HC stays order to register FIR against ex-Sebi chief Madhabi Puri Buch, 5 others

A single-judge bench of justice SG Dige asked Maharashtra’s Anti-Corruption Bureau (ACB) to not act on the order until March 4, when the case will be heard by the high court

MUMBAI: The Bombay high court on Monday temporarily stayed a special court’s order directing a First Information Report (FIR) to be registered against former Securities and Exchange Board of India (Sebi) chairperson Madhabi Puri Buch and five others for alleged financial fraud, regulatory violations and corruption.

Former Securities and Exchange Board of India chairperson Madhabi Puri Buch and five others were accused of financial fraud, regulatory violations and corruption. (PTI)

A single-judge bench of justice SG Dige asked Maharashtra’s Anti-Corruption Bureau (ACB) to not act on the order until March 4, when the case will be heard by the high court. This was after Buch and five other senior Sebi and Bombay Stock Exchange (BSE) officials mentioned in the special court’s March 1 order approached the high court on Monday to quash it.

Solicitor general Tushar Mehta, who represented Buch and Sebi whole-time members Ashwani Bhatia, Ananth Narayan G, and Kamlesh Chandra Varshney, and senior advocate Amit Desai, representing BSE chairperson Pramod Agarwal and chief executive Sundararaman Ramamurthy, mentioned the matter for urgent hearing at the high court.

Their pleas challenged the order passed by a special court designated under the Prevention of Money Laundering Act, stating it was arbitrary and legally unsustainable. They also claimed they had neither received a legal notice nor been given a chance to be heard before the order was passed.

The special court’s order was based on a complaint filed by Sapan Shrivastava, a Thane-based journalist, who alleged that Sebi permitted a certain company’s listing on the BSE in 1994 even though it failed to meet regulatory conditions under the Sebi Act, 1992.

According to the complaint, the alleged fraudulent listing took place with the active connivance of regulatory authorities, particularly Sebi, which facilitated market manipulation and enabled corporate fraud. This highlighted the failure of Sebi officials in carrying out their statutory duty, it added.

The complainant submitted documents that revealed alleged procedural lapses and non-compliance in the company’s IPO process, leading to an irregular listing. He further highlighted regulatory filings and stock market reports, indicating artificial inflation of share prices and market manipulation.

To be sure, trading in shares of the company in question, Cals Refineries, was suspended in August 2017. Neither Buch nor the whole-time members were with Sebi at the time.

The order, passed by special judge Shashikant Eknathrao Bangar on March 1, stated that the allegations disclosed a cognisable offence, necessitating an investigation. Upon reviewing the material on record, he directed ACB to register an FIR against the six officials under relevant provisions of the Indian Penal Code, Prevention of Corruption Act, Sebi Act and other applicable laws. The judge also directed a status report to be submitted within 30 days.

This is not the first time Buch, India’s first female Sebi chief, has been under fire. Last year, she was accused by the now-defunct US-based short-seller Hindenburg of alleged conflict of interest due to undisclosed investments in offshore entities linked to the Adani Group. Buch has denied the allegations, saying the investments were made before she was appointed Sebi chief and that she had made the necessary disclosures.