The Bombay High Court (HC) directed the state’s anti-corruption bureau (ACB) on Monday against acting on the order of the ACB special court, which had ordered the filing of an FIR against former Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch, three current whole-time members of the SEBI, as well as two officials of the Bombay Stock Exchange (BSE).
The court acted after Buch, along with three whole-time SEBI directors Ashwani Bhatia, Ananth Narayan G, and Kamlesh Chandra Varshney, as well as two senior BSE officials, Pramod Agarwal and Sundararaman Ramamurthy, approached it, seeking to quash a special ACB court’s order directing the police to register an FIR against them about an alleged fraudulent stock listing.
The matter was mentioned for urgent hearing in the HC on Monday before a single-judge bench of Justice S G Dige. The case will now be heard on Tuesday, March 4, until when the ACB has been directed not to file any FIR against the accused officials.
The matter pertains to alleged irregularities in granting listing permission to a company called Cals Refineries Ltd on the BSE in 1994. The charges relate to the fraudulent listing of Cals Refineries Ltd in 1994, allegedly involving SEBI officials, without adhering to compliance requirements under the SEBI Act, 1992. The complainant had alleged that SEBI officials neglected their statutory duty, facilitated market manipulation, and enabled corporate fraud by allowing the listing of a company which did not meet regulatory norms.
Solicitor General Tushar Mehta represented Buch and the SEBI officials, while senior advocate Amit Desai appeared on behalf of BSE’s former chairman Pramod Agarwal as well as BSE managing director and chief executive officer Sundararaman Ramamurthy.
The ACB court in Worli, Mumbai, had issued the order after an application made by litigant Sapan Shrivastava, a journalist from Dombivli in Thane district, which alleged fraudulent listing of Cals Refineries on the BSE with the active connivance of SEBI officials. Shrivastava had sought an FIR registration and an investigation into alleged large-scale financial fraud, regulatory violations, and corruption.
In a detailed order dated March 1, special ACB court judge Shashikant Eknathrao Bangar stated, “The allegations disclose a cognisable offence, necessitating an investigation. There is prima facie evidence of regulatory lapses and collusion, requiring a fair and impartial probe. The inaction by law enforcement and SEBI necessitates judicial intervention under Section 156(3) Criminal Procedure Code.”
Incidentally, the ACB court had issued its order to file an FIR just two days after Buch completed her tenure as SEBI chairperson.
After the ACB Court order, the SEBI issued a statement on Sunday that the officials were not holding their respective positions at the time and that the court had allowed the application without issuing any notice or granting SEBI an opportunity to place the facts on record.
The SEBI’s statement supported Buch, calling the complainant Sapan Shrivastava “a frivolous and habitual litigant”, alleging that his previous applications had been dismissed by the court, with costs imposed in some cases.
The SEBI also stated that it would initiate legal proceedings to challenge the order, asserting that it “remains committed to ensuring due regulatory compliance in all matters.”