The complaint sought direction for the ACB to register an FIR and conduct an investigation into alleged offences committed by the “proposed accused”, including former Sebi chairperson Madhabi Puri Buch. (Express Archive Photo/ Sankhadeep Banerjee)
A SPECIAL court designated under the Prevention of Money Laundering Act has directed the Anti-Corruption Bureau (ACB), Mumbai, to register an FIR based on a complaint that alleged stock market fraud and regulatory violations against former Securities Exchange Board of India (Sebi) chairperson Madhabi Puri Buch and five others.
“The allegations disclose a cognizable offence, necessitating an investigation. 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 held on Saturday after perusing the material on record.
The complaint had sought direction for the ACB to register an FIR and conduct an investigation into alleged offences committed by the “proposed accused”, including Buch, three SEBI whole-time members, and Bombay Stock Exchange (BSE) Chairman Pramod Agarwal and CEO Sundararaman Ramamurthy.
The court directed the ACB to register the FIR under relevant provisions of the Prevention of Corruption Act, the SEBI Act, the Indian Penal Code and other applicable laws.
Special Judge S E Bangar passed the order on an application filed by Sapan Shrivastava, a Dombivli resident who claimed to be a journalist. The application alleged fraudulent listing of a company on the stock exchange with the alleged active connivance of regulatory authorities.
Shrivastava claimed that 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 alleged that SEBI and BSE neglected the crimes of the firm, listed it against the law, and failed to protect the interests of investors.
Shrivastava alleged that Sebi officials facilitated market manipulation and enabled corporate fraud by allowing the listing of the company. He said he was prompted to approach the court as police and regulatory authorities did not take action on his complaint.
The court referred to past Supreme Court judgments and observed, “Considering the gravity of the allegations, applicable laws and settled legal precedents, this court deems it appropriate to direct an investigation under Section 156(3) of CrPC.”
According to the order, the probe should be monitored by the special court and a status report should be submitted to it within 30 days.
On Sunday, Sebi issued a press release, stating that Shrivastava’s application was filed against Buch, three present WTMs and two BSE officials. Cals refineries was granted listing permission in 1994 and was suspended from trading in August 2017 and continues to remain suspended till date.
According to Sebi, Buch or the three WTMs were not holding their respective offices at the relevant time and the special court had passed an order without giving opportunity to the regulatory body to put facts on record.
“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.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,” it said.