The direction was issued based on a complaint filed by a journalist, Sapan Shrivastava, alleging that the accused had allowed a fraudulent company, Cals Refineries Ltd, to be listed on the stock exchange
A Mumbai court dealing with anti-corruption cases has ordered the Anti-Corruption Bureau (ACB), Mumbai, to register a First Information Report (FIR) against former Securities Exchange Board of India (Sebi) chairperson Madhabi Puri Buch, three Sebi whole-time members, and Bombay Stock Exchange (BSE) chairman Pramod Agarwal and CEO Sundararaman Ramamurthy.
The direction was issued based on a complaint filed by a journalist, Sapan Shrivastava, alleging that the accused had allowed a fraudulent company, Cals Refineries Ltd, to be listed on the stock exchange. The listing, the complainant argued, had enabled him and his family to invest in the fraudulent company on December 13, 1994, resulting in huge monetary losses.
As the Sebi, the market regulator, failed to stop the fraudulent company from being listed, the complainant accused the top officials of Sebi and BSE of conniving with fraudsters and held them responsible for his loss. The anti-corruption court agreed with the complainant’s argument and directed the ACB to register an FIR to initiate an investigation, causing gross miscarriage of justice.
Though the Bombay high court has stayed the anti-corruption court’s direction, it was surprising that the anti-corruption court had found prima facie evidence against the current officials of Sebi and BSE for a loss incurred 30 years ago. An online search would have been enough for the government pleader to establish that the alleged fraudulent company was suspended from trading in 2017, whereas Buch took charge of the Sebi in March 2022 — nearly five years after the company ceased trading on the exchange.
By directing the registration of the FIR on an offence allegedly committed 30 years ago without conducting a preliminary enquiry, the local court ignored the guidelines issued by a five-judge Constitution Bench of the Supreme Court on registering FIR in the Lalita Kumari vs. Government of Uttar Pradesh (W.P.(Crl) No. 68/2008)
