INDEX

S. No.
PARTICULARS
SYNOPSIS AND LIST OF DATES
1.
2.

WRIT PETITION WITH AFFIDAVIT

3.

ANNEXURE P1: A COPY OF ORDER DATED

MARCH 8 2010 ISSUED BY DR. K. M ABRAHAM,
WHOLE TIME MEMBER OF SEBI

4.

ANNEXURE P2: A COPY OF ORDER DATED

MARCH 26 2012 ISSUED BY MR. PRASHANT
SARAN, WHOLE TIME MEMBER OF SEBI

5.

ANNEXURE P3: A COPY OF ORDER DATED 14 TH

FEBRUARY 2013 PASSED BY THE ADJUDICATING
OFFICER OF SEBI

6.

ANNEXURE P4: THE GAIN QUANTIFIED FROM

THE ORDER OF THE SEBI AND THE MARKET
RATES OF SHARES ON RELEVANT DATES

7.

ANNEXURE P5: HISTORIC STOCK QUOTE OF

ICICI BANK SHARES ON 27.03.2012

8.

ANNEXURE P6: HISTORIC STOCK QUOTE OF

ICICI BANK SHARES ON 14.02.2013

9.

ANNEXURE P7: A COPY OF COMPLAINT FILED BY

THE PETITIONER WITH CVC ON 12.10.2013

10.

ANNEXURE P8: A COPY OF REPLY OF THE CVO

TO THE PETITIONER DATED 25.11.2013

11.

ANNEXURE P9: A COPY OF LETTER WRITTEN BY

THE COMPLAINANT TO THE FINANCE MINISTER
DATED 11.10.2014

12.

ANNEXURE P10: A NOTE ON THE ROLE OF

VARIOUS OFFICERS OF SEBI SUBMITTED BY THE
PETITIONER

13.

ANNEXURE P11: A NOTE REBUTTING ALL THE

POINTS MENTIONED IN THE REPLY OF THE CVO

Pages

14.

15.

CUM EXECUTIVE DIRECTOR (INVESTIGATION)

ANNEXURE P12: A COPY OF ARTICLE PUBLISHED
IN THE LIVE MINT DATED MAY 18, 2013
ANNEXURE P13: A COPY OF ARTICLE PUBLISHED
IN THE BUSINESS STANDARD DATED OCTOBER
16, 2014
SYNOPSIS

This Writ Petition has been filed in public interest on account

of loss to the national exchequer over Rs. 500 Crores, which
along with fine could have been Rs. 2000 Crores incurred at
the time of amalgamation took place between Bank of
Rajasthan with ICICI Bank in 2010. This loss, for reasons
mentioned below, will become irreversible if the Appeal filed
against the order of Securities Appellate Tribunal, by those who
have profited is decided by this Honble Court.

On a reference made by RBI the Securities and Exchange

Board of India conducted investigation into the affairs of Bank
of Rajasthan Ltd for the Period June 2007 to December 2009.
The investigation found that the promoters of Bank of
Rajasthan had increased their stake in the Bank while they
had given an undertaking to RBI to decrease their stake in line
with the permitted shareholding of the promoter in a private
bank. Further, the promoters deliberately declared in the
quarterly filings that they had decreased their stake while they

had been actually increasing their stake through entities

funded by them.

On investigation by SEBI, the promoters were found to be in

violation of various sections of Prohibition of Fraudulent and
Unfair Trade Practices Relating to Securities Market Rules. The
profit made by the promoters/entities on the excess holding of
34.54% was over 500 crores. Under the law, this profit was to
be disgorged and fine levied on it.

The loss occurred because SEBI deliberately did not quantify

the gains made by the promoters/entities for violation of
various sections of Prohibition of Fraudulent and Unfair Trade
Practices Relating to Securities Market Rules.

By not quantifying the gain, SEBI took the gain as zero and not
as over Rs. 500 crores that it should have done. By taking the
gain as zero SEBI was able to put a token fine of Rs. 30 crore
which in appeal was reduced to Rs. 20 crores

The following paragraph of the order of the SEBI Adjudicating

Officer dated 14.02.2013lies at the centre of the scam

78. It is difficult, in cases of such nature, to quantify

exactly the disproportionate gains or unfair advantage
enjoyed by an entity and the consequent losses suffered
by the investors. I have noted that the investigation
report also does not dwell on the extent of specific gains
made by the Noticees. However the manipulations as
elaborated above are a threat to the safety and integrity
of market and thus loss to the investors to that extent. I
observe that the game plan of the Noticees continued
for over a period of more than two years and hence was
of a repetitive nature.

The gains could have been easily quantified from three different
sources, namely the brokers who did the deal, the stock
exchange on which the deals were done, the depositories which
delivered the shares. All these three intermediaries are fully
regulated by SEBI and are bound to provide the information to
SEBI.

In fact, the gains made by the promoters/entities can be largely

quantified from the Adjudication order of SEBI and the data
required for calculating the gain is in the investigation report.
The petitioner has been able to quantify the approximate gains

with a reasonable amount is certainly which has been placed

as an Annexure to the petition.

The gains made by the promoters/entities were to be dislodged

under the following provisions of the SEBI Act with a penalty
the penalty of three times the gains:

15HA.Penalty

for

fraudulent

and

unfair

trade

practices.If any person indulges in fraudulent and unfair trade

practices relating to securities, he shall be liable to a penalty
of twenty-five Crore rupees or three times the amount of
profits made out of such practices, whichever is higher.

The above provision of the law has also been referred to by the
Adjudicating Officer. A reading of the 24 page interim order of
the WTM(Whole Time Member) dated 8/3/2010 and the 54
page order of the Adjudicating Officer dated 14/2/2013 will
confirm that in view of the meticulous investigation done by
SEBI on other matters, the non-quantification of profits was a
deliberate act designed to benefit the promoters by over Rs 500
crores.

