The complainant alleged a large-scale financial fraud, regulatory violations, and corruption. The allegations pertain to an alleged fraudulent listing of a company on the stock exchange. They facilitated market manipulation and enabled corporate fraud by allowing the listing of a company that did not meet the prescribed norms.
The complainant submitted before the Court that despite the complainant having approached the concerned police station and regulatory bodies on multiple occasions, no action was taken, necessitating judicial intervention. The Court, while ordering for the launch of FIR, noted that the complainant has placed on record substantial material to support the allegations, including written complaints lodged with SEBI, the police, and other authorities, with their acknowledgements; documents revealing procedural lapses and noncompliance in the IPO process, leading to an irregular listing of the company; regulatory filings and stock market reports indicating artificial inflation of share prices and market manipulation; correspondence from whistleblowers within SEBI, indicating undue favouritism towards the accused company; among others.
The complainant specifically alleged that the SEBI permitted the listing of the accused company despite its alleged failure to comply with essential regulatory norms, including disclosure requirements and due diligence procedures mandated under the rules.
Also, the complainant alleged that the accused persons engaged in round-tripping, insider trading, and price manipulation and misled investors into believing the company was financially sound. Upon reviewing the material on record, the Court noted that the allegations disclose a cognizable offense and, hence, necessitate an investigation."There is prima facie evidence of regulatory lapses and collusion, requiring a fair and impartial probe. The inaction by law enforcement and SEBI necessitates judicial intervention under Section 156(3) CrPC," the court document read.
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