The Delhi High Court has directed the SEBI and the Reserve Bank of India (RBI) to expedite their investigation into the alleged fraudulent activities of Axis Bank Limited in the purchase and sale of shares of Max Life Insurance Company Limited. The court dismissed former Rajya Sabha member Subramanian Swamy’s plea to constitute a committee to probe the allegations.
Swamy had alleged that Max Financial Services and Mitsui Sumitomo International had transferred Max Life shares to Axis Bank at a lower market value, which were later purchased at a much higher price. “We had filed a criminal complaint in the Delhi High Court alleging that Axis Bank had wrongfully purchased shares of Max Health Insurance Company at a lower price and then sold them at a higher price, making a profit, which is against banking norms and is illegal,” Swamy said.
The IRDA had already imposed a fine of Rs 20 crore on Axis Bank and Rs 30 crore on Max Life and the matter has been referred to the RBI and SEBI for appropriate action. The SEBI informed the court that it had initiated a preliminary inquiry into the matter and had forwarded Swamy’s letter to the RBI for appropriate action.
Swamy had also filed an affidavit alleging a conflict of interest on the part of the SEBI chairman, who was earlier an additional director and director of Max Healthcare Institute Limited. “The SEBI chairman had a professional relationship with the Max group in the past, which raises questions about his ability to take an impartial decision in this case,” Swamy said.
The court, however, observed that Swamy had not included the SEBI chairman as a party in the case. “Even if the SEBI chairman had a prior professional relationship with the Max group, that should not prevent SEBI from taking action as per the rules,” the court said. “If the final decision is influenced by the alleged prior professional relationships of the SEBI chairman, Swamy can again approach the court.”
Swamy warned that if SEBI fails to take action, he will again approach the court. “Axis Bank’s core business is to provide loans and pay interest on deposits, but it is indulging in wrong practices to make money. Such banks should be closed down,” Swamy said. “The government should also recover the money earned through such wrong practices.”
The court also noted that if SEBI fails to take action, Swamy can file a criminal complaint. “We have told the court that if SEBI fails to take action, we will file a criminal complaint,” Swamy said. The court dismissed former Rajya Sabha member Subramanian Swamy’s plea to constitute a committee to probe the allegations.
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