Legal Battle Over 1994 Stock Listing Heats Up
MUMBAI: A legal showdown is unfolding as former Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch, along with Bombay Stock Exchange (BSE) Managing Director Sundararaman Ramamurthy and other officials, have petitioned the Bombay High Court to overturn a special court’s order. This order mandated the Anti-Corruption Bureau (ACB) to file a First Information Report (FIR) regarding alleged irregularities in the listing of a company on the stock exchange back in 1994. The officials argue that the order is unjust, as they were not in their current positions at the time of the alleged infractions.
Petitioners Challenge Court Order
The petitioners, including Buch and Ramamurthy, filed their case on Monday, asserting that the special court’s directive is both “unjust” and “harsh.” They emphasized that none of them held their current roles in 1994, and thus, they should not be held vicariously liable for actions taken long before their appointments. Justice S.G. Dige has scheduled a hearing for Tuesday and has instructed the ACB to refrain from any action based on the trial court’s order until the matter is reviewed.
Senior counsel Amit Desai, representing Ramamurthy and another BSE official, expressed shock at the court’s decision to allow an FIR based on a “four-line complaint” filed in 2024 concerning a company listed in 1994. He argued that the FIR has not yet been registered, and requested the High Court to intervene and prevent any police action until the case is heard.
Allegations of Regulatory Lapses
The complaint that triggered this legal action was filed by Sapan Shrivastava, a resident of Dombivli, on April 6, 2024. Shrivastava claims he and his family suffered significant financial losses due to the alleged fraudulent listing of Cal Refineries Ltd on December 13, 1994. He accuses the public servants of accepting “illegal gratification” and failing to protect investor interests. The petitioners counter that the complaint was only lodged after Shrivastava’s investment lost value, suggesting it was an attempt to settle personal grievances against the company.
The special ACB court, in its March 1 order, noted “prima facie evidence of regulatory lapses and collusion,” warranting a thorough investigation. The court has mandated that the ACB submit a report within 30 days, further complicating the situation for the involved officials.
Legal Arguments and Implications
The petitioners argue that the trial court made significant legal errors by not recognizing the necessity of prior government sanction under the Prevention of Corruption Act before initiating a probe against public servants. They also pointed out that no notice was issued to them prior to the court’s order, which they claim violates legal protocols.
Bhatia, Narayan, and Varshney, all appointed to SEBI in recent years, asserted that the trial judge overlooked the requirement for specific allegations of complicity to implicate them. They contend that the court failed to acknowledge that SEBI had informed Shrivastava that compliance information was not available, which does not substantiate claims of irregularities.
As the legal proceedings unfold, the implications for the involved officials and the broader regulatory framework remain to be seen. The Bombay High Court’s decision will be pivotal in determining the future of this contentious case.
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