Whenever the Government brings up such amendments, there should be a comprehensive and total outlook of the whole issue. We are now having electronic transfer of shares also. Therefore, when there is an amendment, there should be a total outlook, the entirety should be taken into account and a comprehensive Bill should be brought which is modern as we expect, as the Western countries expect or any other foreign investor expects.
There should be a total comprehensive Act. There should not be tailoring and stitching here and there which give a beggary look of the Act also. The people cannot accept this type of amendments.
Regarding the second amendment, the hon. Finance Minister said that we are delegating the powers. Actually, delegation is towards the Government Secretaries who are sitting as Members in the SEBI. There should a provision that it should be occupied by a judicial member. A sitting judge who is not at the command of the Government should be a Member of the SEBI and the Appellate Authority should have a person who is a sitting Member in the Bench. Nowadays, this type of tribunals is occupied by retired people who are just hankering for that particular post. When a Secretary is going to retire, he is seeking for some other appointment. There are ten lakh lawyers on the road. There are many persons who are experts in company law. We should create a separate body which is specialised in company law. After five or ten years of practice, they should be appointed in SEBI or the Appellate Tribunal. A person who is practising law and also specialising in a particular field, especially in company law, should be appointed. Masters degrees are coming up. They are doing research also. Such people are not accommodated. Only the Secretary who has come as an IAS officer is again appointed here. He is omnipotent and knows everything about the trend of law. Many writ petitions are coming and that is why, the courts are interfering in each and every aspect. Therefore, I request that lawyers should be accommodated in SEBI and also in bodies like the Appellate Tribunals which are having this type of arbitrated appointments. There should be a proper position for a practising lawyer who has got expert knowledge in the field.
Finally, I would like to submit that there are many summer resorts and land dealings. I do not want to mention any particular company. Certain companies are coming forward to purchase lands from poor agriculturists for small amounts and are selling them at large bidding. This type of a thing should be taken into consideration. Actually, they are not giving or showing any correct amounts. They are transferring it as black money. This type of transferring lands in the name of the company and getting protection through SEBI and other things should be inquired into properly. Purchasing of lands and summer resorts, giving one month's rotation, taking away the money and declaring one fine morning that the Managing Director has escaped and his property is attached and such things should be restricted. The aggressive nature of certain people is to get the Companies Act into their hands. They exploit poor people considering that the poor people could not understand what is free market. They are afraid that free market is only exploitation and is only for blackmarketeers. These types of things should be taken into consideration by the hon. Finance Minister. It should be clearly shown to the public that we will be adamant in this field and see that these things will not be repeated.
SHRI VARKALA RADHAKRISHNAN (CHIRAYINKIL): Sir, I oppose these two Acts. These Acts were examined by the Standing Committee on Finance in the Twelfth Lok Sabha. At that time, I had pointed out certain irregularities which had crept into the Act. I had difference of opinion about the overriding provision that is given. The words, `Notwithstanding anything contained in any other Act, contracts in derivatives as per this Act shall be legal and valid' have been included. How far will it stand the judicial scrutiny is a matter which has to be seen. You cannot include everything in this Act. Moreover, you have not defined the derivative as such. The Act only tells that derivative includes such and such things without straightaway telling what is exactly the derivative. We were dealing with money transactions which were defined within the purview of the law. But here is a matter where were are dealing with especially collective investments.
Now, Mr. Minister, when we take the definition of "collective investment", we will come to very wrong conclusions. The term "collective investment scheme" means any scheme or arrangement which satisfies the "Any scheme or arrangement which satisfies the conditions referred to in sub-section (2) shall be a collective investment scheme."
What is this collective investment scheme? It will not come within the purview of the proposed Act. The cooperative societies are also conducting and transacting business. They are also collecting money. But they are excluded the Bill which says:
"Notwithstanding anything contained in section (2), the following transactions or the following materials will not come within the purview of this section."
In that, you have said: "made or offered by a cooperative society registered under the Cooperative Societies Act, 1912..." The point is that is not a collective investment scheme as per the present provision. Then, the Insurance Act is also excluded. You have also excluded the Provident Fund Miscellaneous Provisions Act, 1952. So, all these were excluded. Then, what is exactly the meaning of "collective investment?" By "collective investment", we mean without any mutual understanding or without any definition or undergoing any bye-law. What you say is "the contributions, or payments made by investors, by whatever name called, are pooled and utilized solely for the purposes of the scheme or arrangement." The important point is that individuals can join together to make any arrangement and make any proposal. Under what provision of law is it done? How can you define those arrangements and collective investment without any a definition and bringing in all those acts within the purview of the law? I do not think it will stand the judicial scrutiny. So, Section 11A as such and and Section 11 sub-clause (3) are contradictory in many ways. That is why, we oppose this Bill.