By not quantifying the gains, SEBI collectively fined all the

persons involved in the fraudulent trading by Rs. 30 crore
which was reduced to Rs. 20 crore in appeal for SAT. The order
of SAT has been appealed before this Honble Court by some of
the affected parties bearing Civil Appeal number 4958
4959/14 and

5632 33/14. Hence, it is necessary for this

Honble Court to know there was a scam in non-quantification

of the gain and that the gain was over Rs 500 crores which was
to be disgorged. Instead the matter was settled for a paltry Rs
30 crores.

The purpose of this Writ Petition is to determine as to whether

the gains made by the parties involved in the scam could be
determined or not and if it could be determined then what was
the quantum of the gain. The quantification of the gain will
show that there was corruption in passing largesse of Rs. 500
crores for which accountability needs to be fixed.

It may be mentioned that the order of SEBI in the above

mentioned Bank of Rajasthan case has also been commented
adversely by the financial print media and has led to the
erosion of credibility of SEBI.

The reason for increasing their stake their stake in the bank
was to profiteer from the increased stake as the promoters
knew that when they sold their bank the price of the shares
would double and they would make a killing from the increased
stake. It was therefore, a case of insider trading which was a
far more serious charge but for reasons best known was never
investigated.

The fact that the existing officers of the first respondent were
able to bestow a benefit of over Rs. 500 crores in spite of the
complaint by the erstwhile WTM of SEBI who in a confidential
letter written to the then Prime Minister had stated that he was
approached by his superior for allowing the promoters of the
Bank of Rajasthan to sell the shares is a sad commentary on
the system. This complaint of the WTM was in the public
domain much before the two orders of SEBI favouring the
promoters/entities were passed.

LIST OF DATES

Prior to 2010

RBI refers to SEBI the matter of the Promoters

of Bank of Rajasthan violating its Guidelines
dated February 28, 2005 on Ownership and
Governance

in

Private

Sector

Banks

of

promoters

having

maximum

holding

of

10%.Promoters were to reduce their stake to

10% in accordance with the guideline and had
given and undertaking to do so gradually.
However, the promoters of BOR instead of
decreasing their stake as per the RBI licensing
norms and that the undertaking given were
increasing
holdings

their
and

declarations,

stake,
making

as

required

through

benami

quarterly
under

false

law,

of

decreasing their stake.

08.03.2010

Interim

order

of

NoWTM/KMA/ISD/235/03/2010

SEBI
of

SEBI:

SEBI investigates the matter referred to it by

the RBI and finds that the promoters of BOR
had made false declaration on the promoter
holding. They had declared their holding to
have decreased to 28.61%, from 44.71% while
in reality they had increased their holding to
55.01% and in the process acted in violation of
Prohibition of the Fraudulent and Unfair Trade

Practices Relating to Securities Market and

Takeover Regulation.

The then WTM of SEBI K M Abraham passes

interim order freezing the sale of shares by the
promoters

illegally

acquired

and

wrongly

declared. The shareholding of 118 entities

involved in the scam was frozen and directions
to the concerned Depositories issued. This
meant that the persons accused could not sell
their shares.

18.05.2010

ICICI Bank announces the buyout of Bank of

Rajasthan through a share swap ratio of 4.72
shares of Bank of Rajasthan for one share of
ICICI Bank. The buyout was at a price which
was more than two times the current market
price.

09.08.2010

RBI writes to SEBI asking if its interim order

dated 8/3/10 of freezing the promoters shares
would affect the buyout of BOR by ICICI bank.

11.08.2010

SEBI replies that the order would not affect the

amalgamation of BOR into ICICI Bank but its
order against the entities mentioned therein
would apply to ICICI shares allotted to the
entities in lieu of their BOR shares.

01.06.2011

The WTM of SEBI who had passed the interim

order on 8/3/2010 and replied to RBI on
11/8/2010 ( see above dates) writes to the
Prime

Minister

by

SEBI/KMA/2011/7495

(
dated

letter

no

1/6/2011),

wherein he stated that SEBI Chief wanted him

to manage some cases before his tenure
ended. (Para 10 of the letter). The WTM was
more specific about Bank of Rajasthan in Para
14 of his letter he stated the following: He
asked me to explore the possibility of allowing
the promoters to sell the ICICI shares received
by them. I explained to him, that the SEBI
interim orders prohibiting market transactions
cannot be selectively be waived for this. In Para
21 of the letter the WTM had undertaken to
state

the

facts

on

oath

on

any

administrative/judicial forum if required to do

so.

26.3.2012

Shri Prashant Saran, the WTM to whom the file

was allotted after the earlier WTM completed
his tenure at SEBI had left, allowed the
promoters of BOR and other entities to sell
their ICICI shares by blaming the RBI for giving
the green signal for the amalgamation without
providing for the caveats and concealing the
fact that it was SEBI which had given the green
signal and provided the caveats to the RBI. Mr
Saran relied on the report of Investigation
Department headed by R K Padmanabhan (who
was also the CVO of SEBI) Refer para 5,7,1,
7Bc

(The

recommendation

is

to

initiate

adjudication proceedings which may result only

in

imposition

of

monetary

penalty.)

No

disgorgement of profit was referred to while

allowing the promoters to sell the shares. The
promoters gain on the day of the order was over
Rs 500 Crores on their 34.54 percent excess

and illegal holding which was acquired by

violating the PTUTP Rules.

14.02.2013

The

Adjudication

officer

imposes

token

penalty of only Rs 30 Crores inspite of finding

violation of Regulation 3(a), 3(b), 3(c), 3(d), 4(1)
and 4(2)(f) of the SEBI

(PROHIBITION OF

FRAUDULENT

UNFAIR

AND

PRACTICES

RELATING

SECURITIES MARKET)

TRADE
TO

REGULATIONS, (Para

76 of the order) because the Investigation

Department headed by the then CVO Mr R K
Padmanabhan could not quantify the illegal
gain- refer para 78 of the order (I have noted
that the investigation report also does not dwell
on the extent of specific gains made by the
Noticees. )

12.10.2013

Complaint

filed

by

the

Petitioner

dated

12.10.2013 addressed to the Chief Vigilance

Commission travels to Mr R K Padmanabhan,
the Chief Vigilance Officer (CVO) at SEBI, via
the Ministry.

