Bombay High Court Grants Relief to Former SEBI Chief Madhabi Buch in Alleged Market Fraud Case
Bombay High Court stays order to file police case against former SEBI chief
The Bombay High Court recently granted a stay, for a period of four weeks, on a lower court’s order to file a police case against Madhabi Puri Buch, the former chief of the Securities and Exchange Board of India (SEBI), along with five others. The case pertains to alleged market fraud and regulatory violations.
Justice Shivkumar Dige, a single bench judge, expressed concerns that the special court order issued on March 1 was passed hastily, without a thorough examination of the details or specific roles of the accused individuals. As a result, the High Court decided to put a hold on the order until further investigations could be conducted.
Petitions filed by Madhabi Puri Buch and three full-time Directors of SEBI – Ashwani Bhatia, Ananth Narayan, and Kamlesh Chandra Varshney – were considered by the High Court. Additionally, Bombay Stock Exchange Managing Director Ramamurthy and former BSE Chairman Pramod Agarwal had also filed pleas seeking the quashing of the special court’s directive to the Anti-Corruption Bureau to initiate a police case based on allegations dating back to 1994.
Background of the Allegations
The special court’s order was issued in response to a complaint filed by a reporter, alleging financial fraud, regulatory violations, and corruption in connection with the listing of a company on the Bombay Stock Exchange. The court believed that there was sufficient evidence to warrant a thorough investigation into the matter.
Legal Response and SEBI’s Stance
Solicitor-General Tushar Mehta, representing the SEBI directors, argued that the special court’s order was legally flawed and lacked jurisdiction, emphasizing that no substantial case had been established. SEBI, in a statement, reiterated its commitment to upholding regulatory compliance and stated that it would be taking legal action to challenge the court order.
The Bombay Stock Exchange also dismissed the reporter’s claims as “frivolous and vexatious in nature.” Both SEBI and the BSE emphasized the importance of due process and fair investigation in resolving the allegations.
Looking Ahead
The High Court’s decision to stay the lower court order provides a temporary reprieve for Madhabi Puri Buch and the other accused individuals. The court has granted four weeks for further submissions and affidavits to be filed in response to the allegations, signaling a cautious approach to the case.
As the legal proceedings unfold, it remains to be seen how the allegations of market fraud and regulatory violations will be addressed and whether a comprehensive investigation will shed light on the events that transpired in 1994. The outcome of this case could have significant implications for the regulatory landscape in India and the accountability of financial market participants.
With inputs from agencies, the developments in this case will continue to be closely monitored as it progresses through the legal system.