Bombay HC Dismisses Writ Petitions Challenging Criminal Proceedings in IPO Share Manipulation Case [Read Order]
The court noted that SEBI had issued guidelines for consent orders in April 2007, providing a framework for considering requests for composition of offences.
In a ruling upholding the continuation of criminal proceedings, the Bombay High Court has dismissed writ petitions filed by Manoj Gokulchand Seksaria challenging the prosecution against him for alleged manipulation of IPO shares through benami accounts.
The writ petitions were filed challenging orders dated 10th March, 2008 and 19th March, 2008 taking cognizance and issuing process against him in Special CBICase Nos. 47 of 2007 and 48 of 2007. The allegations were that the petitioner, a sub-broker of KSBL, had opened Demat accounts in fictitious and benami names and made 192 IPO applications in fictitious names in the issue of Yes Bank Limited, cornering 14,000 shares and earning a profit of Rs. 1.98,000.
The court noted that SEBI had issued guidelines for consent orders in April 2007, providing a framework for considering requests for composition of offences. The petitioner had applied for consent on 5th November, 2008, disclosing the offences and seeking exoneration from all proceedings.
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The High Powered Advisory Committee considered his proposal and recommended that he pay Rs. 2,05,18,968 as unjust profit and Rs. 20,51,897 as settlement charges. SEBI accepted this recommendation and issued a consent order on 7th December, 2009, disposing of all pending proceedings against the petitioner.
Justice V.G. Bisht observed that the dispute between the parties was predominantly commercial in nature with little criminal overtone. The court relied on Supreme Court precedents, particularly Parbatbhai Aahir Alias Parbatbhai Bhimsinghbhai Karmur and Others vs. State of Gujarat, which held that criminal cases involving offences arising from commercial and financial transactions with an essentially civil flavor may be quashed where parties have settled their disputes.
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The court found that continuing the criminal proceedings would amount to an abuse of process of the court, especially since the petitioner had already paid the settlement amount of Rs. 2,25,70,864 and the public interest had been duly secured through the consent order.
The court concluded that the continuation of proceedings would not cause any prejudice that could not be compensated in monetary terms.
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