'Prima Facie Evidence Of Regulatory Lapses' : Court Orders FIR Against Ex-SEBI Chief Madhabi Puri Buch & BSE Officials

A Special Court in Mumbai on Saturday ordered the Anti-Corruption Bureau (ACB), Mumbai to register a FIR against former Securities and Exchange Board of India SEBI) chairperson - Madhabi Puri Buch and also three of its "whole time members" and the top brass of the Bombay Stock Exchange (BSE), 

Special Judge (Prevention of Corruption Act) passed the order in an application under Section 156(3) Cr.P.C.

Special Judge S E Bangar while hearing an application made by one Sapan Shrivastava (47), a journalist by profession, noted that the complaint discloses a "cognizable offence" and therefore, ordered the ACB to register an FIR under the relevant provisions of the Indian Penal Code (IPC), the Prevention of Corruption (PC) Act and also the SEBI Act, and submit a probe report within 30 days.

The court has ordered probe against Madhabi, Ashwani Bhatia, Anant Narayan G and Kamlesh Varshney (While Time Members of SEBI) along with Sundararaman Ramamurthy, the Director of BSE and Pramod Agarwal the Public Interest Director of the BSE.

The judge clarified that he has considered the "gravity of the offence" as disclosed in the complaint and thus had ordered an investigation under section 156(3) of the Criminal Procedure Code.

"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 under section 156(3) CrPC," the Court observed.

In his complaint, Shrivastava alleged that Madhabi in connivance with other authorities of the SEBI and the BSE, allowed "fraudulent" listing of a company on the stock exchange and also did not take any action against the said company for its wrongs.

According to Shrivastava he and his family had invested in shares of Cals Refineries Ltd on December 13, 1994, which was listed at BSE India, and that he had suffered huge losses. He claimed that SEBI and the officials of BSE did not act against the crimes of the companh and instead listed it against the law, and even failed to protect the interests of investors.

The complaint alleged manipulation of the market by officials BSE and SEBI, who allegedly facilitated the corporate fraud by allowing the listing of the company.

Click here to read the order