Mumbai: In a relief to former Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch and others, the Bombay High Court on Monday directed the Anti-Corruption Bureau (ACB) not to act on the order of the special court.
Justice S.G. Dige granted relief to Buch, three current Whole Time Members of SEBI, and two officials of the BSE while hearing an appeal by them challenging the order of the special ACB court directing the agency to register a case against them in a listing fraud case.
The matter is likely to be heard on Tuesday.
Solicitor General Tushar Mehta appeared for the SEBI officials implicated in the case, while Senior Advocate Amit Desai represented the two BSE officials allegedly involved.
About The Case
The case pertains to allegations of financial fraud and regulatory violations concerning the listing of a company on the Bombay Stock Exchange in 1994.
On March 1, Special Judge Shashikant Eknathrao Bangar directed the ACB to register an FIR against Buch, the current Whole Time Members of SEBI—Ashwani Bhatia, Ananth Narayan G, and Kamlesh Chandra Varshney—and two officials from the BSE—Pramod Agarwal and Sundararaman Ramamurthy. The court also called for a status report on the probe within 30 days.
The order was passed on an application by Sapan Shrivastava, a reporter from Dombivli, who alleged irregularities in granting listing permission to a company on the BSE in 1994 without complying with the provisions of the SEBI Act, 1992, the SEBI (ICDR) Regulations, 2018, and the SEBI (LODR) Regulations, 2015.
It was alleged that SEBI officials, including Buch and several Whole Time Members, failed to exercise their regulatory duties, allowing the company to list despite not meeting the necessary compliance norms. The complainant also claimed that the accused engaged in market manipulation, insider trading, and artificial inflation of share prices, thereby defrauding investors and violating the Prevention of Corruption Act.
The complaint further stated that despite multiple complaints to both SEBI and the police, no action was taken.
The special court noted that the allegations in the complaint prima facie disclosed a cognizable offense and required further investigation, considering the inaction by law enforcement agencies and SEBI.
SEBI had issued a statement asserting that it would initiate appropriate legal steps to challenge the special court’s order and remains committed to ensuring due regulatory compliance in all matters.
“Even though these officials were not holding their respective positions at the relevant point in time, the court allowed the application without issuing any notice or granting any opportunity to SEBI to place the facts on record,” SEBI stated.