CBI Case on IPO Fraud: Supreme Court Orders Remand for Fresh Hearing

The case of CBI BS and FC Mumbai v. Manojdev Gokulchand Seksaria & Anr. revolves around allegations of fraudulent activities in Initial Public Offerings (IPOs) of Yes Bank Ltd. and Infrastructure Development Finance Company Ltd. (IDFC) in 2005. The Supreme Court has ordered the remand of the case to the Bombay High Court’s Division Bench for fresh consideration.

The case originated from a complaint by SEBI, which led to CBI investigations and subsequent criminal charges against multiple accused, including the respondent. After years of litigation, the High Court quashed the proceedings, a decision now set aside by the Supreme Court.

Arguments Presented

Petitioner’s Arguments

The CBI contended that:

• The High Court’s Single Judge Bench did not have jurisdiction to quash the case, as the matter should have been heard by a Division Bench.
• The respondent’s settlement with SEBI did not absolve him from criminal liability.
• The allegations were serious and warranted trial, given the large-scale IPO fraud.

Respondent’s Arguments

The respondent argued that:

• The charges should be quashed since SEBI had already passed a consent order in 2009, settling the case monetarily.
• Proceeding with criminal charges would be an abuse of process and against the interest of justice.
• There was no criminal intent, and the matter was purely regulatory in nature.

Supreme Court’s Observations

The Court noted that:

• The respondent had initially challenged the FIR and charge sheet but later changed the petition to challenge the cognizance orders.
• The High Court’s Single Judge should not have decided the matter when a previous Division Bench had already dismissed a similar petition.
• Since the FIR was registered in 2006, an expedited decision was necessary.

Final Judgment

The Supreme Court:

• Set aside the High Court’s order quashing the case.
• Remanded the matter to the Division Bench for a fresh hearing.
• Ordered an interim stay on trial proceedings for four weeks, allowing the Division Bench to modify the stay.

The judgment ensures that serious financial fraud allegations are thoroughly examined in accordance with legal principles, maintaining the integrity of the judicial process.

Petitioner Name: CBI BS and FC Mumbai.
Respondent Name: Manojdev Gokulchand Seksaria & Anr..
Judgment By: Justice B.R. Gavai, Justice K.V. Viswanathan.
Place Of Incident: Mumbai.
Judgment Date: 21-08-2024.

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