25.11.2013

The CVO who was also the Executive Director

(Investigation)
facilitating

and

the

making,

was

largesse

vide

his

responsible
to

the

for

promoters

letter

no

SEBI/ED/RKP/30239/2013 dated 25/11/13

dismisses the complaint of the Petitioner by
deliberately misstating that the complaint had
stated that there was too much promptness
shown by SEBI in disposing RBI letter dated
9/8/10 SEBI on 11/8/10 which was not the
case. This reference to the promptness was
used not to address the real issue of SEBI
having

given

the

green

signal

for

the

amalgamation of the Banks. This was done in

order to pass the blame on to the RBI while it
was SEBI which had cleared the deal. He also
wrongly stated in the letter that the amount
mentioned was sensational without referring to
the fact that the loss had been quantified in the
complaint on the basis of number of excess
holding of shares, the price and the profit. He
concealed the fact that his department had

deliberately not quantified the loss when they

were in a position to do so easily. He wrongly
stated that the matter was of wrong disclosure
under SAST while suppressing that the charge
of violation of Regulation 3(a), 3(b), 3(c), 3(d),
4(1) and 4(2)(f) of the PFUTP Regulations and
fraudulent

trading

had

been

proven.

He

wrongly stated that the ban related to trading

in other shares when the entities were not
traders. This was done to conceal the fact that
the ban related to en-cashing the gain on the
ill-gotten

shares.

The

CVO

cum

ED

(Investigation) concealed his conflict of interest

role as Executive Director Investigation while
replying to the complaint. The Ministry and the
CVC dutifully accepted the recommendation of
the CVO SEBI without applying their mind or
reading the complaint or verifying that the
alleged losses of Rs. 500 crores were real. They
did not even care to ask the CVO to quantify
the

gain

which

he

had

described

as

sensational. The Ministry was aware that the

appointment of the CVO by SEBI chairman and

had not been approved by any other authority

and that the appointment itself was irregular
and was a conflict of interest situation. Further
the handing over of the additional charge of
lucrative

assignment

of

Executive

Director

(Investigation) was in direct violation of CVC

manual.

26.09.2014

CBI registers a complaint in the BOR case

which is wrongly reported in the press as PE as
clarified by the CBI on inquiries made by the
Petitioner.

11.10.2014

The Petitioner writes to the Finance Minister

Shri

Arun

Jaitley

on

the

cover

up

at

SEBI/Finance Ministry and CVC and the

involvement of SEBI Chairman, WTM and
CVO/ED SEBI in the scam.

10.12.2014

RTI application filed by the Petitioner with

SEBI, for providing the inspection report and
the gains made by the Promoter/entities in
BOR case.

07.01.2015

RTI application of the petitioner rejected on the

grounds that the matter was pending before the
Apex court and hence the information could
not be provided as it would impede the process
of investigation/apprehension/ prosecution of
offenders.

IN THE SUPREME COURT OF INDIA

(CIVIL ORIGINAL JURISDICTION)
Writ Petition (Civil) No. .................... Of 2015
PUBLIC INTEREST LITIGATION
A WRIT PETITION IN PUBLIC INTEREST UNDER ARTICLE 32 OF THE
CONSTITUTION OF INDIA FOR THE ENFORCEMENTS OF RIGHTS
UNDER ARTICLES 14 AND 21 OF THE CONSTITUTION OF INDIA
SEEKING A DIRECTION TO SEBI TO QUANTIFY THE GAINS MADE BY
PROMOTERS OF BANK OF RAJASTHAN AND OTHER ENTITIES JOINTLY,
AND DIRECT THE SEBI TO LEVY APPROPRIATE PENALTY ON THE
VIOLATORS
IN

THE MATTER OF:

1) ARUN KUMAR AGRAWAL

T-8 EAGLETON GOLF RESORT
30 KM BANGALORE MYSORE HIGHWAY
BAIDADI, BANGALORE SOUTH DISTRICT
BANGALORE 562 109
PH: 09845097444
EMAIL:

ANGRYWAL

GMAIL.COM

THE PETITIONER

VERSUS

1)

SECURITIES AND EXCHANGE BOARD OF INDIA

THROUGH ITS CHAIRPERSON
SEBI BHAVAN
BANDRA KURLA COMPLEX
BANDRA (EAST), MUMBAI-400051

2)

RESPONDENT NO. 1

CENTRAL BEAURAU OF INVESTIGATION

THROUGH ITS DIRECTOR
CGO COMPLEX
NEW DELHI-110003

3)

CHIEF VIGILANCE COMMISSION

THROUGH

ITS

CHIEF

VIGILANCE COMMISSIONER

RESPONDENT NO.2

SATARKATA BHAVAN, A-BLOCK

GPO COMPLEX, INA
NEW DELHI - 110 023

4)

RESPONDENT NO.3

UNION OF INDIA
THROUGH
FINANCE SECRETARY
MINISTRY OF FINANCE, DEPARTMENT
OF ECONOMIC AFFAIRS
NORTH BLOCK, NEW DELHI-110001

5)

RESPONDENT NO.4

CHIEF VIGILANCE OFFICER,

DEPARTMENT OF ECONOMIC AFFAIRS
ROOM NO. 67-B
NORTH BLOCK, NEW DELHI 110001

RESPONDENT NO.5

THE HONBLE CHIEF JUSTICE OF INDIA AND HIS COMPANION

JUDGES OF THE HONBLE SUPREME COURT OF INDIA

The Humble Petition of the

Petitioner above-named

MOST RESPECTFULLY SHOWETH: -

1) That the petitioner is filing the instant writ petition in

public interest under Article 32 of the Constitution for the
enforcement of Rights guaranteed under Article 14 and 21
of the Constitution of India, on account of the inaction of
the Respondents, Central Bureau of Investigation (CBI),
Central Vigilance Commission of India (CVC), Ministry of
Finance on a complaint by the Petitioner against the first

respondent (SEBI) that has led to a financial loss of over

Rs. 500 Crores. This loss was caused to the public
exchequer because SEBI deliberately did not quantify the
gains made by the Promoters of Bank of Rajasthan on the
excess of 34.54% of the shares of the Bank held by them
in violation of SEBI (Prohibition of Fraudulent and Unfair
Trade

Practices

Relating

to

the

Securities

Market)

Regulations, 1995 (hereinafter referred to as 'PFUTP

Regulations')and SEBI (Substantial Acquisition of Shares
and Takeovers) Regulations, 1997(hereinafter referred to
as SAST Regulations). The gain of over Rs 500 crores
could

have

been

very

easily

quantified

but

was

deliberately treated as zero. Had the gains made by the

promoters/entities been quantified, the unlawful profit
would have to be disgorged under the existing law. There
is sufficient evidence to show that the gain was not
quantified in order to benefit the promoters of Bank of
Rajasthan. The loss to the exchequer would be over Rs.
2000 Crores, if the penalty of three times the gain, as
provided in section15 HA of the SEBI Act too had been
levied.

