In a significant development, a Parliamentary panel has found irregularities in appointment of IFCI chief Atul Kumar Rai and recommended a CBI probe that should also cover the "hierarchy" of the Department of Financial Services, then headed by current CAG Vinod Rai.

The Parliamentary Committee of Privileges found Atul Rai guilty of suppressing facts regarding his appointment in 2007 while it was examining a complaint of misbehaviour lodged by BJP MP Rajiv Pratap Rudy.

Also see: Vinod Rai 'censured' by RS panel

In its report tabled in the Rajya Sabha, the Committee headed by K Rahman Khan, said, "(Atul) Rai suppressed factual information pertaining to his appointment as CEO/MD of IFCI."

The Committee observed that Rai was a Director in the Ministry of Finance and was also nominated to the IFCI Board.

Rai, who belonged to Indian Economic Service, had taken voluntary retirement from February 28, 2007 citing personal and family grounds.

It said that Rai gave false declaration and suppresed vital information before taking up the IFCI job.

The Committee said it was, therefore, recommending that its observations relating to Rai's conduct "be given serious consideration and properly examined for a CBI probe in the whole matter by the government to find out the facts and fix responsibility at the higher level in the then hierarchy of officers in the Department of Financial Services."

The Department of Financial Services, under the Ministry of Finance, was then headed by Vinod Rai.

"The Committee... feels that a separate probe needs to be carried out to investigate the role played" by the then Secretary and Joint Secretary of the Department, it said.

Alleging that the appointment involved irregularities, the Committee said, "...all these facts (related to the appointment) point towards a definite collusive effort on the part of the Joint Secretary and the Secretary to accord undue favour to Shri (Atul) Rai."

The Committee said that it was "surprised to learn that contrary to the official guidelines, Rai's application for seeking permission to take up the job of IFCI CEO and MD was entertained when he was still in service.

"There were gross irregularities, by way of wrong interpretation of rules to give undue favour to Rai and that his application was not examined in the light of the relevant service rules," it said.

Atul Rai should have applied for taking up the IFCI job after his retirement but he applied for it before retirement, that too without Form 25, which is required under the relevant rules, the report said.

Pointing out that Rai made a "calculated move" and "got ample support from his superiors in the Department of Financial Services," the Committee said that the swiftness with which the file moved underscores the weightage given by officials concerned to the matter of Rai.