomination and remuneration committee. Ramakrishna had approached the Supreme Court after the Delhi High Court in July rejected her challenge to Sections 2(b) and 2(c)(viii) of the PC Act, with the High Court also refusing to interfere with the sanction granted for her prosecution.