The petitioner has no personal interest, or private/oblique

motive in filing the instant petition. There is no civil,
criminal, revenue or any litigation involving the petitioner,
which has or could have a legal nexus with the issues
involved in the PIL.

The petitioner has been an activist in financial area for

the last 15 years unraveling scams in national interest. He
has had successes and failures while agitating issues
involving thousands of Crores of public money. Some of
his successes relate to state of Karnataka abandoning the
Cogentrix Power project which would have led to a loss of
at least Rs 30,000 Crores, preventing the transfer of 290
MW Almatti Hydropower project to a private company,
unraveling of telecast cricket scam as a Consultant to
Prasar Bharati resulting in Doordarshan gaining 20
Crores, unraveling the 2G scam in respect of Swan
Telecom which finds a mention in the judgment of this
court, of taking up iron ore mining by the government of
Karnataka on account of high profitability in the mining
sector

(still

pending

with

Karnataka

High

Court).

Petitioners annual income is Rs XYZ (PAN No. XYZ). His

National UID No. is XYZ.

Though the petitioner has made several representations to

the authorities which include complaint filed with CVC on
12.10.2013 (Annexure P7), complaint filed with the
Finance Minister on 11.10.2014 (Annexure P9). Copies of
the complaint were sent to Finance Secretary, Ministry of
Finance, Dr. K. P. Krishnan, DG & AS, Department of
Economic Affairs, Ms. Usha Titus, Joint Secretary/ Chief
Vigilance Officer and Director CBI, but no action has been
taken against the offenders till date.

THE CASE

IN

BRIEF

2) Reserve Bank of India referred to SEBI the matter of the

Promoters of Bank of Rajasthan violating its Guidelines
dated February 28, 2005 on Ownership and Governance
in Private Sector Banks of promoters having a maximum
holding of 10%. Earlier the Promoters were directed by the
RBI to reduce their stake to 10%. The RBI in its audit
found that the promoters of BOR instead of decreasing
their stake as per the RBI licensing norms were
increasing their stake through benami holdings.

3) It also found that the promoters of Bank of Rajasthan had

been deliberately making false quarterly declaration,
mandated under the law, of having decreased their stake
while in reality they had increased their stake. The matter
was referred to SEBI by the RBI for further investigation.
SEBI conducted investigations into the affairs of Bank of
Rajasthan Ltd for the Period June 2007 to December
2009 and found that the RBI was right in concluding that
the promoters had surreptitiously increased their stake
instead of decreasing their stake.

5)

The then Whole Time Member (WTM) of SEBI in his order

number WTM/KMA/ISD/235/03/2010 dated 8/3/2010
found that while the promoters had stated that their
holding in Bank of Rajasthan had decreased to 28.61%,
from 44.71% while in reality they had increased their
holding to 55.01% in December 2009, and had in the
process acted in violation of Prohibition of Fraudulent
and Unfair Trade Practices Regulations and Takeover
Regulations. The order also stated that the promoters
were repeat offenders. The WTM of SEBI, Shri K M
Abraham, passed interim orders freezing the sale of
shares

by

the

118

promoters/entities

involved

in

acquiring the excess shares and appropriate directions to

the concerned Depositories holding the shares were
issued. This meant that the persons accused could not
sell their shares. The order of the WTM is placed at
Annexure P1.

Revocation of Interim Order by the subsequent WTM

6)

On 18/5/2010 the buyout of Bank of Rajasthan by ICICI

Bank was announced and the amalgamation ratio of
shares in effect doubled the price of the shares of Bank of
Rajasthan. When the proposal of the amalgamation was
put up to the RBI, the RBI by its letter dated 9/8/2010
made a reference to SEBI as to whether the interim order
of SEBI would affect the amalgamation of the two banks.
SEBI replied that the order would not affect the
amalgamation of Bank of Rajasthan into ICICI Bank but
its order against the entities mentioned therein would
apply to ICICI shares allotted to the entities in lieu of their
Bank of Rajasthan shares. In other words the 118 parties
named in the interim order could not sell their Bank of
Rajasthan shares which were to be converted to ICICI
Bank shares. The letter of SEBI by WTM who had passed
the interim order dated 26.03.2012 addressed to the RBI

is placed at Annexure P2 and the relevant portion

reproduced:

The ex parte ad interim order passed by SEBI on 08March-2010 will not come in the way of the proposed
merger of bank of Rajasthan Ltd with ICICI Bank Ltd.
However, this order will continue to operate on the
entities named in the order including the shareholders
of bank of Rajasthan Ltd, who are likely to get the
shares of ICICI Bank Ltd., arising out of the proposed
merger, in respect of their operations in the securities
market, as has been specified therein.

Thus the impounded shares of Bank of Rajasthan

continued to be frozen when converted into ICICI bank
shares.

7)

Subsequently, the new chairman of SEBI apparently

asked the WTM who had passed the interim order to find
a way to allow the promoters to sell their ICICI bank
shares

and

this

request

figured

in

confidential

complaint by the concerned WTM to the Honble Prime

Minister. This complaint though confidential came into

the public domain on account of an RTI application and

was published on the Internet.

