NSE Co-location: Lid on another Congress era scam?
Stock market and legal circles are agog with grapevine with regard to the 'reversal of stand' by market regulator SEBI in one of the biggest stock market scams post the Harshad Mehta and Ketan Parekh scandals. At a time when the incumbent SEBI chief Madhabi Puri Buch is under intense attack from the Congress party that has made several allegations of conflict of interest against her, the regulatory body she heads has 'reversed its stand' in the co-location trading case that partly dampends down a Congress era scam. In a nutshell, a recent order in the co-location matter passed by SEBI's current whole time member Kamlesh Varshney (a former income tax officer, who worked as Director, CBDT in 2006) has dropped the charges of collusion against NSE and its former top officials for the 'lack of evidence.' Opinion is divided on the way SEBI operates. There is a school of thought that says, instead of choosing to let the parties go to the court and fight the case and let a full time judge decide the case on merits, SEBI which is a quasi-judicial body, has overturned its own earlier order that had established Collusion - which makes legal experts wonder if SEBI's opinion in the matter depended on the regime and timing?
In 2010, the former SEBI board member and head of India's National Judicial Academy, G Mohan Gopal had made big revelations on internal operations of SEBI. He said there was a grave conflict of interest, when an order passed by a SEBI official was disposed-off by another Sebi official. Complimenting what Gopal said, J S Verma, another eminent jurist and former Chief Justice of India, too came in his support and said, “Sebi's action violated established legal and constitutional principles.” Even in the Supreme Court when a party goes for an appeal against any verdict, the same judge that had passed the order is also part of the review bench. And here, SEBI is a quasi-judicial body with the adjudicating officer lacking knowledge of a full time judge.
Gadkari's Gambit
Nagpur man Nitin Gadkari's tiff with the Gujarati duo of Prime Minister Narendra Modi and Home Minister Amit Shah is an old enough folklore in New Delhi's power circles and fodder for several media stories. But what may have suddenly emboldened Gadkari is the obvious fact that Modi-Shah this time could not take BJP comfortably past the majority mark to form the government at the center. Those who hold a disbelief in the leadership of Modi-Shah are now imagining that a crisis of confidence will emerge sometime in the near future (mostly if the Democrats, currently perceived to be anti-Modi, return to power in the US in November), leading to a purge within the BJP - there is also the story of the Maharashtrian-Gujarati regional conflict and the RSS power play but let us save that for some other day. Despite being in the same party and colleagues, Gadkari, like a disgruntled alliance partner or opposition, writes a letter to Finance Minister Nirmala Sitharaman to lower the GST on life and medical insurance premium, which is made public 'without his knowledge.' More than anything else, the leak may have contributed in building a negative public perception as to how the Modi administration was keeping the cost of life and health insurance high for the common man.
Then, his repeated meetings with UP Chief Minister Yogi Adityanath (around 5-6 times in quick succession some time in July and August). It is said that BJP faced a defeat this time in UP as candidates suggested by Yogi for the Lok Sabha elections in the state were rejected by the power centers in New Delhi. Hence, the UP strongman was disheartened and the party workers under him did not go all out to woo voters. Speculation regarding an internal strife between New Delhi and BJP's UP unit intensified after Yogi attributed the electoral reverses to "overconfidence." Maharashtra was another state where BJP lost one too many seats to the opposition and RSS had echoed similar sentiments like Yogi. While he already enjoys RSS support mainly due to his Nagpur roots, Gadkari may know that if he wants to play a larger role in New Delhi, he has to secure the backing of Yogisince UP has the largest number of Lok Sabha MPs and hence the back to back meetings with the state's most powerful CM in decades.
Some funny rumours are also with regard to Gadkari's remarks on diesel cars, where he in his public speeches has threatened the manufacturers of these cars with heavy taxes. Some research shows that petrol and diesel cars can be turned into hydrogen fuel operated cars. News reports also show that both Adani and Ambani, labelled by the opposition to be close to Modi-Shah, are working on low cost hydrogen fuel that could be a new revolution. But due to Gadkari's threat, what if people largely start disposing of their diesel cars before hydrogen fuel even becomes reality?
