Manohar Lal Sharma knocked on the doors of the Delhi High Court today, only to be unceremoniously sent away.
Sharma had filed a petition seeking the curtailment of the powers of the Council of Ministers under Article 74, 75 and 78 of the Constitution.
He had also sought a direction to file an FIR against Finance Minister Arun Jaitley for a press statement made by Jaitley regarding a SIT investigation report.
Arguing before a Division Bench of Justices BD Ahmed and Sanjeev Sachdeva, Sharma said that black money ‘siphoned by politicians through Caribbean Islands’ was floating as Participatory Notes in India and as per law, P-Notes should be ceased from circulation.
“More than 300 Lakh Crores have been invested by way of participatory notes in the country. This is black money of politicians. If anybody can prove it is not black money, Lordships can dispose my petition and am willing to pay costs.”
Highlighting the fact that P-notes needed KYC registration under the Rules made by FEMA, Sharma said that these P notes were circulating in the market with the direction of the Finance Ministry, thereby justifying his prayer of seeking a direction from the Court to file an FIR against Jaitley under the Prevention of Money Laundering Act.
Refuting all of Sharma’s arguments, ASG Sanjay Jain submitted that P-notes were now being described as offshore derivative instruments (ODI) and there existed a regulatory regime to handle these transactions.
“Firstly, if you’re a Foreign Institutional Investor (FII), you need to register so you are in a regulated regime in any case. Secondly, that foreign investor should also hail from a country that has a regulator of their securities market. So the KYC norms have to be complied with, in the relevant foreign country in accordance with the regulations of that country. ODI issued outside India is also regulated outside India.”
Commenting on Sharma’s contentions against Jaitley, Jain submitted:
“His prayer is inherently misconceived and cannot be granted at all. How can a press release be ultra-vires the Constitution? There is no policy direction. So what is wrong in a Minister saying that before I answer your question, I will examine the issue?
This petition must be dismissed with exemplary costs. His statement in the petition that no provision has been made by the Parliament to regulate P-Notes, is wrong. All that SIT is saying is that there should be a stricter regime of regulating P-Notes in India.”
While the Bench had accorded a patient hearing yesterday to the issue and adjourned it so as to enable Sharma to provide certain clarifications over his petition, today it was in no mood to entertain ‘vague facts.’ Justice BD Ahmed stated,
“The Minister has not said that he will not take any action despite the SIT report. We do not even know if he actually made the statement because it is based on a news report. Even assuming that he said that, all he has said is we wont take any knee jerk action. You show us one rule which says that FIIs should have KYC requirements for their investors….
….the P-Note is not an illegal instrument. So the foundation of your petition itself goes. Point out a particular transaction and we will take action. Statements made by the SIT are not statements made in court of law. It means nothing.”
Rebuking Sharma’s manner of imputing allegations, the Bench further went on to say,
“You come with a concrete case and we will take action. But you bring us facts and not innuendos.”
An emboldened Sharma commented that he will be ‘back’ with facts with the Bench dismissing this petition and observing that it was abundantly clear from relevant provisions of the SEBI Act, P-Notes by themselves were not illegal and were regulated in the manner prescribed under said Regulations.
“If there are any deviations from the regulations, it is well within the power of SEBI to take corrective action and the very premise on which writ petition is founded does not exist…
…insofar as the newspaper report is concerned, it indicated that the SIT setup by the Supreme Court has suggested stricter norms for P-Notes. The Finance Minister has only stated that he would not take “any knee jerk action” with regard to stipulating/not stipulating any norms stricter than what are already in place under the said SEBI Regulations. This does not give the Petitioner any cause for filing the present petition and seeking the reliefs he has sought.”