The Supreme Court on Tuesday upheld the sanction for the prosecution of former National Stock Exchange (NSE) managing director and CEO Chitra Ramakrishna under the Prevention of Corruption Act. A bench of Justices JB Pardiwala and K Vinod Chandran dismissed her challenge to a Delhi High Court order that had allowed her prosecution, while permitting her to raise before the trial court the question of whether she performed a public duty and could be considered a public servant under the law.

The case against Ramakrishna stems from allegations of financial irregularities related to the compensation of former NSE employee Anand Subramanian. The Securities and Exchange Board of India (SEBI) issued a Feb 11 order accusing her of facilitating a system that enabled certain brokers to gain preferential access to the exchange’s servers between 2010 and 2014. The Central Bureau of Investigation (CBI) has charged her under the Prevention of Corruption Act and the Indian Penal Code, alleging she shared information about server switching times and facilitated access to less-crowded servers for certain brokers.

Ramakrishna argued that her role as NSE’s managing director and CEO was confined to managing business and corporate governance, and that the NSE, being a private entity, could not be considered a public authority. She also claimed the NSE board lacked the authority to sanction her prosecution, as shareholders were the proper body to remove her from her position. The Centre opposed her challenge, asserting that her role had a significant bearing on public interest and financial markets, thereby constituting a public duty.

The Delhi High Court had previously ruled that the NSE performs a public duty due to its role in the economy and financial markets, and that Ramakrishna, as its managing director, could not be entirely separated from the functions of the exchange. The court rejected her plea to quash the sanction, stating that whether she was in charge of day-to-day operations and policy decisions would be determined through evidence at trial.

The co-location controversy emerged in 2015 after a whistleblower alleged that some NSE members obtained early access to the exchange’s trading system due to their servers being located on the exchange’s premises. SEBI investigated the matter, leading to the CBI registering a case in 2018. The charge was that co-location allowed certain brokers to gain pricing information ahead of others, enabling them to front-run the markets.

The CBI’s chargesheet, filed in 2022, also accused Ramakrishna of arbitrarily appointing Subramanian and repeatedly increasing his remuneration without the approval of the NSE’s nomination and remuneration committee. The court’s decision to allow her to argue whether her role constituted a public duty reflects the ongoing legal debate over the scope of the Prevention of Corruption Act and the definition of a public servant. What remains unclear is the full extent of her alleged misconduct and the outcome of the trial.