In a recent development that has captured the attention of India’s financial sector, the Bombay High Court has granted a temporary stay on a First Information Report (FIR) against Madhabi Puri Buch, the former Chairperson of the Securities and Exchange Board of India (SEBI), along with three SEBI officials and two executives from the Bombay Stock Exchange (BSE). The FIR order, originally mandated by a Special Court, has been put on hold until March 4, 2025.
This move by Justice Shivkumar Dighe comes in response to petitions filed against the Special Court’s order, which had instructed the Anti-Corruption Bureau (ACB) to probe alleged regulatory lapses and market manipulation tied to the 1994 listing of Cals Refineries Ltd. The accusations, raised by Sapan Shrivastava, a journalist, alleged that SEBI and BSE officials participated in fraudulent activities during the listing.
The Special Court’s directive was grounded on Section 156(3) of the Criminal Procedure Code, addressing the need for a thorough investigation under the Indian Penal Code and the Prevention of Corruption Act. The court emphasized the existence of prima facie evidence suggesting significant regulatory failures and collusion.
However, the allegations have been robustly challenged. SEBI, in a press release, defended Buch and the officials, clarifying that they were not in office during the scrutinized period and dismissing the claims as baseless. Similarly, BSE labeled the accusations as vexatious in a statement.
The legal tussle took a procedural turn when India’s Solicitor General, Tushar Mehta, representing Buch, argued before the High Court that the Special Court had not adhered to procedural norms, bypassing critical steps such as notifying the accused. Senior Advocate Amit Desai, advocating for the BSE officials, contended that the Special Court overstepped its bounds by mandating an investigation on non-PMLA statutes.
With the High Court’s interim order, SEBI emphasized its dedication to ensuring regulatory compliance. Meanwhile, Cals Refineries, which ceased trading in 2017, continues to be scrutinized for past listing irregularities.
For more details on this developing story, refer to the full article on JURIST.