In a huge relief for former SEBI chief Madhabi Buch, the Bombay High Court Today (March 3) directed the Maharashtra ACB not to act on an order passed by the Mumbai Sessions Court, which directed it to register an FIR against her and other SEBI officials.
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Mumbai: The Bombay High Court on Monday told the Maharashtra Anti-Corruption Bureau (ACB) that it should not take any action on the order given by the Mumbai Sessions Court.
This order had asked the ACB to register an FIR against some former officials of the Securities and Exchange Board of India (SEBI) and the Bombay Stock Exchange (BSE).
However, the High Court said that the ACB must wait until Tuesday before doing anything.
A bench led by Justice Shivkumar Dige issued this directive following an urgent mention by Solicitor General Tushar Mehta and senior advocate Amit Desai regarding certain petitions that were in the process of being filed on Monday morning.
Mehta and Desai, representing various officials from the Securities and Exchange Board of India (SEBI) and the Bombay Stock Exchange (BSE), contended that the order issued by the Sessions Court was legally untenable.
They argued that the respondents—officials who had been named in the complaints—were not even served with a notice before the order was passed.
According to them, this procedural lapse rendered the Sessions Court’s decision fundamentally flawed and necessitated immediate judicial intervention.
BACKGROUND
Former SEBI Chairperson Madhabi Puri Buch, along with three current whole-time directors Ashwani Bhatia, Ananth Narayan G, and Kamlesh Chandra Varshney approached the Bombay High Court earlier today.
They seeked to quash a Mumbai special court’s order directing the Anti-Corruption Bureau (ACB) to register an FIR against them in connection with a 1994 listing fraud case.
The case was brought before Justice SG Dige.
Solicitor General Tushar Mehta represented the SEBI officials involved in the matter.
Earlier, SEBI has decided to challenge the court’s order to file an FIR against its former chief and officials. The board argues that the case is based on a weak petition and that the court did not hear its side. SEBI insists that the allegations are not strong enough for such action. It plans to contest the order legally.
Senior Advocate Amit Desai represented the two officials from the Bombay Stock Exchange (BSE) involved in the case related to allegations of financial fraud and regulatory violations concerning a company’s listing on the BSE in 1994.
In addition to Madhabi Puri Buch, special judge Shashikant Eknathrao Bangar ordered the filing of a first information report (FIR) against three current whole-time directors of SEBI Ashwani Bhatia, Ananth Narayan G, and Kamlesh Chandra Varshney as well as two BSE officials, Pramod Agarwal and Sundararaman Ramamurthy.
A status report on the investigation is expected within the next 30 days.
The order stemmed from an application filed by Sapan Shrivastava, a reporter from Dombivali, who requested an investigation into alleged irregularities surrounding the company’s listing, which he claimed was facilitated by top SEBI officials.
The complainant asserted that the listing was conducted without compliance with the SEBI Act, 1992, and relevant regulations such as the SEBI (ICDR) Regulations, 2018, and the SEBI (LODR) Regulations, 2015.
Despite filing multiple complaints with both SEBI and the police, the complainant alleged that no action had been taken. The allegations included claims that SEBI officials, including Buch and several whole-time members, neglected their regulatory responsibilities, allowing the company to list without meeting necessary compliance standards.
The complainant also accused the defendants of engaging in market manipulation, insider trading, and artificially inflating share prices, thereby defrauding investors and violating the Prevention of Corruption Act.
The court noted that the allegations “prima facie” indicated a cognizable offense requiring further investigation, given the inaction by law enforcement and SEBI.
Judge Bangar stated,
“The inaction by law enforcement and SEBI necessitates judicial intervention under Section 156(3) CrPC,”
Madhabi Puri Buch, who became the first woman to lead the markets regulator, completed her three-year tenure on March 1.
During her time, she made notable advancements in areas such as quicker settlements in equities, improved disclosures for foreign portfolio investors, and increased mutual fund participation through a Rs 250 SIP initiative. However, her last year in office was marked by controversy.
The officials against whom the court has ordered the filing of First Information Reports include BSE Managing Director and CEO Sundararaman Ramamurthy, former chairman and public interest director Pramod Agarwal, and SEBI’s whole-time members Ashwani Bhatia, Ananth Narayan G, and Kamlesh Chandra Varshney.
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