Bombay High Court Stays FIR: Key Developments
The Bombay High Court has suspended a special court’s order directing an FIR against former SEBI chairperson Madhabi Puri Buch, SEBI’s whole-time members, and top BSE officials. The case, tied to a 1994 stock listing and a 2015 co-location scandal, highlights high-stakes legal clashes over regulatory accountability.
Why Did the High Court Intervene?
Justice Shivkumar Dige stayed the FIR after Solicitor General Tushar Mehta (representing SEBI), senior advocates Amit Desai (for BSE) and Sudeep Pasbola (for Buch) argued the special court’s order was “mechanical” and ignored critical facts. The Bombay High Court noted the lower court failed to let the accused respond, violating due process. Justice Dige remarked:
“The special judge passed the order mechanically without examining details or granting respondents a hearing.”
Defense’s Key Arguments
1. Temporal Disconnect: 1994 vs. 2024
SG Tushar Mehta stressed the absurdity of linking current officials to a 1994 listing: “My lord, we weren’t there in 1994. The special court overlooked this ‘abuse of process’.” He presented a chart detailing the complainant’s history of “frivolous litigations,” including a Bombay High Court order imposing ₹5 lakh costs on Shrivastava for “extorting public servants.”
2. Regulatory Anachronism
Senior counsel Amit Desai argued the complainant falsely cited 2002-era regulations to allege wrongdoing in the 1994 listing: “The provisions didn’t exist then. These baseless allegations harm India’s economic reputation.”
3. Legal Misrepresentation
Pasbola, representing Buch, highlighted the special court’s failure to note that the Securities Contract Regulation Act (SCRA) amendments cited by the complainant were enacted in 2002—eight years post-listing.
Special Court’s Order: What Did It Say?
Special Judge S.E. Bangar ordered an FIR under IPC, Prevention of Corruption Act, and SEBI Act, citing “prima facie evidence of collusion” in the 1994 listing of Cals Refineries Ltd. The court noted:
“SEBI and BSE officials failed to act against fraudulent listing, causing investor losses. Inaction necessitates judicial intervention under Section 156(3) CrPC.”
Complainant’s Allegations: A Closer Look
Journalist Sapan Shrivastava claimed he lost money investing in Cals Refineries Ltd, listed on BSE in 1994. His complaint alleged:
- SEBI and BSE officials manipulated markets by allowing fraudulent listings.
- Regulatory inaction shielded the company despite investor complaints.
What’s Next?
The Bombay High Court will review the special court’s order on Tuesday. Key focus areas include:
- Procedural fairness in directing the FIR.
- Relevance of 2002 laws to a 1994 case.
- Complainant’s history of litigation.
FAQs: FIR Stay Against Madhabi Puri Buch & BSE Officials
Why did SG Mehta call the FIR an “abuse of process”?
He argued the 30-year gap between the 1994 listing and current officials’ roles makes the case legally untenable.
What is Section 156(3) CrPC?
It empowers magistrates to order police investigations into cognizable offenses without taking cognizance of the complaint.
How does the 2002 SCRA amendment affect this case?
The complainant cited post-2002 laws to accuse officials of 1994 actions—a timeline mismatch the defense claims invalidates allegations.
What is the significance of the ₹5 lakh cost on Shrivastava?
The Bombay High Court previously penalized him for filing “frivolous” petitions to extort officials, undermining his credibility.
