Madhabi Puri Buch, others get relief as Bombay HC stays Sessions Court's FIR order

The court granted this temporary relief until Tuesday, reported India Today.

A single-judge bench of Justice Shivkumar Dige issued the directive.

Solicitor General Tushar Mehta and senior advocate Amit Desai, appearing for SEBI and BSE officials, argued that the Sessions Court's directive was legally flawed as no notice had been issued to the officials named in the complaint before passing the order.

Justice Dige acknowledged their concerns and agreed to hear the matter on Tuesday, instructing the ACB not to proceed with any action until then.

Several high-profile officials, including former SEBI Chairperson Madhabi Puri Buch and Whole-Time Members Ashwani Bhatia, Ananth Narayan G, and Kamlesh Chandra Varshney, along with BSE Chairman Pramod Agarwal and CEO Sundararaman Ramamurthy, have individually filed petitions challenging the Sessions Court order.

What is the fraud case about?

The Sessions Court order stemmed from a complaint filed by Thane-based journalist Sapan Shrivastava, who alleged large-scale financial fraud in the listing of a company on the stock exchange.

He claimed that SEBI officials had neglected their regulatory duties, thereby facilitating market manipulation and corporate fraud.

According to the complaint, SEBI officials approved the listing of a company that did not meet regulatory standards, enabling fraudulent activities that resulted in investor losses.

It further alleged that SEBI colluded with corporate entities, engaged in insider trading, and allowed the siphoning of public funds post-listing.

Special Judge SE Bangar, after reviewing the complaint, found prima facie evidence of wrongdoing and ordered the ACB, Mumbai, to register an FIR under relevant provisions of the Indian Penal Code, the Prevention of Corruption Act, and the SEBI Act.

"The allegations disclose a cognisable offense, necessitating a fair and impartial probe," the court stated, adding, "There is prima facie evidence of regulatory lapses and collusion, requiring a fair and impartial probe. The inaction by law enforcement and SEBI necessitates judicial intervention."

SEBI, BSE dismiss claims as frivolous

SEBI, in response, dismissed the complaint, calling the petitioner a "frivolous and habitual litigant" whose previous pleas had been rejected, sometimes with penalties imposed.

The regulator also pointed out that the officials named in the complaint were not even in their respective positions when the alleged violations occurred.

BSE also issued a statement, clarifying that the complaint was linked to Cals Refineries Ltd., a company that was listed on the exchange in 1994.

It stated that the officials named in the FIR had no association with the company at the time of its listing. BSE termed the complaint "frivolous and vexatious."

With the Bombay High Court set to hear the petitions on Tuesday, the case remains a high-stakes legal battle over allegations of regulatory failures in India's financial markets.