The Wire Staff 
Mumbai: A special Anti-Corruption Bureau (ACB) court in Mumbai has directed the police to register a first information report against former Securities and Exchange Board of India (SEBI) chairperson Madhabi Puri Buch, as well as three of its “whole-time members” and two senior individuals at the Bombay Stock Exchange (BSE).
Besides Buch, the court has directed an FIR to be registered against Ashwani Bhatia, Anant Narayan G, and Kamlesh Varshney (whole-time members of SEBI), and Sundararaman Ramamurthy, the director of BSE, and Pramod Agarwal, the public interest director of the BSE.
The direction to file an FIR was issued following a private complaint filed by a city-based reporter, Sapan Shrivastava, under Section 156(3) of the Code of Criminal Procedure (CrPC). When the police refuse to file a case, a litigant can, under Section 156(3) of the CrPC, move the court for directions to register an FIR.
Special Judge S.E. Bangar noted that the complaint discloses a “cognizable offence” and ordered the ACB to register an FIR under the relevant provisions of the Indian Penal Code (IPC), the Prevention of Corruption (PC) Act, and the SEBI Act. A status report of the probe is to be submitted to the court within 30 days.
‘Frivolous’, says SEBI
Soon after the court issued the order, SEBI issued a statement in support of Buch, who retired from her post on February 28. In the statement, SEBI called the complainant “a frivolous and habitual litigant” and alleged that his previous applications had been dismissed by the court, “with imposition of costs in some cases.” SEBI would be initiating “appropriate legal steps to challenge this order,” and the statement claimed that the regulatory body “remains committed to ensuring due regulatory compliance in all matters.”
The judge’s order came after considering the “gravity of the offence” as disclosed in the complaint. “There is prima facie evidence of regulatory lapses and collusion, requiring a fair and impartial probe. The inaction by law enforcement and SEBI necessitates judicial intervention under Section 156(3) CrPC,” the order observed.
Shrivastava, in his complaint, has alleged that Madhabi Puri Buch, in connivance with other authorities of SEBI and the BSE, allowed the “fraudulent” listing of a company, Cals Refineries Ltd, on the stock exchange and also did not take any action against the said company for its wrongdoings.
According to Shrivastava, he and his family had invested in shares of Cals Refineries Ltd on December 13, 1994, which was listed at BSE India, and that they had suffered huge losses. He claimed that SEBI and the officials of BSE did not act against the crimes of the company and instead listed it illegally, failing to protect the interests of investors.
Also read: As SEBI Board Member Calls Out Madhabi Buch in Adani Probe, Will SC Act?
‘Procedural lapses and noncompliance’
The court has observed that the complainant has placed on record “substantial material to support the allegations, including written complaints lodged with SEBI, the police, and other authorities, with their acknowledgments.” These documents, the order says, reveal “procedural lapses and noncompliance in the IPO process, leading to an irregular listing of the company.” Shrivastava had also placed before the court some correspondence from whistleblowers within SEBI, indicating “undue favouritism” towards the accused company.
The court has directed the ACB to investigate the matter for criminal breach of trust, cheating, forgery, and criminal conspiracy.
In August last year, Madhabi Puri Buch and her husband Dhavan Buch were both in the news after an investigation put out by the short-seller Hindenburg Research claimed they had “undisclosed investments” in offshore entities linked to the Adani Group.
According to Hindenburg, the Buchs held stakes in Bermuda and Mauritius-based funds allegedly connected to Vinod Adani, the brother of Gautam Adani. Hindenburg also alleged that during her time as SEBI chairperson, Madhabi Buch owned a Singaporean consulting firm, Agora Partners, which she later transferred to her husband. The firm did not publicly report its financials, leading to questions about the transparency of her financial dealings. Both Buch and her husband denied these allegations. No action was initiated against them by the Indian probe agencies.
Hindenburg has since wrapped up operations.