SEBI to challenge Mumbai court order against Madhabi Puri Buch, former chief, in alleged fraud case

A Mumbai special court has ordered the launching of an FIR against former SEBI Chairperson Madhabi Puri Buch and the rest over alleged financial fraud, regulatory violations, and corruption.

"SEBI would be initiating appropriate legal steps to challenge this order and remains committed to ensuring due regulatory compliance in all matters," SEBI said today in a one-page press statement.

An application was filed before the Special ACB Court in Mumbai by the complainant- Sapan Shrivastava, a Thane-based legal news reporter- seeking directions to the concerned police station for the registration of an FIR and investigation into alleged offenses committed by the accused, which includes Buch. The complainant alleged a large-scale financial fraud, regulatory violations, and corruption.

Know more about the alleged fraud case

The allegations pertain to an alleged fraudulent listing of a company on the stock exchange- Cals Refineries Ltd. It was alleged that the fraudulent activity was done with the active connivance of regulatory authorities. The complainant facilitated market manipulation and enabled corporate fraud by allowing the listing of a company that did not meet the prescribed norms. SEBI, in its statement, defended the accused.

"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," SEBI argued.

"The application sought directions for the police to register an FIR and investigate into the alleged irregularities in granting listing permission to a Company on the Bombay Stock Exchange in 1994, without complying with the provisions of the SEBI Act, 1992, SEBI (ICDR) Regulations, 2018, and the SEBI (LODR) Regulations, 2015," the markets regulator hit back at the complainant.

A Miscellaneous Application was filed before the ACB Court, Mumbai, seeking judicial intervention. Upon reviewing the material on record, the Court noted that the allegations disclose a cognizable offense and, hence, necessitate an investigation. The court has directed the Anti Corruption Bureau (ACB), Worli, Mumbai Region, Mumbai, to register an FIR under the relevant provisions of the IPC, Prevention of Corruption Act, SEBI Act, and other applicable laws.

The Court would monitor the investigation. The Court also ordered that a status report be submitted within 30 days. Hitting out at the applicant, SEBI painted him as a "frivolous and habitual" litigant, with previous applications being dismissed by the Court, with the imposition of costs in some cases.