8)

After the completion of the tenure of the WTM who had

passed the interim order, the file was allotted to another
WTM whose term was about to end but who had applied
for another term. Though the earlier interim order had
allowed the persons affected by the order to appeal
against the order, none of them done so. The file was
taken up without any of the parties appealing against the
earlier interim order. The interim order of the earlier WTM
was reversed to allow the promoters and other entities to
sell the shares of ICICI Bank allotted to them and thereby
encash a profit of over Rs. 500 crores on the 34.54%
excess shares. While doing so the order did not state the
percentage by which the promoters/entities had increase
their stake nor attempted to identify the quantum of the
profit that they would make. The interim order should not
have allowed the release of the security at the centre of
the scam without proper adjudication and it in effect took
away the power to disgorge the illegal profit made by the
promoters/entities from the Adjudicating Officer.

The interim order was flawed on various counts:

The WTM in para 9 of the order stated:
It would also be safe to presume that if the RBI
itself had considered the conduct of the promoters
extremely serious then either it would not have
allowed the amalgamation or would have done so
with required caveats for the promoters.

9)

The WTM wrongly blamed the RBI for approving the

amalgamation without providing for the caveats against
the promoters while the truth was that the previous WTM
of SEBI had provided the caveats to the RBI against the
Promoters by making the order effective to the shares of
ICICI Bank that was to be allotted on the Promoter
/entities. (Refer Annexure P2). Neither the letter nor the
contents of the letter at Annexure P2 were referred to in
the order.

10)

The

order

of

the

WTM

also

took

shelter

in

the

recommendation of the Investigation Authority (headed by

the CVO) produced below for revoking the directions in
the interim order and for sending the matter for
adjudication.

I have noted that the Investigation Authority has

recommended initiation of adjudication proceedings
against all the entities except the entities mentioned
at Sr. No. 93 to 100 and revocation of Interim Order
against all the aforesaid entities.( para 5)
The

Investigating

Authority

has

recommended

revocation of directions passed against the entities

mentioned in the Interim Order. Before considering
the recommendation, certain factors as mentioned
below need to be taken into account..( para 7)
xxx
The

recommendation

is

to

initiate

adjudication

proceedings which may result only in imposition of

monetary penalty.( para 7Bc)

11)

The recommendation of lifting the embargo on the sale of

shares and sending the matter for adjudication for a
penalty without quantifying the gain or dwelling on the
disgorgement of the gain was made by a person who was
also the CVO of SEBI and was in a huge conflict of
interest situation. Approval of his appointment as CVO
was not obtained from the CVC as SEBI was not notified
under section 8 of the CVC Act. The CVO was appointed

by the Chairman of SEBI and he was given the charge of

Executive Director (investigation) by the Chairman of
SEBI which was a huge conflict of interest position not
permitted under the Vigilance Manual. The CVO though
junior in rank to the WTM was later responsible for giving
the final vigilance clearance for the reappointment of the
WTM who had passed the order.

12)

The order also stated the following to justify the lifting of

the embargo on the sale of the ICICI shares:
The second issue to be examined is whether any
such attempt at camouflaging the real level of
shareholding by promoters should be considered
as a serious, very serious or fatal threat to the
securities market. Again, as a baseline, the
securities regulations are disclosure based and
the securities market regulator does expect that
all disclosures should be true and fair. I am of the
opinion that such an offence would have been
considered as very serious or fatal if the wrongful
disclosures would have led genuine investors into
trades that would eventually expose them to much
greater risk. I have noted that there is no

allegation as to any price or volume manipulation

by the promoters. Therefore, I am of the opinion
that purely from a securities market point of view,
the severity of the offence could be considered not
very grave. (Para 9,last para)

13)

The Petitioner submits that the promoters had indulged in

fraudulent and unfair trade practices and their dealings
were fraudulent in terms of Regulation 2(1) (c),3(b), 3(c),
3(d), 4(1) and 4(2)(f) of the Securities and Exchange Board
of Indian (Prohibition of Fraudulent and Unfair Trade
Practices Relating to Securities Market) Regulations,
2003. Further, they had indulged in insider trading for
profiteering on the sale of increased stake when the Bank
was sold to another Bank (in this case ICICI Bank). Just
because the stake was increased over a long period of
time of two a half years and the fraud was committed at
leisure without price manipulation does not mean that
the fraud was not committed on the investors and the
market. There are a lot of investors who buy and sell the
shares of a company by taking a cue from the promoters.
If the promoters increase their shareholding they buy, and
if the promoters decrease their shareholding they sell. It is

precisely these types of fraud that SEBI should be

detecting and punishing the violators so that the investors
believe in the credibility of the market and the regulator
which oversees the market, supposedly in the interest of
the investors. In fact the promoters should have been
proceeded against under the IPC for committing fraud and
cheating the investors by increasing their stake with the
full knowledge that they were in negotiation for selling the
bank.

14)

The Petitioner submits that the WTM did not adjudicate

the matter fully, constrained the adjudication by limiting
it to imposition of fine and left the adjudication to another
officer already appointed. The value of 34.54% excess
shares illegally acquired, as stated above, was Rs. 1036
Crores on the date after the order was passed which the
promoters could now encash.

Order of the Adjudicating Officer (AO hereinafter) of SEBI

15)

The WTM having released the ICICI shares and having

sent the matter for adjudication only for the purpose of
determining the penalty, the role of the Adjudicating

Officer was a limited one. The order of the AO dated

14/2/2013 is placed at Annexure P3.
Para 3 of the order of the AO states:
I was appointed as the Adjudicating Officer, vide order
dated January 25, 2012, under Section 15 I of the
SEBI Act read with Rule 3 of SEBI (Procedure for
Holding Inquiry and Imposing Penalty by Adjudicating
Officer) Rules, 1995 (hereinafter referred to as the
Rules) to inquire into and adjudge under Sections
15HA, 15H(ii), 15A(a) and 15A (b) of the SEBI Act for
the alleged violations committed by the Noticees.

16)

The appointment of the AO was on 25/1/2012 which was

prior to the modification of the interim order by the WTM
on 14/2/2012. As the AO was supposed to impose
penalty under section 15 HA of the SEBI Act and the
quantum of the penalty under section 15 HA was linked
to the profit made by the promoter/entities it was not
correct for the WTM and the Investigation Department to
pre-empt the order of the AO by releasing the security and
not quantifying the profits.

