Former Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch, along with Bombay Stock Exchange (BSE) Managing Director Sundararaman Ramamurthy and four other officials, filed pleas before the Bombay High Court on Monday, seeking to quash a special court's order directing the registration of a First Information Report (FIR) against them. The FIR stems from allegations of stock market fraud and regulatory violations.
The pleas were presented before a single bench of Justice S.G. Dige for an urgent hearing. Justice Dige scheduled the matter for a hearing on Tuesday and issued an interim order. The court directed that, until the matter is heard, the state Anti-Corruption Bureau (ACB), which had been tasked with investigating the case, should not act on the special court’s March 1 directive.
The legal team representing the petitioners includes Solicitor General Tushar Mehta, who appeared for Buch and three current SEBI directors – Ashwani Bhatia, Ananth Narayan G, and Kamlesh Chandra Varshney. Senior counsel Amit Desai represented BSE MD Sundararaman Ramamurthy, as well as former BSE chairman and public interest director Pramod Agarwal.
The petitioners argue that the special court’s order, which directs the ACB to investigate, is both "illegal" and "arbitrary."
Special Court's Order
The special court’s order followed a complaint filed by media reporter Sapan Shrivastava, who alleged large-scale financial fraud, regulatory lapses, and corruption related to the fraudulent listing of a company on the Bombay Stock Exchange (BSE) in 1994. According to the special court, there was prima facie evidence of regulatory lapses and possible collusion among authorities, necessitating a thorough and impartial investigation.Judge Shashikant Eknathrao Bangar, presiding over the special ACB court, directed that the Anti-Corruption Bureau monitor the investigation and submit a status report within 30 days.
The allegations in question center around the alleged fraudulent listing of a company on the stock exchange in 1994. The complaint contends that the listing was done with the active involvement of regulatory authorities, including SEBI, without complying with the provisions of the SEBI Act, 1992, and its associated rules and regulations.
SEBI's Response
In response to the court's order, SEBI issued a statement on Sunday, confirming that it would take appropriate legal steps to challenge the special court's decision. The market regulator emphasized its commitment to ensuring regulatory compliance in all financial matters.SEBI further highlighted that the special court's order for an FIR to be registered was made despite the fact that many of the officials named were not in their current positions at the time of the alleged violations.
BSE's Stand
The Bombay Stock Exchange also weighed in, labeling the complaint as "frivolous and vexatious." The BSE maintained that the allegations lacked merit and were without foundation.As the legal proceedings unfold, the case continues to attract attention due to its potential impact on both the regulatory framework of the Indian securities market and the credibility of those involved.
Key Points:
- Former SEBI Chairperson, BSE MD, and four other officials seek to quash FIR.
- Bombay High Court to hear pleas on March 4, 2025.
- Special court directed the ACB to probe alleged stock market fraud and regulatory violations dating back to 1994.
- SEBI and BSE contest the accusations, with SEBI planning legal action.
