The Bombay High Court on Monday asked the Maharashtra Anti-Corruption Bureau (ACB) not to act until March 4 on an order directing it to lodge an FIR against former Sebi chairperson Madhabi Puri Buch and five other officials for alleged stock market fraud and regulatory violations.
Ms Buch, Bombay Stock Exchange MD Sundararaman Ramamurthy and the others moved the High Court on Monday, seeking to quash the March 1 order passed by a special court in Mumbai directing the Anti-Corruption Bureau (ACB) to register an FIR against them pertaining to certain allegations of fraud committed in 1994 while listing a company on the BSE.
The pleas were mentioned before a single bench of Justice SG Dige for urgent hearing.
The bench said it would hear the pleas on Tuesday (March 4) and orally added that until then, the state ACB, which was directed to probe the case, shall not act upon the special court order.
During the hearing, Solicitor General Tushar Mehta appeared for the three current whole-time SEBI directors - Ashwani Bhatia, Ananth Narayan G and Kamlesh Chandra Varshney.
Senior counsel Amit Desai appeared for Bombay Stock Exchange's Managing Director and Chief Executive Officer Ramamurthy and its former chairman and public interest director Pramod Agarwal.
The pleas sought quashing of the special court order, terming it as illegal and arbitrary.
The order by the special court was passed on a complaint filed by Sapan Shrivastava, a media reporter, seeking investigation into the alleged offences committed by the accused, involving largescale financial fraud, regulatory violations and corruption.
"The special court order is manifestly erroneous, patently illegal and passed without jurisdiction. The court has failed to consider that the complainant has failed to make out a prime facie case against the applicants for failing to discharge their duties as officers of the Sebi," the pleas said.
There was no material submitted by the complainant to support the allegations made by him, they added.
"At the relevant point of time, there was no requirement for obtaining an NOC from Sebi for listing of any shares on the BSE," the pleas said.
No vicarious liability can be fastened on Sebi officials in respect of the alleged offence, as per the pleas.
The pleas further claimed that the complainant Shrivastava was a habitual complainant who has filed several vexatious proceedings in the past.
The pleas sought quashing of the special court and also stay on the execution of the order by way or interim relief.
The order was not legally sustainable as the petitioners were not even issued a notice or heard before decision was taken, the pleas pointed out.
Special ACB court judge S E Bangar, in his March 1 order, noted there was prima facie evidence of regulatory lapses and collusion, requiring a fair and impartial probe.
The ACB court also said it will monitor the probe, and sought a status report within 30 days.
The allegations in the complaint pertained to "fraudulent listing of a company on the stock exchange in 1994 with the active connivance of regulatory authorities", particularly the Securities and Exchange Board of India, without compliance under the SEBI Act, 1992 and rules and regulations thereunder.
The Sebi, in a statement on Sunday, said it "would be initiating appropriate legal steps to challenge this order and remains committed to ensuring due regulatory compliance in all matters".
The market regulator said the application, which sought directions to the police to register an FIR and investigate alleged irregularities in granting listing permission to a company on the BSE in 1994, was allowed by the court "even though these officials were not holding their respective positions at the relevant point of time".
The BSE, in a statement, has termed the application as "frivolous and vexatious in nature".
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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