Supreme Court sets aside Bombay HC order quashing criminal proceedings related to 2005 IPOs of Yes Bank, IDFC

New Delhi: The Supreme Court has set aside an order that quashed the criminal proceedings in connection with the Initial Public Offering (IPO) of the shares of Yes Bank Ltd and Infrastructure Development Finance Company Ltd (IDFC) in 2005.

A bench of Justices B R Gavai and K V Vishwanathan took into record a submission by advocate Alabhaya Dhamija, appearing for the CBI, that the respondent accused Manojdev Gokulchand Seksaria and another resorted to a clever device by deleting the prayers for quashing of the FIRs and charge sheet and incorporated fresh prayers challenging the cognisance orders which were not expressly challenged in the first round.

"This was in order to have the matter heard by the single judge in view of Rule 18(4) of Part 1 Chapter I of the High Court Rules," he said.

According to the Bombay High Court rules, the counsel said, applications for quashing of an FIR and charge sheet are outside the jurisdiction of single judge and are to be heard by the division bench.

The CBI also submitted mere settlement before the SEBI would not absolve a party from the criminal proceedings.

The agency's counsel also said the allegations are of such a nature which warranted the criminal trial to proceed.

Justice Vishwanathan, in the August 22 judgment authored by him on behalf of the bench, also opined the present case ought to have been heard by the division bench, since the respondent accused had earlier challenged the order of the Bombay High Court's division bench, which declined to quash the charge sheet and the FIR and the apex court had granted them liberty to file a fresh petition before the High Court.

"We are refraining from pronouncing on the aspect whether there was any clever manipulation of the prayers to clutch at jurisdiction (before the single judge bench) since anything said would prejudice the case of the parties. We say nothing more on this at this stage," the bench said.

The court also decided not to comment on the contentions of the parties with regard to the merits of the matter.

Opposing the CBI's plea, senior advocate Siddharth Dave for the accused submitted there was nothing sinister in deleting the prayer for challenging the FIR and charge sheet and challenging the validity of the cognisance orders.

The court remanded the matter to the High Court for consideration afresh before the division bench within maximum time of three months since the FIRs were registered in 2006.

The bench, however, granted interim stay on the criminal proceedings for four weeks.

The FIRs and charge sheets filed by in 2006 and 2007 respectively were related to fraudulent activities and cornering of shares meant for retail investors allegedly committed during the IPOs. As many as 43 people were named as accused in IDFC case and 25 persons in Yes Bank case.

In 2008, the Special Court took cognisance of the offences against the accused persons.

The respondents filed writ petitions in the High Court in 2018 for quashing the FIR and the charge sheets, which was dismissed by the division bench. On challenge, the top court remanded the matter back to the High Court.

The respondents then filed fresh writ petitions before the High Court but this time they challenged the cognisance orders only which was allowed by the single judge bench in 2022, forcing the CBI to question the validity of the order before the top court.