Key Points:
- Bombay High Court stays FIR against ex-SEBI chief Madhabi Puri Buch and 5 others for 4 weeks
- Court calls special court’s order “mechanical” and lacking specific role attribution
- Case involves alleged 1994 stock listing fraud and regulatory violations
- Petitioners include current SEBI directors and BSE officials
- Complainant Sapan Shrivastava given 4 weeks to file affidavit in reply
Mumbai: In a significant development, the Bombay High Court has put a four-week stay on the special court’s order to file an FIR against former Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch and five other officials. The case, which centers on alleged stock market fraud and regulatory violations, took a new turn as Justice Shivkumar Dige criticized the lower court’s decision as “mechanical”.
High-Profile Petitioners Seek Justice
The High Court’s judgment came in response to petitions filed by a group of prominent figures in India’s financial regulatory landscape:
- Madhabi Puri Buch, former SEBI chairperson
- Three current whole-time SEBI directors: Ashwani Bhatia, Ananth Narayan G, and Kamlesh Chandra Varshney
- Sundararaman Ramamurthy, BSE Managing Director and CEO
- Pramod Agarwal, former BSE chairman and public interest director
These petitioners sought to quash the special court’s order, which had directed the Anti-Corruption Bureau (ACB) to register an FIR against them.
The Allegations and Their Origins
The case stems from a complaint filed by Sapan Shrivastava, a media reporter, who alleged large-scale financial fraud, regulatory violations, and corruption related to a company’s listing on the BSE in 1994. The special court, presided over by Judge Shashikant Eknathrao Bangar, had found “prima facie evidence of regulatory lapses and collusion” warranting investigation.
High Court’s Reasoning and Next Steps
Justice Dige, in staying the order, noted that the special court had “passed the order mechanically without going into details and without attributing any specific role to the accused”. The High Court has given Shrivastava four weeks to file an affidavit in reply to the petitions.
Broader Context and Implications
This case comes at a sensitive time for India’s financial regulatory environment. Buch, who recently completed her three-year tenure as SEBI’s first woman chief, had faced allegations of conflict of interest from US-based short-seller Hindenburg Research. The court’s decision to stay the FIR highlights the complexities involved in prosecuting high-level financial regulators and the need for thorough examination of evidence before proceeding with criminal investigations.
As the legal battle unfolds, all eyes will be on the Bombay High Court’s next hearing, which promises to shed more light on this high-stakes case involving some of India’s top financial regulators and market operators.