17)

Para 35 of the order confirms that the promoters and

Persons Acting in Concert (PACs) held 34.54% excess
shares than that the declared by them. (63.15-28.61 =
34.54). The relevant portion of the para is reproduced:

35. As can be seen from the above table the

shareholding of the promoters and PACs increased from
46.80% to 63.15% whereas the disclosure which was
made to the stock exchange was shown as reduced
from 44.18% to 28.61%. Thus, wrong disclosures were
made to the stock exchange.
..

18)

Para (78) of the order of the Adjudicating Authority is at

the heart of the scam and once again it was the
Investigation Department that was responsible for not
quantifying the gain. The relevant paragraph of the order
is being reproduced:

78. It is difficult, in cases of such nature, to

quantify exactly the disproportionate gains or
unfair advantage enjoyed by an entity and the
consequent losses suffered by the investors. I have

noted that the investigation report also does not

dwell on the extent of specific gains made by the
Noticees. However the manipulations as Bank of
Rajasthan above are a threat to the safety and
integrity of market and thus loss to the investors to
that extent. I observe that the game plan of the
Noticees continued for over a period of more than
two years and hence was of a repetitive nature.

19)

SEBI, the first Respondent could have quantified the gain

through three different sources. The first source was the
brokers through whom the purchase and sales of the
shares took place, the second source was the stock
exchange through in which the brokers traded the shares,
and the third source was the depositories through which
the shares were credited or debited at the time of
purchase/sale. All these three intermediaries of the stock
market are regulated by the first respondent and under
the Act and rules are bound to provide the information
whenever a stock market fraud takes place.( Refer section
11C(3) of the SEBI Act).

20)

SEBI, the first respondent deliberately did not

quantify

the gains made by the promoters and various entities who

were found violating of Section 12 A (a), (b) and (c) of the
SEBI Act and Regulation 3(a), 3(b), 3(c), 3(d), 4(1) and 4(2)
(f) of the Securities and Exchange Board of Indian
(Prohibition of Fraudulent and Unfair Trade Practices
Relating to Securities Market) Regulations, 2003. (para 76
of the order of the Adjudicating officer.)
21)

The data for the calculation of the illegal gains made by

the promoters/entities is in the investigation report and
almost 95% of the data for calculating the cost price of
the excess shares is in the order itself. The calculation of
the gains based on the ruling price of the ICICI shares on
the date of the order has been calculated and enclosed as
an Annexure referred to below.
After holding the Noticees in violation of various sections
of PFUTP regulations in paragraph 76 of the order, section
15HA of the SEBI Act is also reproduced in paragraph 76
of the order which is as follows:
76. ..
15HA.Penalty

for

fraudulent

and

unfair

practices.If any person indulges in fraudulent and unfair trade

practices relating to securities, he shall be liable to a

trade

penalty of twenty-five crore rupees or three times the

amount of profits made out of such practices, whichever is
higher.
22)

The gain made by the promoters was in the vicinity of over

Rs. 500- 650 Crores. Further, just because the exact
gains could not be quantified, it did not mean that the
gains were to be treated as zero as was done in this case.
SAT in other cases had upheld the disgorgement of profits
based on estimates through notional gain which could
have been done in this case, if required. The value of the
ICICI shares with the Promoters/other entities on the day
of the order Adjudicating Authority was Rs. 1329 Crores.
The exact gain could have been very easily quantified
given the powers vested in SEBI and for reasons
mentioned above.

23)

The Petitioner submits that reference has been made in

para 78 of the order of the Adjudicating Officer refers to
the report of the Investigation Department headed by the
CVO. The report did not dwell on the gains made by the
noticees. Under the circumstances, the gain made by the
noticees was treated as zero and a collective token fine of
Rs. 30 Crores was levied on the 118 noticees instead of

disgorging the Rs. 500 crore gains along with three times
the fine that could have been imposed.
The Gains is Quantified :Rs. 650 crores
SEBI had all the means to quantify the gains. However this
was not done deliberately (Refer to in para 78 of the order
of AO)
24)

The Investigation department had all the means to find

out as to on what dates and the price the shares of ICICI
were sold. The information was available from multiple
sources- the stock exchange, the depository, and the
brokers-but did not do so deliberately. The excess shares
involved were 34.54% as is evident from paragraph 35 of
the order of the AO reproduced below:

35. As can be seen from the above table the

shareholding of the promoters and PACs increased
from 46.80% to 63.15% whereas the disclosure
which was made to the stock exchange was shown
as reduced from 44.18% to 28.61%. Thus, wrong
disclosures were made to the stock exchange was
shown as reduced from 44.18% to 28.61%. Thus,

wrong

disclosures

were

made

to

the

stock

exchange.

25)

The information needed to calculate the gains on this

34.54% is there in the investigation report which SEBI
refuses to share. In fact information relating to 95% of the
purchase price of the excess shares is there in the order
itself. The balance information will be in the investigation
report.

26)

The price at which the shares were actually sold was

never

enquired

by

SEBI

as

SEBI

wanted

the

promoters/entities to make a gain of Rs. 500 crores and

that is why they allow them to sell the shares before
completing

the

adjudication.

The

gains

were

not

quantified because they were difficult to quantify but

because SEBI never intended to quantify the gains
because by quantifying the gains they could not favour
the promoters.

27)

The gains could have been easily quantified through the

brokers, the depositories, or the stock exchange. The price
of ICICI bank shares at the time of the second order of the

WTM when the ban on the sale of shares was lifted, and
also the date on which the Adjudicating Officer passed
the order are available from any number of sources which
charts the daily share prices. The prevailing price on that
day can be applied for the calculation of notional gains, a
concept which has been upheld by Securities Appellate
Tribunal. The Excess 34.54% holding worth Rs.1036
Crores on the day subsequent to the order of WTM and
Rs. 1329 Crores on the day of the order of the Adjudicated
Officer.Based on the principle of notional gains, the gain
was around Rs. 650 crores at the time of the order of the
WTM and around Rs. 950 crores at the time of the order
of the Adjudicating officer. The detailed calculations are
placed at Annexure P4. Historic Stock Quote of ICICI
Bank Shares in NSE on 27.03.2012 collected from the
website is placed at Annexure P5. Historic Stock Quote in
NSE of ICICI Bank Shares on 14.02.2013 collected from
the website is placed at Annexure P6.

