Introduction:
The Bombay High Court has intervened in a significant legal battle concerning former SEBI Chairperson Madhabi Puri Buch and top officials of the Bombay Stock Exchange (BSE), staying an order of a special Anti-Corruption Bureau (ACB) court that had directed the registration of an FIR against them. The special court’s order, based on a complaint filed by journalist Sapan Shrivastava, alleged regulatory lapses and collusion in the listing of a company back in 1994, leading to investor losses. Justice Shivkumar Dige, presiding over the matter, found the order to be “mechanical” and stayed its execution after hearing arguments from Solicitor General Tushar Mehta and senior advocates Amit Desai and Sudeep Pasbola. The court acknowledged that the special judge had passed the order without due consideration of critical facts, including the passage of nearly three decades since the alleged incident and the complainant’s history of filing frivolous litigations. This case underscores the complexities of regulatory accountability, judicial intervention in financial oversight, and the legal safeguards for officials executing statutory duties.
Arguments of Both Sides:
The petitioners, represented by SG Tushar Mehta and senior advocates Amit Desai and Sudeep Pasbola, contended that the special court had failed to apply its mind while directing the registration of an FIR. Mehta argued that the officials accused in the complaint were not even in office when the alleged listing occurred in 1994, making the allegations baseless. He further pointed out that the complainant, Sapan Shrivastava, was a habitual litigant with a track record of filing frivolous cases to extort public officials, as evidenced by a previous Bombay High Court order imposing a cost of ₹5 lakh on him. The petitioners highlighted that the regulatory provisions cited in the complaint, particularly the Securities Contract Regulation Act (Amendment of 2002), did not exist at the time of the alleged misconduct. They asserted that the special court’s order overlooked these fundamental aspects, rendering its directive legally unsustainable.
On the other hand, the complainant, Sapan Shrivastava, argued that SEBI and BSE officials had facilitated corporate fraud by allowing the listing of a company that later caused massive losses to investors, including his family. He claimed that despite clear regulatory lapses, no action was taken against the company, warranting judicial intervention under Section 156(3) CrPC. The special court, in its order, had concurred that the allegations disclosed a cognizable offense necessitating an investigation. The judge emphasized the need for an impartial probe, stating that inaction by law enforcement agencies and SEBI officials justified judicial oversight.
Court’s Judgement:
After considering the arguments, Justice Shivkumar Dige stayed the special court’s order, remarking that it had been passed mechanically without examining key details or allowing the respondents to present their defense. The High Court acknowledged that the petitioners had raised substantial concerns regarding the complainant’s credibility and the procedural lapses in the special court’s decision-making process. The bench also noted that the special judge failed to consider the legislative timeline, particularly that the regulatory framework in question was introduced only in 2002, eight years after the alleged listing. By granting the stay, the Bombay High Court has effectively paused any immediate criminal proceedings against SEBI and BSE officials, allowing for a more thorough judicial review of the case. The matter is now set for further hearing, where the court will decide whether to quash the special court’s order entirely.