If all his moves were not enough, Gadkari recently revealed that some leader had approached him with an idea of PM's post, which he refused - is he actually indicating to Modi-Shah that there are leaders to support him for the PM post? Could this be Gadkari's Gambit as and when the opportunity arises?
How Speculators Watch The CAM Index For Adani Play
It is an open secret that CAM is close to Adani group since Gautam Adani's daughter-in-law Paridhi was born to lawyers Cyril Shroff (Managing Partner at Cyril Amarchand Mangaldas) and Vandana Shroff. Paridhi, a celebrated corporate lawyer, is the wife of Karan Adani, the endest son of Gautam Bhai. When Adani group acquired a majority stake in news media channel NDTV in 2022, CAM acted on the legal side on behalf of the Adani Group. Hence, speculators watch CAM's movement's for Adani play. This time, CAM is generating excitement about Jaiprakash (JP) Associates, a company undergoing debt resolution. Since CAM has been appointed as an advisor to the Committee of Creditors of JP Associates headed by State Bank Of India (SBI), speculators believe that Adani group may have an interest in JP Associates. Although the JP Associates stock is barred from trading till the debt resolution takes place, every move with regard to the company is being watched closely.
SBI, ICICI Bank and IDBI Bank hold the key to the JP Associates insolvency resolution with admitted claims of more than Rs 51,000 crore is one of the biggest cases since the Insolvency and Bankruptcy Code (IBC) came into force in 2016. Deloitte & Shardul Amarchand Mangaldas (SAM) won the mandate for JP Associates. Deloitte replaced PWC for the sale process. Lenders give approval to appoint SAM as legal advisor to RP Bhuvan Madan. SBI has admitted claims of Rs. 15,000 crores , ICICI of Rs. 9,200 crores, IDBI of Rs. 5700 crores followed by 30 other banks.
What is on the block: Cement Plants, Land around Yamuna E Way, 5 Star Hotels in Delhi, Noida, Mussoorie, Agra, EPC Business, Power Plants, BIG hospital in Noida and a formula-1 race track in Greater Noida.
Haste In Remuneration
Multi Commodity Exchange had put to shareholder vote a matter related to former MD's remuneration, which it said was subject to the outcome of a show cause notice (SCN) issued against him by market regulator SEBI. The SCN had become an issue after it was found that the exchange had awarded software contracts to a little known London based company in violation of norms and majority of the money was paid in advance but the software was not delivered to the satisfaction and was not usable. The MD was appointed in 2019 and his tenure ended on May 9, 2024. The remuneration committee of MCX on May 7, 2024 and board vide meeting on May 21, 2024 approved the payment of revised remuneration for FY 2022-23 and 2023-24, which they said was subject to outcome of SEBI's SCN. So what is amiss here? The details of the SCN are nowhere declared in the notice for voting to MCX shareholders. In the absence of this, how will the shareholders take an informed decision to vote against or in favour on a matter involving SEBI SCN and investigations? Why this hurry in passing such a resolution when the matter is pending before SEBI? Also, one of the reasons for SEBI not granting an extension to the MD is the pending SCN. In such a scenario, the exchange's push for a higher variable pay up to 25 to 50 percent of the gross to the MD for the past years and getting it approved via shareholder vote without giving them full details of SCN, is likely to come under SEBI scanner, exchange insiders worry.
High Command's Backing
In Maharashtra, there is a belief among BJP's opposition parties that the anti-incumbency factor against the current state government, may bring them back to power. Sensing the winds of change, a state politician from the opposition rank has acquired a 500 bed hospital and made his daughter, with no medical background, a key board member. One of India's leading advocates associated with the opposition parties has been instrumental in getting a sweet deal for the hospital from the debt recovery tribunal. The presence of the lawyer in a hospital deal for a (second rung) state leader indicates the backing of opposition high command, little bird says.
Disclosure: Gossip & Tales is a column on grapevine in the stock market, corporate and political circles.