28)

The Petitioner submits that he has complained to every

relevant authority in the country on the corruption
involved, but no action has been taken so far. The
Petitioner would have waited for some more time had he

not been alerted by the Information Officer of SEBI that

an appeal had been filed by the Promoters and other
entities of Bank of Rajasthan against the order of the SAT
which is pending before this Honble Court. The order of
SEBI which had imposed a penalty of Rs. 30 crore is
without quantifying the gain. This was reduced in the
period to SAT to Rs. 20 Crores. It was therefore
considered necessary to bring to the notice of this Honble
Court that the gain was over Rs 500 Crores and the same
had not been quantified by SEBI in its order on account of
corruption.

29)

The Petitioner had filed a complaint with the CVC dated

12/10/2013 and copies were marked various authorities
in the Finance Ministry and the CBI. The complaint is
placed at Annexure P7. The complaint was redirected to
the Finance Ministry which in turn redirected the
complaint

to

the

CVO

of

SEBI.

The

Investigation

Department was responsible for failing to quantify the

gains of over Rs 500 Crores as mentioned in the order of
the Adjudication Officer. The CVO cum ED (Investigations)
disposed the complaint by ridiculing the petitioner that the
gain stated by the Petitioner was without any basis and

aimed at sensationalisation the gain. With all the staff at

his command, the powers vested in him through various
Acts and Rules, the very least that the CVO should have
done was to proceed and quantify the gain and called of
the bluff of the petitioner by showing that the gain was
indeed insignificant and that the petitioner was a mere
busybody. If the actual gain was indeed what has been
described as sensational by the CVO, then that in itself
suggests that the conclusion of the CVO was not an
honest one and that he was covering up not only for SEBI
but

for

himself

as

he

had

made

the

crucial

recommendations to the authorities who wrote the

interim and the final order and these authorities referred
to the recommendations made by him as the Executive
Director (Investigation). The CVO also did not claim that
the gain could not be quantified. He also dismissed the
letter to the RBI as being objected to by the Petitioner on
grounds of early disposal. A copy of the letter of the CVO
dated 25/11/2013 is placed at Annexure P8. A detailed
rebuttal of the explanation given by the CVO is placed
below as an Annexure written to the current Finance
Minister.

30)

Surprisingly, the letter of the CVO/Executive Director

(Investigation) was accepted by one and all in the Ministry
and the matter was treated as closed without any concern
for the huge loss to the exchequer. It did not occur to any
of the officers of the Ministry that there was an off
chance, however remote, that the Petitioner could be right
about the quantum of the gain. The petitioner was also
not informed of the disposal of the complaint. While the
Ministry was satisfied with the explanation offered by
CVO of SEBI, the CVC after having referred the matter to
the Ministry did not bother to follow up the matter with
the Ministry any further. The casual manner in which
complaints of over Rs. 500 crores are dealt with by
various authorities was an eye-opener to the Petitioner.

31)

The petitioners submits that while pursuing the fate of

the complaint with the CVC and the appointment of the
CVO of SEBI in conflict of the Vigilance Manual through
RTI ACT, he also discovered that SEBI has not been
notified under section 8 (2) of the CVC Act and there is
little that the CVC could do but to refer the complaint to
the Ministry. This too came as a shock to the petitioner as
SEBI has been around for 25 years and CVC Act has been
there from 1998 onwards.

32)

The petitioners submits that he does not want to

speculate as to why the CBI did not pursue the complaint
though

the

above-mentioned

complaint

dated

12/10/2013 had been marked to the Director of CBI. As

CBI is an exempt organisation under section 24 of the RTI
Act there is no way to know the reasons for the CBI to
drop the complaint at the initial stage.

33)

The Petitioner submits that he filed two Right to

Information appeals before the Ministry giving the details
of the complaint referred to it by the CVO before it
reluctantly made available the documents which led to
the closure of the complaint filed by the Petitioner. The
reply of the CVO placed at Annexure P7 is from the
documents given to the petitioner on his RTI appeal.

34)

The Petitioner on coming to know that the complaint had

been given a decent burial by all the authorities
concerned, complained to the Finance Minister by name
by a letter dated 11/10/2014. A copy of the complaint is
marked as Annexure P9. Copies of the letter were marked
all the other authorities to whom the earlier complaint
dated 12/10/2013 had been sent. A note on the role of
the various officers of SEBI was also enclosed. The same

is placed as Annexure P10. A note rebutting all the

points mentioned in the reply of the CVO cum Executive
Director (Investigation) was also enclosed and the same is
placed as Annexure P11. A copy of the letter and the note
was also sent to IG (anti-crime Branch) CBI, Mumbai.

Criticism of the order of the WTM in the media and the

quantification of the gain by the media:
35)

The financial print media was highly critical of the order

of the WTM on Bank of Rajasthan. One of the articles
published in the MINT in the concluding paragraph
rightly quantified the amount involved as a couple of
thousand Crores and rightly wondered that such a fine
would not be imposed when the matter was finally
adjudicated. This article is placed as Annexure P12.
Another Article published in the Business Standard on
October 16, 2014 titled Sebi changed its mind on Tayals
Bank of Rajasthan Shares after 2 years is placed as
Annexure P13.

Pending Appeals on the order of SAT:

36)

The quantification of the gain is also necessary and

urgent as the order of the Adjudicated Authority of SEBI

was appealed and SAT reduced the amount of penalty

from Rs. 30 Crores to Rs. 20 Crores. The order of SAT has
been appealed against by some of the promoters and
entities and is pending before this Honble court. Some of
these appeals have been numbered as Appeal Civil 4958
4959/14, 5632 33/14. If the matter is decided one way
or the other it will attain finality and the promoters /other
entities would have benefited by a huge amount at the
expense of public exchequer as it will be difficult to
reopen the case.
37)

The petitioner has not filed any other petition or

application or suit regarding the matter in dispute in this
Honble Court or in any High Court or any other Court
throughout the territory of India. The petitioner has no
better remedy available.

