Madhabi Puri Buch, whose tenure as the chairperson of market regulator SEBI ended on February 28, 2025, along with several other officials, including the current MD and CEO of BSE S. Ramamurthy find themselves in trouble after a court in Mumbai directed the Anti Corruption Bureau to register an FIR against them in connection with allegations of stock market fraud and regulatory violations.
Curiously though, the case relates to a listing of a company on the stock market back in 1994, when neither of the officials against whom an FIR has been ordered may have been in their respective positions.
What is the case?
The case pertains to a company called Cals Refineries.
The complainant, who claims to be a journalist, had sought an investigation into the listing of the company alleging large-scale financial fraud regulatory violations and corruption.
He had alleged that SEBI officials facilitated market manipulation and committed corporate fraud by allowing the company's listing that didn't meet the prescribed norms.
Apart from Buch and Ramamurthy, FIR has also been ordered against Pramod Agarwal, BSE's then chairman and public interest director, and three whole-time members of SEBI.
The court has said the allegations disclosed a cognisable offence and thus necessitated an investigation.
Sapan Shrivastava has claimed that he and his family had invested in the shares of Cals Refineries back in 1994, which was listed on BSE, and had suffered huge losses.
Cals Refineries' troubles
Cals Refineries was earlier known as Cals Limited and incorporated back in 1984, according to information available on stock broking firms. Originally promoted as a hardware firm, it was later transformed into a refinery company.
The company was later in 2013, found guilty in a case involving irregularities
In issuance of global depository receipts (GDR). In relation to the case, the market regulator barred 8 entities from the securities market for 10 years in 2014.
SEBI, BSE to mount legal challenge
Considering the case predates the tenure of the officials named, it's interesting the court ordered an FIR against them now.
Not surprisingly, both SEBI as well as BSE have said they will mount a legal challenge.
"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. BSE is initiating necessary and appropriate legal steps in this regard," the exchange said.
SEBI issued a similar statement and said it would initiate appropriate legal steps to challenge the order.
"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," it said.
The regulator also pointed the applicant is known to be a "frivolous and habitual litigant" with previous applications dismissed by the court, with the imposition of costs in some cases.
