The Securities and Exchange Board of India (SEBI) will soon initiate legal steps to challenge the order passed by the ACB Court, Mumbai, which, among other things, directed an FIR to be filed against former chairperson Madhabi Puri Buch, along with three current whole time members and two officials of BSE.
In a statement released on Sunday, the capital market regulatory body stated that the complainant is a “frivolous and habitual litigant” and it would take appropriate legal steps to challenge the order.
“The applicant is known to be a frivolous and habitual litigant, with previous applications being dismissed by the Court, with imposition of costs in some cases. SEBI would be initiating appropriate legal steps to challenge this order and remains committed to ensuring due regulatory compliance in all matters,” said the SEBI statement.
In an order passed on March 1, the ACB Court, following a miscellaneous application filed by Sapan Shrivastava, ruled that the Anti Corruption Bureau, Worli, Mumbai Region, should register an FIR against Buch, along with whole time members – Ashwani Bhatia, Ananth Narayan, Kamlesh Chandra Varshney – and BSE CEO Sundararaman Ramamurthy and former chairman and public interest director Pramod Agarwal.
“Even though these officials were not holding their respective positions at the relevant point of time, the court allowed the application without issuing any notice or granting any opportunity to SEBI to place the facts on record,” added the SEBI statement.
The miscellaneous application was filed following allegations pertaining to the listing of Cals Refineries.
“The allegations pertain to the fraudulent listing of a company on the stock exchange with the active connivance of regulatory authorities, particularly the Securities and Exchange Board of India (SEBI)… The complainant contends that SEBI officials failed in their statutory duty, facilitated market manipulation, and enabled corporate fraud by allowing the listing of a company that did not meet the prescribed norms,” stated the court order.
The court order further highlighted the fact that the complainant alleged that “SEBI permitted the listing of the accused company despite its failure to comply with essential regulatory norms, including disclosure requirements and due diligence procedures mandated under the SEBI Act, 1992, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018.”
The complainant further alleged that certain SEBI officials colluded with the accused company and failed to exercise regulatory oversight and that post the listing of the company the promoters siphoned off funds with SEBI failing to take preventive measures despite red flags.
BSE to also challenge the order
In a statement issued on Sunday, BSE said that it is also "initiating necessary and appropriate legal steps in this regard" while adding that the listing of Cals Refineries happened at a time when the BSE officials named in the order were not associated with the exchange.
"The named company, Cals Refineries Ltd., was listed at BSE in 1994. The officials named in the application were not in their respective positions at the time of listing and were not connected with the company at all. The application is frivolous and vexatious in nature. The Honourable Court has allowed the application without issuing any notice or granting any opportunity to BSE to place the facts on record," said the BSE statement.
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