MUMBAI: The Bombay High Court has directed the state’s anti-corruption bureau (ACB) not to act on the order of the special court to file FIRs against Madhabi Puri-Buch, the former Sebi chairperson, three current whole-time members of the regulator, and two top officials of the BSE. The court has posted the matter for further hearing on March 4.
Puri-Buch, Sebi and the BSE moved the high court earlier in the day on Monday, seeking urgent hearing before and a single-judge bench of justice SG Dige, who directed the ACB not to act on the lower court order of filing FIRs if she hears the matter on Tuesday.
Solicitor General Tushar Mehta represented Buch and Sebi officials, while a senior counsel appeared fro BSE’s former chairman Pramod Agarwal and managing director and chief executive Sundararaman Ramamurthy.
The matter pertains to alleged irregularities in granting listing permission to Cals Refineries on the BSE way back in 1994. The petitioner, Sapan Shrivastava, had alleged fraudulent listing of Cals Refineries with the active connivance of regulatory authorities.
Last Saturday—just a day after Puri-Buch demitted office—ACB court judge SE Bangar ordered filing of FIRs against Puri-Buch, three of the four whole-time members of Sebi--Ashwani Bhatia, Ananth Narayan G, and Kamlesh Chandra Varshney--, along with a former BSE chairman Pramod Agarwal and the present BSE chief executive Sundararaman Ramamurthy for allegedly colluding with the promoters of Cals Refineries during its listing in 1994.
The little-known Bengal firm was banned by the Sebi in 2017 for alleged misuse of the funds raised through a global depository issue. Currently its share is not traded and is worth just about 10 paise.
In separate statements issued Sunday, both Sebi and BSE had said these officials were not holding their respective positions at the relevant point in time (1994 when the alleged malpractices took place).
“The applicant is known to be a frivolous and a habitual litigant, with previous applications being dismissed by courts, with imposition of costs in some cases,” their statements said.
The petitioner, who claims to be a journalist from Kalyan, had moved Sebi in 2022 seeking action against Cals but had not been acted upon against the company for what he alleged to be financial fraud, corruption and regulatory violations while listing and he sought a court-monitored investigation, which the ACB court accepted.
The petitioner contended that Sebi officials failed in their statutory duty, facilitated market manipulation, and enabled corporate fraud by allowing the listing of this company that did not meet the prescribed norms but engaged in market manipulation leading to huge loss for investors. It also alleged collusion between Sebi and corporate entities, insider trading, and siphoning of public funds post-listing.
Additional public prosecutors Prabhakar Tarange and Rajlaxmi Bhandari appeared for the state government.
"The allegations disclose a cognizable offense, necessitating a fair and impartial probe. 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," the ACB court said ordering filing of FIRs against these persons.
"Considering the gravity of allegations, applicable laws, and settled legal precedents, this court deems it appropriate to direct an investigation," the court said directing the ACB to submit a status report within 30 days.