Mumbai court orders FIR against ex-SEBI chief Madhabi Puri Buch, 5 others in stock market 'fraud' case

The court of the special judge in an order passed on Saturday (1 Mar ’25) directed the ACB, Mumbai Region to file a FIR in the matter, under the relevant provisions of the Indian Penal Code, Prevention of Corruption Act, SEBI Act, and other applicable laws.

It said that the court found the allegations disclosed a cognizable offense, necessitating an investigation and there is prima facie evidence of regulatory lapses and collusion, requiring a fair and impartial probe.

The court also pointed out that “The inaction by the police and regulatory authorities amounts to dereliction of duty, necessitating a court-monitored investigation.” The investigations will be monitored by the court, and status report has to be submitted in 30 days. The other officials named in the complaint include three wholetime members of SEBI and two officials of the BSE.

The allegations pertain to the fraudulent listing of a company, Cals Refineries Ltd, on the stock exchange with the active connivance of regulatory authorities, particularly SEBI. According to the complainant SEBI permitted the listing of the accused company despite its failure to comply with essential regulatory norms, including disclosure requirements and due diligence procedure.

The complainant claimed that the SEBI officials failed in their statutory duty, facilitated market manipulation, and enabled corporate fraud by allowing the listing of a company that did not meet the prescribed norms.

 Though the complainant had approached the police station and regulatory bodies on multiple occasions no action was taken. Reacting to the order, Securities and Exchange Board of India said in a release that though the officials named in the complaint “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 would be initiating appropriate legal steps to challenge this order and remains committed to ensuring due regulatory compliance in all matters, it said. It added that the applicant was known to be a “frivolous and habitual litigant... “The Honourable Court has allowed the application without issuing any notice or granting any opportunity to BSE to place the facts on record.”

BSE is initiating necessary and appropriate legal steps in this regard, the exchange said.