SEBI to Challenge Mumbai Court’s FIR Order in Corruption Case Against Former Chief Madhabi Puri Buch

A Special Anti-Corruption Court in Mumbai has directed the registration of a First Information Report (FIR) against senior officials of the Securities and Exchange Board of India (SEBI), including former Chairperson Madhabi Puri Buch, as well as the Bombay Stock Exchange (BSE). The order follows a petition filed by journalist Sapan Shrivastava, alleging large-scale stock market fraud and regulatory violations in the listing of a company.

Allegations of Market Manipulation and Regulatory Failures

The complaint accused SEBI officials of failing in their regulatory duties, facilitating market manipulation, and allowing the listing of a company that did not meet the prescribed norms. The petition further alleged collusion between SEBI and corporate entities, enabling insider trading and misappropriation of public funds post-listing. Named in the complaint were former SEBI Chairperson Madhabi Puri Buch, Whole Time Members Ashwani Bhatia, Ananth Narayan G, and Kamlesh Chandra Varshney, alongside BSE Chairman Pramod Agarwal and CEO Sundararaman Ramamurthy.

The court highlighted “The allegations disclose a cognizable offence, necessitating a fair and impartial probe”, While observing, “Considering the gravity of allegations, applicable laws, and settled legal precedents, this Court deems it appropriate to direct an investigation,” the court directed the ACB to submit a status report within 30 days.

The judge added, “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 and BSE Respond to Court Order

Following the court’s directive, SEBI issued a statement expressing, “The applicant is known to be a frivolous and habitual litigant, with previous applications being dismissed by the Court, with imposition of costs in some cases. SEBI would be initiating appropriate legal steps to challenge this order and remains committed to ensuring due regulatory compliance in all matters,” the Sebi statement read.

“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,” it added

Similarly, BSE released a statement asserting that “The named company, Cals Refineries Ltd, was listed at BSE in 1994. The officials named in the application were not in their respective positions at the time of listing and were not connected with the company at all. The application is frivolous and vexatious in nature,” the BSE statement read.

“The Honourable Court has allowed the application without issuing any notice or granting any opportunity to BSE to place the facts on record. BSE is initiating necessary and appropriate legal steps in this regard. As a responsible market institution, BSE remains committed to upholding regulatory compliance and ensuring transparency.”

Conclusion

The Mumbai court’s order to register an FIR against SEBI officials and BSE has sparked legal challenges from both institutions. While the allegations centre on regulatory failures and market misconduct, SEBI and BSE maintain that the claims are baseless and have vowed to pursue legal recourse. The investigation by the ACB will proceed, with a status report expected within a month.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.