The Bombay High Court on Monday directed Maharashtra's Anti-Corruption Bureau (ACB) not to proceed until March 4 with the registration of an FIR against former Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch and five other officials. The case pertains to allegations of stock market fraud and regulatory violations dating back to 1994.
Urgent Pleas Filed Against Special Court Order
Buch, along with Bombay Stock Exchange (BSE) Managing Director Sundararaman Ramamurthy and four others, approached the High Court seeking to quash a special court order issued on March 1, which directed the ACB to file an FIR against them. The special court had ordered the probe based on allegations of fraud related to the listing of a company on the BSE nearly three decades ago.Justice S.G. Dige's single bench agreed to urgently hear the matter on Tuesday (March 4), orally instructing the ACB not to take any action in the interim.
Allegations of Fraudulent Listing and Regulatory Failures
The special court's order followed a complaint filed by media reporter Sapan Shrivastava. Shrivastava accused the former SEBI officials and others of significant financial fraud, regulatory violations, and corruption. The core allegation involved the purported fraudulent listing of a company on the BSE in 1994, reportedly enabled by regulatory authorities without proper adherence to the SEBI Act, 1992.Special court judge S.E. Bangar, while passing the order, noted there appeared to be prima facie evidence of regulatory lapses and collusion, necessitating a thorough investigation. The special court also said it would monitor the probe, asking the ACB to submit a status report within 30 days.
Arguments Against Special Court Order by SEBI and BSE Officials
In their petitions before the High Court, Buch and the others argued that the special court order was "manifestly erroneous," "patently illegal," and issued "without jurisdiction." They highlighted that Shrivastava, the complainant, failed to substantiate his allegations with concrete evidence.“At the relevant point of time, there was no requirement for obtaining a No-Objection Certificate (NOC) from SEBI for listing shares on the BSE," the pleas contended. They further argued that no liability could legally fall on SEBI officials since they were not in their respective positions at the time of the alleged misconduct.
The petitions also pointed out procedural errors, asserting that the special court had neither issued notices nor heard their arguments before passing the order, which amounted to a violation of natural justice.
Additionally, the pleas criticized Shrivastava as a habitual complainant, alleging that he had previously initiated multiple "vexatious proceedings."
Representation and Statements
During the hearing, Solicitor General Tushar Mehta represented three current whole-time SEBI directors—Ashwani Bhatia, Ananth Narayan G, and Kamlesh Chandra Varshney. Senior advocate Amit Desai appeared on behalf of BSE MD Sundararaman Ramamurthy and former BSE Chairman Pramod Agarwal.In response to the developments, SEBI stated that it would pursue appropriate legal remedies against the special court's order. The regulator emphasized its commitment to regulatory compliance, highlighting that the accused officials were not even serving in their current positions at the time of the alleged offenses.
The Bombay Stock Exchange labeled the application against its officials as "frivolous and vexatious," reinforcing its stand against the allegations.
The High Court's decision on Tuesday will determine the next steps in this high-profile legal battle involving prominent figures in India's financial markets.
