Today, On 4th March, The Bombay High Court stayed the order directing the registration of an FIR against former SEBI chief Madhabi Buch and two others. Justice SG Dige granted the relief after they challenged the directive in court. The case involves allegations that prompted legal scrutiny of regulatory decisions. The stay provides temporary relief as the matter undergoes further judicial review.
Mumbai: The Bombay High Court on Tuesday stayed a special court’s order to register a first information report (FIR) against former Securities and Exchange Board of India (SEBI) Chairperson Madhabi Puri Buch and several other SEBI and Bombay Stock Exchange (BSE) officials in connection with a listing fraud case.
The Court was addressing a challenge to the special court’s directive for the Anti-Corruption Bureau (ACB) to file an FIR against Buch and five others concerning alleged irregularities in a 1994 company listing on the BSE.
Single-judge Justice SG Dige granted relief after Buch and two others contested the order.
The High Court ruled,
“The complainant seeks time to file a reply. After hearing all parties, it appears that the judge passed the order mechanically, without going into details and without attributing any role to the applicants. Hence, the order is stayed,”
The special court also ordered FIRs against SEBI’s whole-time members Ashwani Bhatia, Ananth Narayan G, and Kamlesh Chandra Varshney, as well as BSE officials Pramod Agarwal and Sundararaman Ramamurthy.
This order was issued on March 1 by Judge Shashikant Eknathrao Bangar following a complaint from Sapan Shrivastava, a reporter from Dombivli.
Shrivastava alleged collusion among SEBI officials to facilitate the company’s listing in 1994 without ensuring compliance with regulatory norms. He claimed that multiple complaints to SEBI and law enforcement had been ignored, prompting judicial intervention.
The complaint alleged that the accused officials failed to enforce critical provisions of the SEBI Act, 1992, and related regulations, leading to market manipulation and defrauding investors. It also accused them of violating the Prevention of Corruption Act by neglecting their regulatory duties.
Judge Bangar noted that the allegations “prima facie” indicated a cognizable offense, necessitating further investigation, and directed the ACB to file an FIR and submit a status report within 30 days.
During the hearing of Buch’s plea, Solicitor General Tushar Mehta, representing the SEBI officials, argued that the complainant had a history of filing frivolous cases and had been fined for such actions in the past.
He stated,
“In essence, this two-paragraph complaint pertains to an IPO granted by SEBI in 1994. All parties are current members… There was a complete lack of application of mind in the judgments.”
Senior Advocate Amit Desai, representing BSE officials, described the allegations as baseless and scandalous, asserting that the complaint amounted to an attack on the BSE. He pointed out that the regulations allegedly violated did not come into effect until 2002.
Desai argued,
“What is the offense? Where is the cheating? Who was defrauded? The learned judge has not addressed these questions… The complainant’s claims are a charade of communication.”
He emphasized that government sanction is required before prosecuting officials for actions taken in the discharge of their duties, criticizing the special court’s order as fundamentally flawed.
Advocate Sudeep Pasbola, representing Buch, contested the claim that no action was taken against Cals Refinery, stating,
“SEBI has taken numerous actions against Cals Refinery. SEBI is a market regulator, and they intervene when violations occur.”
He also noted that the accused officials assumed their roles after 2023.