Bombay HC stays FIR against ex-Sebi chief Madhabi Puri Buch, others

The order was passed by a single bench of Justice Shivkumar Dige, who noted that the special court's order of March 1 was passed mechanically, without going into the details

The Bombay High Court on Tuesday ordered a stay for four weeks a special court order seeking a First Information Report (FIR) against former Securities and Exchange Board of India (Sebi) chief Madhabi Puri Buch and five others for alleged stock market fraud and regulatory violations.

 

The court stated that the "order was passed mechanically." The case pertains to the 1994 Cals Refineries stock listing fraud case.

 

On March 3, Buch and three whole-time directors of Sebi-Ashwani Bhatia, Ananth Narayan G, and Kamlesh Chandra Varshney—and two senior BSE officials, Pramod Agarwal, and Sundararaman Ramamurthy, moved the Bombay High Court, seeking to quash an order passed by a special court of the Anti-Corruption Bureau (ACB), which directed the police to register an FIR against them.

 

 

The order was passed by a single bench of Justice Shivkumar Dige, who noted that the special court's March 1 order was passed mechanically without going into the details. He further said that it was passed without attributing any specific role to the persons accused. 

 

The court said that the special court's order seeking an FIR was passed on the complaint filed by Sapan Shrivastava, a media reporter, who sought investigation into the alleged offence committed by the accused.

 

"Hence, the order is stayed till the next date. Four weeks is given to the complainant in the case (Sapan Shrivastava) to file his affidavit in reply to the petitions," the high court noted. 

What did the complaint allege?

According to a Bar and Bench report, these officials from Sebi and BSE failed to enforce key provisions of the Sebi Act 1992, as well as the Sebi (Issue of Capital and Disclosure Requirements) Regulations, 2018, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The complaint also alleged that Sebi's inaction helped in the listing, despite non-compliance, which led to insider trading, market manipulation, and artificial inflation of share prices.

Sebi terms allegations 'frivolous'

Following the ACB court order, Sebi came out in support of Buch and issued a statement, calling the complainant a "frivolous and habitual litigant."

 

The regulator further said that it would initiate legal proceedings to challenge the order and asserted that "it remains committed to ensuring due regulatory compliance in all matters."