SEBI gets SC nod to interrogate Ramalinga Raju

New Delhi, Feb 3 (PTI) India's market regulator SEBI
Tuesday secured the Supreme Court's nod to interrogate Satyam
Computer founder Ramalinga Raju and his brother Rama Raju for
three days from Wednesday in connection with the accounting
fraud in the firm.

A bench headed by Chief Justice K G Balakrishnan directed
the Superintendent of Chanchalguda central prison to allow
SEBI's investigating officer Sunil Kumar to question the Raju
brothers.

Securities and Exchange Board of India (SEBI) had since
January 8, the day after Ramalinga Raju disclosed a Rs 7,800
crore fraud in Satyam, been trying to quiz the two brothers.
But the Rajus were arrested by the state Criminal
Investigation Department (CID) police on January 9 and since
became inaccessible.

The regulator then approached a local court for permission
to interrogate the Rajus, but the plea was rejected on
technical grounds.

When hearing of its appeal in the Andhra Pradesh High
Court was repeatedly deferred, SEBI moved the apex court for
"urgent relief."

The Supreme Court Tuesday also said that Kumar will
intimate the jail authorities in advance as to who will be
accompanying him for the interrogation of the Raju brothers.

SEBI would be probing if there was any insider trading
angle to the fraud since Raju had disclosed falsifying profits
for years -- which would have helped inflate share prices.

Arguing on behalf of SEBI, Solicitor General G E Vahanvati
claimed interrogation and recording of statement was necessary
to verify facts as documents were going out of the country.

He clarified that the regulator was not seeking custody of
the Rajus, but only permission to quiz them.

The 6th Additional Chief Metropolitan Magistrate,
Hyderabad, had refused permission on the ground that SEBI was
not an investigating agency and there was no provision in law
under which it could interrogate the Raju brothers.

The Supreme Court today directed SEBI to also intimate the
jail authorities about the duration of the interrogation.

In its petition before the apex court, the regulator said
the high court should have seen that the Raju brothers cannot
use judicial custody as a shield to avoid probe by expert
agencies.

"The judge ought to have seen Section 167 (2) Criminal
Procedure Code which gives a magistrate power to authorise the
detention of the accused in such custody as he thinks fit,"
the petition filed through K J John and Co stated.

"He can grant a remand either to judicial custody or
custody of other agency like SEBI who are not police officers
if the circumstances require and permit them to record the
statements of the accused," the petition stated, adding that
SEBI has powers and obligations under the SEBI Act 1992 to
investigate, "but is being thwarted at every stage."

SEBI further said that just as police apply for custody,
any other agency can also apply for access or custody and the
same can be granted and the refusal to permit SEBI even to
record the statements of the accused while in the custody was
"arbitrary, unreasonable and perverse".

According to SEBI, merely because investigations by
different agencies like CID, Enforcement Directorate, Serious
Frauds Investigation Office, Registrar of Companies, etc may
overlap, it cannot be said that they cannot investigate
simultaneously pursuant to the power conferred on them under
their respective statutes. PTI IB
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