Bombay HC halts probe against ex-Sebi chief Buch, others

The Bombay high court has directed the Maharashtra Anti-Corruption Bureau (ACB) not to act on an order passed by a Mumbai sessions court seeking registration of a first information report (FIR) against past and current officials of market regulator Sebi and Bombay Stock Exchange Ltd.

A single-judge bench of justice Shivkumar Dige issued the directive on Monday after Solicitor General Tushar Mehta and senior counsel Amit Desai filed petitions seeking to quash the 1 March order by the special court.

Mehta and Desai, representing the Sebi and BSE members, said the special court’s order was legally unsustainable as the respondents–officials named in the complaints–had not even been issued a notice.

Justice Dige agreed to hear the petitions on Tuesday, directing the ACB not to act until then.

Former Sebi chairperson Madhabi Puri Buch, current whole-time members Ashwani Bhatia, Ananth Narayan G., and Kamlesh Chandra Varshney, along with BSE chairman Pramod Agarwal and CEO Sundararaman Ramamurthy, individually filed petitions before the high court.

The local court passed an order, directing the registration of an FIR on a complaint filed by Thane-based journalist Sapan Shrivastava, who alleged large-scale financial fraud and graft in the listing of a firm on the stock exchange.

The complainant said Sebi officials failed in their statutory duty, “facilitated market manipulation, and enabled corporate fraud by allowing the listing of a company that did not meet regulatory norms.”

Finding prima facie evidence of wrongdoing, special judge S.E. Bangar had directed ACB, Mumbai, to register the FIR under various laws, including Prevention of Corruption Act, and the Sebi Act.

In a statement, Sebi called the complainant “a frivolous and habitual litigant,” whose earlier pleas had been dismissed by the court, sometimes imposing costs.

The regulator said the officials named in the court’s order were not even holding their respective positions at the time the alleged violations occurred.

BSE Ltd also issued a statement, clarifying that the complaint was centered around a company named Cals Refineries Ltd, which got listed in 1994.

Buch, the first woman to lead Sebi, had assumed office in March 2022. Her tenure witnessed scrutiny over the market regulator’s handling of the Adani Group allegations raised by Hindenburg Research and internal complaints about workplace culture.

BSE, terming the complaint frivolous and vexatious, said that the officials named in the complaint were not in their respective positions at the time of listing and had no connection with the company.