Mumbai: The Bombay high court on Thursday dismissed a petition that challenged the Securities and Exchange Board of India’s (Sebi) policy of hiring some of its executive directors (EDs) from outside the organization.
The February 2016 petition, filed by the Sebi Employee Association representing 650 employees, said that hiring outside candidates instead of promoting Sebi officials, impacts employee morale and violates regulations. Mint has seen a copy of the petition.
Justices S.C. Dharmadhikari and Burgess Colabawalla ruled that Sebi has the power to recruit from outside Sebi and that the petition had failed to bring out the grievances.
The court order comes at a time when the Sebi board needs to finalize appointments for the posts of two executive directors (EDs) which have been vacant for at least two months.
At Sebi, there are eight posts of ED, the highest post to which its officials can be promoted. Candidates to higher posts of whole-time members and the Sebi chairman are chosen by the finance ministry.
Of the eight executive director posts, four are considered to be non-cadre. This means for these posts, Sebi does not need to choose from within the existing pool of its officials. According to the rules, Sebi can appoint officials on deputation to these four posts “where no suitable candidate is available in the board’s service”. Sebi has often used this provision to hire outside candidates.
A Sebi spokesperson could not immediately be contacted.
“The judgment did not go into all the aspects of the petition, we may approach a higher court,” said a Sebi official, who did not want to be identified. A second Sebi official, also on condition of anonymity, said it is disheartening when Sebi doesn’t trust its own employees and needs to hire from outside.
“We don’t like this approach, as at the end of the day, it is our organization. But, it is the lack of professional growth that is forcing us to resort to the legal route,” he said.
R.K. Padmanabhan, an officer from the Indian Police Service (IPS) who was heading the market intermediaries regulation and supervision department at Sebi, stepped down in September last year and Gyan Bhushan, an officer from the Indian Economic Services, who headed the surveillance department, left in October. Sebi has issued advertisements for these two posts.
Mint reported on 5 January that Sebi has already finalized two candidates for the post. Both are likely from outside Sebi and officers from the Bihar cadre.