Then, I come to the second provision. As per the existing Act, the Government can give directions. The Government can frame rules and the Government can even entertain appeals from the Appellate Tribunals. Now, those powers are taken away and given to a new body, the Appellate Tribunal. The Government is having no power. As far as this provision is concerned, the Government is retaining no power to give direction in matters concerning money transactions. This is a matter which I cannot agree to. So, my opposition is mainly because of this. The Government should retain some powers to control these bodies.
Sir, they say that they are entering into an area where there is privatisation and tax research. In that case, if you entrust the entire thing to a body constituted under the provisions of this Bill without reserving any power for the Government, it looks absurd and, at the same time, it is dangerous to all. That is the main reason for which I oppose this Bill.
Then, you have made an amendment whereby the powers of the courts are taken away through this proposed Act. That is evident. Section 22E says:
"No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Securities Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority..."
Why should it be so? Whenever there is some irregularity in a money transaction, why should the common citizen be asked to go to the High Court? Let him take the matter to the civil court. Why should you debar the citizens? Also, in the High Courts, petitions or cases are accumulating day by day. Our judicial system itself is facing a crisis. At this time, you are making a statute by which further accumulation will be the result.
And there will be no end of the matter. So, I would like to ask the Government as to why the courts are debarred from entertaining matters under this Act. What is the necessity? Let the civil court decide. Why should you ask the citizen to go to the High Court to file a petition in such matters? So, I would urge upon the Government to do away with this provision. Whenever there is any grievance, let the court decide it. After all, when it is a money matter, why should they refuse justice at the lower level? So, I oppose this Bill on that ground also.
Moreover, even the appeal to the High Court is also there only in a limited sense, not in the correct perspective. So, the Bill itself is defective and it cannot be supported. At the same time, in future we will have to face very serious irregularities in money matters. So, I oppose these two Bills on these grounds.
Sir, this is a very important legislation. Unfortunately, we were not given sufficient time to discuss this legislation in the House. Hereafter, I would request that we should be given more time to discuss such legislations concerning money matters. So, I would urge upon the Speaker to give us more time in such cases, in future.
With these words, I conclude.
MR. DEPUTY-SPEAKER: Dr. Raghuvansh Prasad Singh - Not present.
Now, Shri Priya Ranjan Dasmunshi.
SHRI PRIYA RANJAN DASMUNSHI (RAIGANJ): Sir, I am not speaking.
MR. DEPUTY-SPEAKER: Shri Rupchand Pal.
SHRI RUPCHAND PAL (HOOGLY): Mr. Deputy-Speaker, Sir, I rise to oppose both the Bills. My first objection is based on the reality and I would like to know whether the capital market in our country is equipped enough to undertake derivatives. I had occasions to interact with very important people related to the capital market and they are of the opinion that till today, the situation with regard to the capital market is not such as may warrant permitting trading in derivatives. Once, I had an occasion to ask the Head of the S.E.B.I. whether he has enough teeth to control the unscrupulous operators in the capital market. His reply was that he has no such teeth and he was toothless. We have witnessed this kind of a situation not only during the days of the securities' scam but also in the subsequent days. Even very recently, the well-known operator, who was operating during the days of the securities' scam, was operating and three very well-known companies like Starlight, Videocon, B.P.L., etc., are there in the market. We had asked the Head of the S.E.B.I. as to what steps he has taken to stop the unscrupulous operators who had been rigging the market in various ways. The reply was that as a regulator, he had hardly any strength in his apparatus, both physical as well as legal, to control these operators.
Sir, we have, of course, seen the very distressing spectacle of more than 5,000 companies literally vanishing in the air after taking the small investors' money. Here, it is being said that this is brought forward in order to protect the small investors.
Since the days of securities scam, we have been trying again and again to draw the attention of the Government to what is happening in the capital market. We were told at a point of time by the great leader of reforms in our country, Dr. Manmohan Singh: "I cannot lose my sleep over what is happening in the capital market." A Joint Committee was set up. They had gone into the details of what had happened. Till today, there is only one bank. I can give you any number of instances. Rupees seven hundred crore are due from a particular foreign bank. They have bluntly stated, "We are not ready to pay it." Is the RBI having enough strength to control the situation? No. They cannot control the foreign banks. SEBI cannot control the unscrupulous operations. In such a situation, they are going to start shedding in derivatives.
