NSE co-location case: HC dismisses Ramkrishna’s plea against PC Act

Observing that recognised stock exchanges perform “very vital economic functions in the public interest” and “are not ordinary commercial ventures”, the Delhi High Court on Thursday dismissed former National Stock Exchange (NSE) Managing Director and CEO Chitra Ramkrishna’s challenge to the constitutional validity of provisions of the Prevention of Corruption Act (PC Act) under which she is being prosecuted in the NSE co-location case.

Court Upholds Anti-Corruption Law, Refuses to Quash Proceedings

A Division Bench of Justice Navin Chawla and Justice Ravinder Dudeja held that Sections 2(c)(viii) and 2(b) of the Prevention of Corruption Act, which deal with the definition of “public servant” and “public duty”, are neither vague nor unconstitutional. The Court ruled that the provisions were enacted to widen the scope of anti-corruption law and cannot be invalidated merely because every office performing a public duty is not specifically identified in the statute.

The High Court further observed that whether a person falls within the definition of a “public servant” under the Act has to be determined on the facts of each case. It said that whether Ramkrishna, in her role at the NSE, performed a public duty and the extent of her responsibility in the decisions questioned by the CBI are mixed questions of fact and law that can only be decided after evidence is led during trial. Consequently, the Court declined to quash either the chargesheet or the criminal proceedings at this stage.

The Bench also refused to set aside the sanction granted by the NSE Board of Directors for Ramkrishna’s prosecution. It held that although the Board had clarified while granting sanction that it was not admitting that NSE officials were “public servants” or that the Prevention of Corruption Act applied to the NSE, such clarification did not invalidate the sanction. Instead, those issues are to be decided by the trial court on the basis of evidence.

Ramkrishna had approached the High Court seeking to strike down Sections 2(c)(viii) and 2(b) of the Prevention of Corruption Act as unconstitutional insofar as they were sought to be applied to employees of private companies. She had also challenged the sanction orders issued by the NSE Board and the Special Judge’s order taking cognisance of the CBI chargesheet and summoning her in the case.

The NSE Co-location Scam Allegations

The case stems from the CBI’s investigation into the alleged NSE co-location scam. According to the agency, between 2010 and 2014, certain brokers, including OPG Securities, allegedly received preferential access to NSE servers, enabling them to access market data before other participants. The CBI has alleged that Ramkrishna, while heading the NSE, entered into a criminal conspiracy, facilitated preferential access to certain brokers, and made irregular appointments and decisions, including those relating to former Group Operating Officer Anand Subramanian.

‘Public Interest’ Function of NSE

While examining the issue, the High Court referred to the statutory framework governing recognised stock exchanges and noted that they are entrusted with significant regulatory and market functions in the interest of investors and the securities market. It also referred to the NSE’s Memorandum of Association, which states that one of its principal objects is to regulate and manage dealings in securities “in the public interest”. These features, the Court observed, demonstrate that the NSE performs functions that carry a strong public character.

Dismissing the petition, the Bench clarified that none of its observations on the issues involved should influence the trial court, which will independently examine the evidence and decide the matter in accordance with law. No order as to costs was passed. (ANI)

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