The Bombay High Court granted relief to former Securities & Exchange Board of India (SEBI) chief Madhabi Puri Buch on Tuesday by staying a special Anti-Corruption Bureau (ACB) court’s order directing a First Information Report (FIR) to be filed against her for alleged stock market fraud and regulatory violations.
A single bench headed by Justice Shivkumar Dige said the ACB special court order of March 1 was passed “mechanically” without going into details and without attributing any specific role to the accused.
The HC’s judgement came after petitions filed by Buch, three present whole-time SEBI directors namely Ashwani Bhatia, Ananth Narayan G and Kamlesh Chandra Varshney, BSE Managing Director and Chief Executive Officer Sundararaman Ramamurthy as well as its former chairman and public interest director Pramod Agarwal, sought quashing of an order passed by the ACB special court directing the ACB to register an FIR against them pertaining to allegations of fraud committed in 1994, while listing a company called Cals Refineries Ltd on the BSE.
After hearing the arguments by Solicitor General Tushar Mehta and senior advocates Amit Desai and Sudeep Pasbola, as well as complainant Sapan Shrivastava, Justice Dige stayed the ACB special court’s order, saying that the same was “mechanical.”
“After hearing all the counsels and perusing the impugned order, it appears that the special judge passed the order mechanically without going into details and without giving opportunity to the respondents to file their say. Hence, the order is stayed till the next date. Time of four weeks has been given to the complainant in the case, Sapan Shrivastava, to file his affidavit replying to the petitions submitted by defendants,” Justice Dige said.
Earlier, while arguing for SEBI whole-time member Ashwani Bhatia, his lawyer SG Mehta told the bench that the ACB special judge had failed to apply his mind especially to the fact that the petitioners were present office bearers, while the alleged listing of the company Cals Refineries Ltd took place way back in 1994, which is before 30 years.
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 that did not meet regulatory norms.
Earlier, the ACB court in Worli, Mumbai, issued the order after an application made by litigant Sapan Shrivastava, a journalist from Dombivli in Thane district, 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, SEBI issued a statement on Sunday that the officials were not in their respective positions at the time and that the ACB court had allowed the application without issuing any notice or granting SEBI an opportunity to place the facts on record.
The SEBI statement had 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.