Lord, bless us but invest not - Court denies deities right to open demat accounts
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- Published 17.07.10
|Not in share shrine|
Mumbai, July 16: The gods cannot play the stock markets.
That’s the upshot of a verdict handed down today by Bombay High Court which threw out a petition seeking to open demat trading accounts in the names of Lord Ganesh — the popular god of wealth and prosperity — and four avatars of lesser deities.
The petition was moved by a Sangli-based private religious trust named Ganpati Panchayatam Sansthan. The other four deities are Chintamaneshwardev, Chintamaneshwaridevi, Suryanarayandev and Laxminarayandev.
The trust had contended that if the deities could be granted PAN cards — a key tax-filing requirement for the large assets that temples and trusts own in the name of the ruling deities — they could not be barred from trading on the bourses. A PAN card is a basic requirement for opening a demat account.
The National Securities Depository Ltd (NSDL) had rejected the private religious trust’s request to open demat accounts in the name of the deities, sparking the unusual case where the gods — or at least the mortals who manage their considerable assets — started showing an undue interest in playing the markets.
“Trading in shares on the stock markets requires certain skills and expertise and to expect this from deities would not be proper,” said Justice P.B. Majumdar and Rajendra Sawant while tossing out the petition that challenged NSDL’s refusal to open demat accounts in the names of the five deities.
The trust, which belongs to the Patwardhan family (the former royals from Sangli), had obtained PAN cards in the names of the deities in 2008. They reckoned that trading on the local stock markets — which saw the sensex yield 76 per cent returns in calendar year 2009 — would be a breeze for the gods.
The trust had applied for the five demat accounts in the names of the deities through a private bank.
In its petition, the trust maintained that verdicts handed down by the Supreme Court and several high courts had upheld the right of deities to own property.
Uday Varunjkar, the counsel for the trust, said that shares, debentures and mutual fund units were also regarded as property under income-tax laws and, therefore, the deities could not be barred from placing their celestial bets on stocks.
NSDL chose to rely on a legal quibble to fob off the Patwardhans and their pantheon of deities.
S. Ganesh, a senior officer of NSLD, filed an affidavit in court saying only deities of registered public trusts could acquire property.
He argued that the Sangli-based trust was a private religious trust that was not registered under the Bombay Public Trust Act. Therefore, it could not acquire property in the name of the deities.
The NSDL official said private trusts could own or acquire property, including shares and debentures, in the name of trustees but not in the name of gods.
It is not known whether the deity of any public trust has ever applied for a demat account to trade in shares.
To open a demat account, the prospective account holder needs to show proof of identity (passport, driving licence, ID card issued by a central or state government, membership of professional bodies or credit cards), proof of address, passport size photograph and a copy of the PAN card.
It is not known how many of these documents the trust was able to submit along with its application for opening demat accounts on behalf of the gods.
A couple of years ago, NSDL was sucked into a controversy when it was accused of conniving with several banks and unscrupulous people to open bogus accounts to help certain people corner share allotments arising from initial public offerings (IPOs).
The racket was unearthed in 2005 and had run unchecked for two years. Over 40,000 fake demat accounts had been opened by the banks and the two depositories — NSDL and Central Depository Services (India) Ltd.
Both depositories were indicted in two interim reports that were produced during former Sebi chairman M. Damodaran’s tenure. NSDL was cleared of all charges after C.B. Bhave took over as Sebi chairman.