New Delhi’s special CBI court reprimanded the investigative agency for its delay in probing the co-location case and termed market regulator SEBI as too soft on the accused. In an order that rejected the anticipatory bail of NSE’s former MD and CEO Chitra Ramkrishna, the court said that even after four years of registering FIR, the CBI had failed in reaching the beneficiaries of the scam. CBI told the court that there were many facets of the investigations which have to be excavated after removing the dust of time over them.

“CBI is most lackadaisical to say the least; as no action seems to have been taken against main beneficiaries of the present co-location scam, (the names of some of whom are mentioned in the RC/FIR of 2018 itself) and others for almost four full years, who seems to be enjoying merrily at the expense of common citizenry for the reasons best known,” CBI special judge Sanjeev Aggarwal, said.

The order mentions that “SEBI despite being capital market watch dog has been too kind and gentle qua the accused persons in the present FIR.

Chitra Ramkrishna is likely to be the most high profile arrest in the matter by the CBI after the court rejected her anticipatory bail. CBI has sought Ramkrishna’s custody to confront her with another accused Anand Subramanian whom they have already arrested from Chennai. Subramanian was Ramkrishna’s confidant and she appointed him as NSE group chief operating officer.

Ramkrishna’s lawyers had argued that she belongs to a reputed family and is a chartered accountant by profession, a leader in financial sector and stock market fora. They also said that she was one of the only few female individuals at the helm of NSE who had become a global leader and won many awards including the CNBC Business Leader award.

The CBI argued that she was very influential in dealing with the affairs related to NSE and has remained evasive on the major issues related to the crime. She is thus required to be examined in detail on all the aspects that have come to fore in the course of investigation including the facts revealed in the forensic audits of the co-location carried out by the various agencies. Therefore, it is stated that the application moved by the applicant / accused for grant of anticipatory bail be dismissed.

‘Evasive responses’

CBI stated that Ramkrishna was examined for three days and did not give proper responses and in order to extract the actual facts, services of a senior forensic psychologist of CFSL, CBI, New Delhi was also utilized. The senior forensic psychologist CFSL, CBI, New Delhi has observed that the applicant has been evasive in her responses. She has always attributed the knowledge regarding the matters to her lower functionaries. The magnitude of the present case may be huge, as due to this financial skulduggery huge loss may have been caused to adherent stockbrokers, institutional investors, foreign institutional investors and honest investors, whose faith in this premier financial institution i.e. NSE may have been severely shaken and dented, CBI said. 

CBI has also linked Subramanian’s appointment at NSE with the co-location scam. “Subramanian was appointed without following due process at very exorbitant salary, prima facie shows that all of them may have been acting in tandem with each other in carrying out or in furtherance of the objectives of the co-location scam,” CBI said.

Inherent flaws

CBI’s probe moves around the fact that NSE’s co-location trading infrastructure had deliberate flaws and the investigations have revealed that Muralidharan Natarajan, the CTO of NSETECH (a subsidiary of NSE), who was responsible for putting in place the colocation architecture at NSE was directly reporting to Ramkrishna. 

The Court observed that prima facie this kind of co-location swindle could not have been possible without the knowledge and active connivance of all the functional heads of the NSE at the relevant time, this period can be considered as dark period in the history of NSE. ”

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