+91 964 334 1948
29 May 2025, 01:37 PM
The Lokpal dismissed three complaints filed against Madhabi Puri Buch, former Chairperson of the Securities and Exchange Board of India (SEBI), after concluding that there was no prima facie case for directing an investigation into allegations of corruption.
The common order dated May 28, 2025, was passed by a Bench of Justice AM Khanwilkar (Chairperson), Justice L Narayana Swamy, Justice Sanjay Yadav, Sushil Chandra, Justice Ritu Raj Awasthi, and Ajay Tirkey. The complaints dated August 13, 2024, September 11, 2024, and October 8, 2024 were filed by different complainants, including Lok Sabha MP Mahua Moitra.
“The Complainant(s) by making such unverified and flimsy or fragile allegations, only to sensationalize or so to say politicize the matter, has inevitably trivialised the process before the Lokpal. It is nothing short of vexatious proceedings actionable under Section 46 of the Act of 2013. We say no more”, the order stated.
The Lokpal further granted liberty to Buch to pursue appropriate remedy against the complainants for surreptitiously obtaining Buch's income tax returns.
“At the outset, the RPS (respondent public servant – Buch) is right in appealing to us to proceed against the Complainant in the third Complaint in particular and against the other Complainant(s), for an action under the Income Tax Act for surreptitiously obtaining copies of her Income Tax returns and also aggravating the matter by making it public, invading her privacy. However, in the present proceedings we cannot pronounce upon this prayer, but would give liberty to the RPS to purse her remedy before appropriate forum.”
The allegations were based primarily on a report by Hindenburg Research dated August 10, 2024. It accused Buch and her husband of having stakes in obscure offshore funds allegedly linked to a money-siphoning scandal involving the Adani Group.
The complainants alleged that Buch had taken undue advantage and was involved in quid pro quo arrangements with private entities during her tenure at SEBI. However, the Lokpal concluded that the allegations were speculative, lacked supporting evidence, and did not reveal any cognizable offence.
First Allegation: Investment in GDOF and Non-disclosure to SEBI and Expert Committee
It was alleged that Buch and her husband invested Rs. 5 crore in 2015 and held till 2018 in the Global Dynamic Opportunities Fund Ltd. (GDOF), which was linked to Adani Group companies, even though the Directorate of Revenue Intelligence had alerted SEBI of stock manipulation by Adani Group in 2014.
Allegedly, Buch did not disclose this investment while serving at SEBI since 2017, initially as a awhole-time member and later as Chairperson, and while interacting with a Supreme Court-appointed Expert Committee to investigate allegations against Adani Group.
Buch denied these allegations, stating that the investment was redeemed in 2018, two years before SEBI's investigation began. She submitted that she was not involved in any SEBI proceedings related to the Adani Group and had no control over the fund's investments, being a mere passive investor.
The Lokpal found that there was no material suggesting quid pro quo or conflict of interest and held that the allegations were an indirect attempt to reopen the findings of the Supreme Court, which had commended SEBI's investigation.
Second and Fifth Allegations: Quid Pro Quo via Consultancy Services to Mahindra Group and Blackstone
The complainants alleged that Buch's husband, Dhaval Buch, received approximately Rs. 4.78 crore in consultancy fees from the Mahindra & Mahindra Group between 2019 and 2021, and that this was in exchange for favours for Mahindra group companies facing SEBI investigation. Similar allegations were made concerning consultancy services to Blackstone Inc. and Real Estate Investment Trusts (REITs).
Buch submitted that she had disclosed her husband's consultancy work and recused herself from Mahindra matters. She denied any involvement in SEBI's decisions regarding the group.
The Lokpal accepted the explanation and noted that SEBI decisions were taken by panels headed by independent judges and officials, and Buch had not influenced any of them. The consultancy was legitimate and based on Dhaval Buch's global professional credentials. The Lokpal drew similar conclusions in relation to Blackstone, and termed the allegations as speculative and unsupported.
Third Allegation: Rental Income from Wockhardt-Linked Entity
It was alleged that Buch received rent from Carol Info Services Ltd., associated with Wockhardt Ltd., while the latter faced insider trading investigations by SEBI. The complainants claimed this rent was quid pro quo.
The Lokpal noted that the rental agreement was executed in 2015, four years before Wockhardt filed a settlement application. Further, the settlement was handled by two whole-time SEBI members and approved by a High-Powered Committee chaired by a retired High Court judge. The Lokpal found no evidence of undue influence or advantage.
“The allegation is an attribution even about the integrity and capabilities of a retired High Court Judge, who had chaired the High-Powered Committee on Settlements. Thus, it is preposterous to even suggest that the RPS could have been able to influence the passing of settlement order concerning Wockhardt”, the Lokapal said.
It added, “there is clinching material to indicate that the flat was rented out by the RPS without any anticipation of filing of settlement application by Wockhardt; nor the in rental income is unusually high than the market rate of rentals the locality; and more so because, the RPS was in no way concerned with the process of consideration of claim of Wockhardt for settlement which culminated with the decision of the High- Powered Committee on Settlements chaired by a retired High Court Judge.”
Fourth Allegation: ESOP Encashment from ICICI Bank
The complainants alleged that Buch received Rs. 16.18 crore from ICICI Bank through ESOP encashment between 2017 and 2024, while SEBI passed favourable orders in four cases involving ICICI entities.
Buch explained that the ESOPs were granted during her tenure at ICICI Bank (before 2013) and were encashed later at her discretion. The Lokpal accepted this explanation and noted that the settlement orders were passed by institutional processes and independent committees. No material was provided to establish any influence by Buch or undue benefit to ICICI Bank.
“we agree with the RPS that this allegation by the Complainant(s) is an afterthought having realized the that the other allegations would not stand the ground, being devoid of any merit. It is too much to assume that the stock options granted to an officer by ICICI Bank upto 2011, can be used to allege quid pro quo attributable to him/her (RPS) years after superannuation in 2013 and connecting it to some remote settlement orders passed in 2019-2021. That too, when there is nothing to indicate that the RPS was party to the decision-making process of the High-Powered Committee of SEBI in any manner at all.”
Conclusion
The Lokpal held that none of the allegations disclosed any offence under Sections 7, 11 or 13 of the Prevention of Corruption Act, 1988. It also observed that the complaints were largely based on the report by known short seller Hindenburg, and the allegations were speculative and bordered on frivolity.
“we need to record that the complaint(s) under consideration were essentially founded on the Hindenburg Report dated 10.08.2024, by a known short seller trader whose focus was to expose or corner Adani Group of Companies. As noted in our order dated 20.09.2024, that report by itself cannot be made the sole basis to escalate action against the RPS. The Complainant(s) being conscious of this position advisedly attempted to articulate allegations independent of the stated report but the analysis of the allegations by us, ended with a finding that the same are untenable, unsubstantiated and bordering on frivolity.”
Applying the test laid down in Lalita Kumari the Lokpal did not assess whether the allegations were true, rather, it assessed whether the complaints disclosed any cognizable offence. It concluded that the allegations were based on assumptions, lacked verifiable material, and did not justify an investigation under the Prevention of Corruption Act, 1988.
Mahua Moitra was represented by Advocate Prashant Bhushan.
Madhabi Puri Buch was represented by Senior Advocate Arvid P. Datar briefed by Advocates Amarjit Singh Bedi, Surekha Raman and Srisatya Mohanty.
Case no. – 186, 188 and 222/2024