Fraud Case: SEBI To Challenge Mumbai Court Order Against Former Chief, Others

Bombay Stock Exchange officials

The Securities and Exchange Board of India has announced its decision to contest a directive issued by a Mumbai special court, which mandates the filing of a FIR against former SEBI Chairperson Madhabi Puri Buch, 3 current Whole Time Members, and 2 Bombay Stock Exchange officials.

The court’s order stems from allegations of financial misconduct, regulatory non-compliance, and corruption.

In an official statement, SEBI reaffirmed its commitment to upholding regulatory compliance, stating, “SEBI would be initiating appropriate legal steps to challenge this order and remains committed to ensuring due regulatory compliance in all matters.”

The regulator contends that the court’s directive was issued without providing an opportunity for SEBI to present relevant legal and factual arguments.

The case originated from a petition filed by Sapan Shrivastava, a Thane-based legal journalist, before the Special Anti-Corruption Bureau (ACB) Court in Mumbai. Shrivastava sought judicial intervention to direct law enforcement agencies to investigate what he alleges to be large-scale financial fraud and regulatory negligence.

More Into The Case

At the core of the allegations is the listing of Cals Refineries Ltd. on the stock exchange, which the complainant claims was facilitated through regulatory collusion. He asserts that SEBI officials failed in their statutory duties by authorizing the listing of a company that did not meet regulatory requirements, thereby enabling market manipulation and corporate misconduct.

In response, SEBI underscored that the implicated officials were not in office at the time of the alleged infractions.

“Even though these officials were not holding their respective positions at the relevant point of time, the court allowed the application without issuing any notice or granting any opportunity to SEBI to place the facts on record,” the regulator argued.

The allegations pertain to events dating back to 1994, with SEBI clarifying that the petitioner’s claims focus on alleged procedural lapses in approving a company’s listing on the Bombay Stock Exchange. The complaint references purported violations of the SEBI Act, 1992, the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

After assessing the available evidence, the court determined that the allegations warranted further inquiry.

Consequently, the Anti-Corruption Bureau (ACB), Worli, Mumbai, has been directed to register an FIR under relevant provisions of the Indian Penal Code (IPC), the Prevention of Corruption Act, the SEBI Act, and other applicable statutes.

Additionally, the court has assumed supervisory jurisdiction over the investigation and has mandated the submission of a status report within 30 days.

SEBI has strongly criticized the complainant, describing him as a “frivolous and habitual” litigant, citing past instances where his legal actions were dismissed, some with judicially imposed penalties. The regulator maintains that the allegations are unfounded and lack substantive legal merit.