GROUNDS
A. The Petitioner submits that the promoters had indulged in
fraudulent and unfair trade practices and their dealings
were fraudulent in terms of Regulation 2(1) (c),3(b), 3(c),
3(d), 4(1) and 4(2)(f) of the Securities and Exchange Board
of Indian (Prohibition of Fraudulent and Unfair Trade
Practices Relating to Securities Market) Regulations,
2003.
B. That the non-quantification of the gain was not accidental
but was the result of shrewd planning. The nonquantification of the gain was deliberate as SEBI had the
details of the day and the rate at which the excess shares
were acquired through off market trades and market
trades (through purchases by brokers from the stock
market). Further the gain made by the sale of ICICI
shares could have been easily determined through the
three intermediaries that function under it. The value of
the shares on the day of the order of SEBI has been
shown to be Rs1036 Crores and Rs. 1329 Crores
respectively. If SEBI wanted it could have found out the
day and the dates on which the ICICI bank shares were
sold after the ban was lifted by the WTM.

C. That even if the exact amount of gain could not be

quantified by the officers of SEBI, it could not have been
the reason for treating the gain as zero as was done in the
present case. The only reason why over Rs. 500 crore
again was taken as zero was on account of corruption.

D. That the letter to the Prime Minister by the erstwhile

WTM, the transfer of the file to a WTM whose tenure was
coming to an end and had applied for a fresh five-year
tenure, the omission of mention of the letter written by
SEBI to RBI in the order of the WTM, the shifting of the
blame to the RBI, the giving of the vigilance clearance to
the WTM by the CVO of SEBI (the concerned officer being
junior to the WTM), the WTM being given a further tenure
of five years, the appointment of a CVO with additional
charge of Executive Director (Investigation),the wrong
recommendations made by the Investigation Department,
the lifting of the embargo on the selling of the shares,
ignoring the criticism in the media on the order passed by
the WTM, the non-quantification of the gain made by the
Promoters /other entities by the Adjudicating Officer, the
report of the Investigation Department, treating the gain
as zero while imposing a penalty, the subsequent cover-up

by the CVO are all events which form a complete chain

which shows that there was a criminal conspiracy to pass
on a benefit of Rs. 500 Crores/Rs. 2000 Crores.

E. That the use of notional gain for the purpose of

disgorgement has been done by SEBI and has been
upheld by SAT. The same could have been applied in the
present case but was not done.

F. That the Promoters were not charged with the offence of

insider trading on account of knowledge of selling the
Bank in the market leading to the increase in price of the
share which led to their increasing their stake gradually
and making the wrong disclosures.

G. That the offence of fraud and tampering with the integrity

of the market is an offence to be taken seriously and not
to be dismissed on the grounds that there was no of price
manipulation and those specific investors were not
defrauded. The fraud was established under the law and
as the fraud had taken place over a long period of time,
there was no need to manipulate the price. In creeping

acquisition there is no price manipulation but the same is

disclosed as and when the shares are acquired.

H. That there is no discretion in disgorging the illegal profit

made and that is why the illegal profit was not quantified.
As the illegal profit was over Rs. 500 Crores, there was
sufficient incentive for not quantifying the illegal profit.

I. That the passing of an illegal benefit of Rs. 500 / Rs. 650

Crores at the expense of the exchequer is an offence
under section 13 (1) (d)(iv) of the Prevention of Corruption
Act, even if bribes and kickbacks are not proven or is
absent.

J. That in spite of so much publicity given in the media on

the allegations of the erstwhile WTM and the order of the
subsequent WTM, SEBI still went ahead and passed an
order favouring the Promoters shows the brazenness with
which power was exercised for passing on a favour of Rs.
500 crores.

K. That unlike The Income Tax Department and the Central

Excise

Department

where appeal against

erroneous

decisions at the stage of adjudication is possible, SEBI

cannot and does not ever appeal against an erroneous
decision of its Adjudication Officer.

L. That in the 25 years of existence of SEBI, though

numerous scams have taken place on the Stock Market,
the investors have been able to recover their losses only
once. This fact alone itself speaks for itself.

M.That the right to the savings of a person is a fundamental

right under Article 21 of the saver and he has full right to
recover his money through information gathered by a
state regulator like SEBI and therefore there is a need to
make public the information gathered by the Investigation
Department on the conclusion of the adjudication process
and give investors a reasonable opportunity to appeal
before the Appellate Authority which is SAT in this case.

N. That there is a need to make SEBI accountable and hence

it is necessary that it should be notified under Section 8

(2) of the CVC Act, so that no cover up can take place and
officers

in

conflict

of

interest

position

cannot

be

appointed.
PRAYER
In view of the facts & circumstances stated above, it is most
respectfully prayed that this Honble Court in public interest
may be pleased to: a) Issue a writ of mandamus or any other appropriate
writ directing the SEBI or any other body to quantify
the gains made by promoters of Bank of Rajasthan
and other entities jointly, and direct the SEBI to levy
appropriate penalty on the violators.
b) Issue a writ of mandamus or any other appropriate
writ directing a Court monitored investigation by the
CBI into the issue raised in this petition.

c) Issue a writ of mandamus or any other appropriate

writ directing SEBI to make public its investigative
report after the conclusion of the adjudication process
in the matter of amalgamation of Bank of Rajasthan
with ICICI Bank and the amount of profit made by
Promoters of Bank of Rajasthan through illegal
holding of shares.

d) Issue a writ of mandamus or any other appropriate

writ directing that the appeal filed by the promoter
and other entities before this Honble court may be
decided in light of the facts urged in this writ petition
including the amount of profits made by these
entities.

e) Pass any other writ, direction or order as may be

deemed fit and proper.
Petitioner
Through

PRASHANT BHUSHAN

Counsel for the Petitioner

Drawn & Filed On:
New Delhi

March 2015