ARUN KUMAR AGRAWAL versus UNION OF INDIA & ORS.

Citation: [2014] 3 S.C.R. 861 · Decided: 01-11-2013 · Supreme Court of India · Bench: S.S. NIJJAR · Disposal: Dismissed
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Judgment (excerpt)

[2014} 3 S.C.R. 861 
ARUN KUMAR AGRAWAL 
v. 
UNION OF INDIA & ORS. 
(Writ Petition (Civil) No. 374 of 2012) 
NOVEMBER 01, 2013 
[SURINDER SINGH NIJJAR AND 
PINAKI CHANDRA GHOSE, JJ] 
CONSTITUTION OF IND/A, 1950: 
Art.32 - Writ petition challenging appointment of 
Chairman, SEBI - Held: Section 4(5) of SEBI Act inter alia 
stipulates that Chairman and other Members of SEBI shall 
A 
B 
c 
be persons of "ability, integrity and standing who have shown 
capacity in dealing with problems relating to securities market" 0 
- Thus, statutorily, a person cannot be appointed as 
Chairman/Member of SEBI unless he or she is a person of 
high integrity - Therefore, selection and appointment of 
Chairman, SEBI could be challenged before Supreme Court 
in a writ petition under Art. 32 of the Constitution on the 
E 
ground that he does not satisfy the statutory requirements of 
a person of high integrity - Securities and Exchange BoarrJ 
of India Act, 1992 - s. 4(5). 
SECURITIES AND EXCHANGE BOARD OF /NOIA 
ACT, 1992: 
F 
s.4(5) - Appointment of Chairman of SEBI - Challenged 
on the ground of integrity, ma/a fides, conspiracy etc. - Held: 
SEBI is an institution of high integrity -- The functions 
performed by it are such that any malfunctioning in G 
performance of such functions can disturb economy of the 
country - Therefore, only persons of high integrity would be 
eligible to be appointed as Chairman/Member of SEBI - This 
is imperative - There is no substance in the alleged 
861 
H 
862 
SUPREME COURT REPORTS 
[2014] 3 S.C.R. 
A irregularities regarding deputation of fourth respondent, the 
alleged misstatement/non-disclosure about his pay scale/ 
sanctioned emoluments as disclosed -- There is nothing 
which would render him a person of not high integrity - SEBI 
(Terms and Conditions of Service and Members) Rules, 1992 
B - r.3(5) -- /AS Cadre Rules - rr.6(2)(i) and 6(2)(ii). 
Appointment of Chairman, SEBI - Allegation of ma/a fide 
- Held: If the a/legations of ma/a fide are established, it would 
vitiate the selection procedure, recommendation and 
C appointment of fourth respondent as Chairman, SEBI - But, 
burden of proving the allegations of ma/a fide. would lie very 
heavily on petitioner - It was incumbent on petitioner not only 
to make specific allegations, but also to produce very strong 
evidence to lead to a clear conclusion that the selection was 
actuated by ma/a fide - Petitioner has not made out a case 
D of ma/a fide to vitiate the selection process and appointment 
of fourth respondent as Chairman, SEBI. 
Appointment of Chairman, SEBI - Allegation of 
conspiracy - Held: The charge of conspiracy has to be taken 
E seriously as it involves commission of very serious criminal 
offence uls 120-B, /PC - Such a charge of criminal intent and 
conduct had to be clearly pleaded and established by 
evidence of very high degree of probative value - No notice 
of such allegations can be taken based only on pure 
F conjectures, speculations and interpretation of notings in the 
official files -Appointment of fourth respondent is strictly in 
conformity with the procedure prescribed - Petitioner has not 
placed on record any material to establish that any 
conspiracy was hatched to ensure the selection of fourth 
G respondent as Chairman, SEBI - All India Services (Death-
cum-Retirement Benefits) Rules, 1958 - rr.16 and 26. 
PUBLIC INTEREST LIT/GA TION: 
Writ petition challenging appointment of Chairman, SEBI 
H - Held: In the instant case, petitioner has unjustifiably attacked 
ARUN KUMAR AGRAWAL v. UNION OF INDIA & 
863 
ORS. 
integrity of the entire selection process - The petition does not A 
satisfy the test of utmost good faith which is required to 
maintain public interest litigation -- On facts, petitioner could 
not justify invoking the jurisdiction of the Court under Art. 32. 
The instant writ petition was filed by the petitioner 8 
purporting to be in public interest, challenging the 
appointment of respondent no. 4 as Chairman of the 
Securities Exchange Board of India (SEBI) on the 
grounds: (a) that respondent no. 4 failed to fulfill one of 
the eligibility condition as laid down in sub-s. (5) of s.4 C 
of the Securities and Exchange Board of India Act, 1992 
(SEBI Act), as well as the qualification contained in 
Government communication, which required that the 
Chairman should be a person of high integrity; (b) that 
appointment of respondent No.4 was the result of 
manipulation, misrepresentation and supp
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