There is a reference to the plantation companies' investment schemes and all these things. At one point, they are quoting: "Because of the sagging capital market, derivatives will be necessary." At another time, the Minister said, "We have already matured enough to undertake derivatives." These are both contradictory. At that point of time, when the Standing Committee have been suggesting all these things, they have been referring to the capital market as a sagging market. Now, what is happening? It has never happened in the world that even though a near-war situation has developed after the Kargil war, we witnessed that even in such a situation, the sensex was going up and up and up. It has never happened in the world. Out of several issues, you would find only five. It is related to information technology, pharmaceutical company, certain banks and a fast-moving consumer goods concern - Hindustan Lever. Five or six companies are there. Take the examples of steel sector, oil sector and many more.
Of course, in the public sector, there has been an encouraging response. But in respect of most other well-known reputed companies, who several times wanted to have access to the foreign market for capital mobilisation, they have also been failing miserably. That is the situation in the capital market. The sensex is artificial. I can tell you that on any day, it is just like a balloon. It will be pinpricked. We shall be nowhere. What are these foreign institutional investors doing?
After experience of the East Asian countries, after the experience of the Asian tigers, we have not learnt anything that they are indulging in unscrupulous speculation. Whenever we need money, they are withdrawing it. We are playing to the tune of the foreign investors.
If these things are allowed in such a manner, a point will come when we shall be in a situation when not only our currency but our whole economy will also be in jeopardy. I have repeatedly been asking one question that you are globalising. We are speaking in terms of global standards and many more things. We have been on line. We do have a national stock exchange. Even after that, can the Minister of Finance assure us that there is enough transparency in the operations? No. They have been encouraged to cover up. The SEBI is daily giving opportunities to unscrupulous operators to have their own way.
There is hardly any transparency, leave alone global standard. By any standard, there is no transparency at all and the unscrupulous operators are free to loot the public money to deprive the small investors of their valuable savings.
I am objecting these two Bills. I am just clubbing together the arguments also as these two Bills have been clubbed together.
Now I come to plantation companies. Till today they have been ruining the savings of the common people and the small investors. This Government and the previous Congress Government have been just on-lookers. I charge this Government also that they are in the full knowledge of what is happening but they have been hand in glove with these unscrupulous operators, those who are looting money. I can cite a number of examples. I can give you the names of important people who are associated with it. Till today there is a deep association, close association of very important people belonging to that side with these unscrupulous operators. I can name them. I can give any number of instances as to what is happening. Now what should they do? What has happened? You were there. I am talking about the securities scam. ... (Interruptions)
SHRI SOMNATH CHATTERJEE (BOLPUR): Who will investigate? ... (Interruptions)
SHRI RUPCHAND PAL : The Joint Parliamentary Committee gave certain recommendations. India is unfortunately one of the most corrupt countries considered by the Transparency International. ... (Interruptions)
THE MINISTER OF FINANCE (SHRI YASHWANT SINHA): Why are you quoting the imperialist organisation? ... (Interruptions)
SHRI RUPCHAND PAL : That is okay. They are your friends. ... (Interruptions)
DR. NITISH SENGUPTA : China is the most corrupt country. ... (Interruptions)
SHRI SOMNATH CHATTERJEE : Would you object to our quoting the World Bank report also? ... (Interruptions)
SHRI RUPCHAND PAL : We find that corruption is rewarded. ... (Interruptions)
SHRI SOMNATH CHATTERJEE : Dr. Sengupta is very happy and proud that China is the most corrupt country and we are second. What are you talking? ... (Interruptions)
MR. DEPUTY-SPEAKER: Order please.
SHRI RUPCHAND PAL : We can have a discussion on that. ... (Interruptions)
MR. DEPUTY-SPEAKER: Let there be a discussion on these two Bills now.
SHRI RUPCHAND PAL : Now, corruption is taking place in respect of telecom and in respect of sugar. What has happened very recently can be taken up on that occasion only. I am now confining only to these two Bills.
MR. DEPUTY-SPEAKER: That is exactly I want you to do. ... (Interruptions)
SHRI RUPCHAND PAL : The Joint Parliamentary Committee on Securities Scam was chaired by Shri Ram Niwas Mirdha, as far as I remember. He was the Chairman of that Committee and unanimous report had been given to the Government saying that these were the culprits, who had been ruining the capital market, they had done this and that; these were the foreign banks, nationalised banks, the financial institutions and these were the culprits. After a long time, we found that one or two people were picked up and apparently punished. Some huge claim was made in respect of some individual that his income tax was due more than Rs.5,000 crore. But the same person was called to deliver his observation, deliver his speech about the Budget on the Television, Government-controlled Television. Both the people from this side and that side were friendly. On that side, when Dr. Manmohan Singh was sitting, he refused to lose his sleep over the happenings in the capital market. When you are sitting now, you are bringing these derivatives. ... (Interruptions)
SHRI SOMNATH CHATTERJEE : They are two sides of the same coin. ... (Interruptions)
SHRI RUPCHAND PAL : Yes, they are two sides of the same coin.