SEBI court refuses to close case against Chetan Sandesara and others, issue was settled in SC

SEBI court refuses to close case against Chetan Sandesara and others even as issue was settled in SC

• SEBI court rejects plea to close case against Chetan Sandesara
• Supreme Court orders did not quash SEBI's prosecution
• SEBI can continue its GDR-related case independently

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Special SEBI court in Mumbai has rejected applications filed by Chetan Sandesara seeking closure of a pending Securities and Exchange Board of India (SEBI) prosecution, ruling that the relief granted by the Supreme Court in connected criminal matters does not automatically extend to the regulator’s case.

Special SEBI court Judge R.M. Jadhav dismissed applications filed by the accused Chetan Sandesara and Rajbhushan Omprakash Dixit, arguing that the Supreme Court’s November 2025 and December 2025 orders, which quashed multiple investigations involving agencies such as the CBI, ED and SFIO should also result in termination of the SEBI proceedings.

The accused had contended that the apex court had recorded full compliance of settlement terms, including a payment of over Rs 5,100 crore, and had put an end to all the related investigations and litigation. As per the court order Sandesara side argued that, “Supreme Court has expressly held that “quietus has been put to all investigations and litigation”, and has further directed that all investigating agencies shall communicated the decision regarding closure of all proceedings at all levels, including at airports, through the Ministry of Foreign Affairs”.

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Sandesara side further asserted that the SEBI case was derived from the same Global Depository Receipt (GDR) investigations that were quashed, therefore could not survive independently. As per the order, Sandesara aside stated, “The present SEBI proceedings are derivative, consequential, and inseparably linked to the very same investigations which now stand finally quashed, once the parent investigation has been extinguished by the Hon’ble Supreme Court, no residual or ancillary proceedings, statutory or criminal can survive”.

However, regulator opposed the plea, maintaining that SEBI was not a party before the Supreme Court and that the apex court orders did not specifically mention or quash its complaint. The prosecution relates to alleged non-compliance with SEBI summons issued during its investigation into GDR issuances involving multiple companies, including Sterling Biotech. SEBI side maintained that, “There is no Reference of the SEBI complaint in the order passed by Hon’ble Supreme Court. Since, SEBI was not heard and the order does not give reference to the SEBI case, the present prosecution cannot assume to be quashed/closed by the Hon’ble Apex Court order. Unless a clear clarification is obtained from the Hon’ble Supreme Court this prosecution cannot be quashed against the accused”.

SEBI side submitted that, it had carried out investigation with respect to seven Indian companies that had issued Global Depository Receipt (GDR) and Sterling Biotech ltd., was one of such entity. As per the regulator, the investigation by SEBI was concluded before SFIO come into picture as the prosecution was filed on 01.03.2018. It is argued that neither the writ petition filed before Supreme Court dealt with the SEBI actions and the proceeding. Also, SEBI was not party in the writ petition and there was no specific prayer to quashed the investigation initiated by SEBI.

The court accepted SEBI’s position, holding that the Supreme Court orders did not explicitly refer to the present prosecution and therefore could not be interpreted to include it. It said a trial court cannot infer or assume quashing of proceedings in the absence of specific directions from the apex court.

Judge R.M.Jadhav in his order wrote, “ it cannot be construed that the SEBI proceeding is involved in the order of Hon’ble Apex Court. The closer of proceeding investigated by agencies such as CBI, ED or SFIO occurred only upon an express order of Hon’ble Apex Court. There must be therefore, an explicit direction. The trial Court cannot invent or import a so-called doctrine of consequential quashing in the absence of statutory recognition”.

The Special SEBI court rejected both applications which means that SEBI can continue its case against Chetan Sandesara and others, as per its regulation.

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What was the GDR manipulation issue?

The Global Depository Receipt cases investigated by the SEBI involved several Indian companies that raised funds overseas through GDR issuances but were later found to have allegedly misused the route. SEBI’s probes revealed a pattern where promoters arranged loans from foreign banks that were used by a single overseas entity to subscribe to GDR issues, often secured against the issue proceeds themselves, creating the illusion of genuine foreign investment.

The regulator held that fictitious foreign investors were projected to mislead markets, after which converted shares were dumped in Indian exchanges to the detriment of investors. SEBI passed order in 2013 against several entities and imposed long market bans and access restrictions on key entities.