Former managing director of Central Depository Services B G Daga, who allegedly played a role in the Calcutta Stock Exchange payment crisis of 2001, has demanded a compensation of Rs 1 crore (Rs 10 million) from the country's largest shares depository participant. Earlier last month, a division bench of the Bombay high court held that the allegations made against Daga were baseless.
Raut Vijay, the current managing director of CDSL, said, "We have received the letter from Daga. The board would go through the entire matter and decide accordingly."
Prior to joining CDSL in November 2001, Daga was the executive director (business development) at Unit Trust of India (UTI) during the CSE payment crisis. Broker Ketan Parekh made huge share purchases through his associates before March 2001, with CSE-listed DSQ Software being a favourite.
But he failed to provide funds amounting to over Rs 150 crore (Rs 1.5 billion). This led to a huge payment crisis and affected the share prices across the country. An internal inquiry of UTI found Daga guilty and he was subsequently removed from his CDSL post. UTI also purchased the shares of DSQ Software.
The SS Tarapore committee appointed by the government in October 2001 had indicated UTI's involvement in the CSE payment crisis. The Tarapore panel pointed out that UTI's investment decision in the technology company was a violation of its mandate and against the interests of the unit holders.
An internal inquiry conducted by UTI after Daga joined CDSL also proved his involvement in the investment decision vis-a-vis DSQ Software.
UTI accordingly advised the three sponsors of CDSL-State Bank of India, Bank of Baroda and Bank of India-to convene an extraordinary general meeting and pass a resolution to remove Daga.
Following his removal from CDSL, Daga filed a writ petition in the Bombay high court and asked the parties to prove their allegations.
The court disposed off the petition, observing that Daga was neither called for any inquiry nor asked to respond to the allegations. The court noted that the allegations levelled against him were the prima facie view of the inquiry report's author and should not be considered as a stigma on Daga's career.
Talking to Business Standard, Daga said, "I was removed from CDSL in violation of the working contract. As per my estimates CDSL would have to pay me at least Rs 1 crore as my remuneration and other charges. I would initiate legal action and claim huge damages if they fail to settle my claim."