The judicial and media spotlight on the SEBI regarding the IPO scam has finally forced the SEBI Board into action. The Board today announced that it would make the orders of the two-member Committee public. The Committee, comprising Mohan Gopal and V. Leeladhar, had been constituted to investigate the IPO scam and identify the persons responsible. The Committee passed two quasi-judicial orders in October 2008, but these orders were not made public. Bar & Bench had carried a full coverage of the issue and the PILs filed in the AP High Court on November 4.

The SEBI has issued a press release stating, "SEBI in its meeting on Monday decided to confirm the findings of its meeting held on August 26, 2009. In view of the above, the Board declared the two orders (relating to IPO Irregularities and DSQ Software) as non est. However, in the interest of transparency, it decided to make public the two non-est orders. It also decided that the Board as a whole (excluding Chairman Mr. Bhave) would dispose of these two matters afresh". A detailed copy of the Order can be found here. 

There are two important issues that need to be examined here. First is the question of how a quasi-judicial order can be set aside as non est (does not exist), when there is no provision in law for the Board to be able to do so; and second, the necessity of re-examining a matter that has already been heard in detail by two members of the SEBI who have the highest reputation and credibility, and who have prepared final orders on the basis of their findings, which have now been deemed null and void.

Sucheta Dalal, an award-winning business journalist who has been closely following the outcome of the issue, also questions the SEBI's decision. Speaking to Bar & Bench, she said, "Firstly, this was the first time a quasi judicial body had been set up. The way the SEBI decided the matter and said the orders are non est - if it was that simple, then why did SEBI hide the final order for this long?  Also, SEBI gives no reason for making the orders of the two-member Committee non est. For a layman who reads that order, [it is apparent] that the two-member Committee has stuck to the mandates that were given to them. Now, the entire Board will sit in judgment of their two colleagues, when the Board includes non-independent persons who report to the Chairman and SEBI."

The order which has been published clearly mandates NSDL to conduct an independent investigation and pin individual responsibilities for failures to meet its legal duties. Several observers feel that the reason the orders have been suppressed so far may be because C.B. Bhave, the present Chairman of SEBI, was the Chairman of NSDL during the IPO scam. If individual responsibilities are pinned down, then the current Chairman of SEBI may have to own up responsibility and resign from his post.

The Committee had submitted its detailed findings on October 14, 2008. J. Sagar's Mumbai Partner, Somashekar Sundaresan, who is a Securities Appellate Tribunal specialist, had appeared for NSDL before the two-member Committee along with Senior Associate Zerick Dastur.

After more than a year, the SEBI has finally taken action on these orders. Unfortunately, the action does not appear to take the SEBI any further towards the resolution of the matter and thus, after nearly five years, the persons responsible for the scam still remain at large.