SC issues notice in Chitra Ramakrishna's plea in against penalty in 'dark fiber' case

SC issues notice in Chitra Ramakrishna's appeal

Supreme Court on February 26 issued a notice in former National Stock Exchange (NSE) chief executive officer Chitra Ramakrishna's appeal against the Securities Appellate Tribunal (SAT) order upholding SEBI's penalty against her in the 'dark fiber' case.

A bench of SC comprising Justices Sanjiv Khanna and Dipankar Dutta further directed Ramakrishna to deposit 50 percent of the Rs. 25 lakh penalty to stay the operation of the SAT order. The case is now likely to come up for a hearing in March 2024.

The case pertains to a complaint received by the Securities Exchange Board of India (SEBI) in 2015 that alleged irregularities in certain brokers availing point-to-point (P2P) dark fiber connectivity from Sampark Infotainment, which was the service provider for NSE’s co-location servers.

In December 2023, the SAT partially set aside a Rs. 5 crore penalty imposed against Ramakrishna and reduced it to Rs. 25 lakh. The appellate tribunal found that Ramakrishna was negligent in her duties as the MD and CEO of NSE and failed to exercise due diligence at NSE to verify the license of Sampark and thus penalty can be imposed against her. According to SAT, Ramakrishna was indeed in violation of the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) regulation.

The SAT however found that a penalty of Rs. 5 crore was arbitrary and excessive, thus reducing it to Rs. 25 lakhs. Ramakrishna moved the apex court against the judgment.

In 2022, SEBI found 18 entities including Ramakrishna, NSE COO Anand Subramanian, and the NSE, guilty of collusion in the 2015 dark-fibre case. The market regulator imposed a cumulative penalty of Rs 43.8 crore on the 18 entities, with the NSE alone slapped a Rs 7-crore fine. NSE’s Chief Business Development Officer Ravi Varanasi was fined Rs 5 crore, while Ramakrishna was fined Rs 5 crore.

Subramanian, who along with Ramakrishna were being probed over alleged wrongdoings during their time at the country’s largest stock exchange, has been fined Rs 5 crore.  SEBI's order found that brokerages like Way2Wealth and GKN Securities benefitted from preferential access to the NSE facility in collusion with the stock exchange and its employees.

Meanwhile, the Supreme Court is expected to hear all the cases about co-location scams in March 2024, this case is likely to be heard then.