Nearly three decades after investigations into the alleged manipulation of shares of BPL Ltd, Videocon International Ltd and Sterlite Industries Ltd shook India’s stock market, a special court under the Securities and Exchange Board of India (SEBI) Act has convicted six companies, part of the Damayanti group linked to late stockbroker Harshad Mehta and two of their directors, Dinesh Doshi and Anil Doshi, for failing to comply with multiple summons issued by the market regulator.
In six separate judgements delivered last week, special judge RM Jadhav convicted Dinesh Doshi and Anil Doshi, along with six firms identified as part of the 'Damayanti group', for withholding information and documents sought by SEBI during its investigation into abnormal share price movements in 1998.
The convicted firms are Starshare Investments & Finanz, Ikshu Finvest, KRN Finvest & Leasing, Esquire International, Money Television and Industries Ltd and CDP Fincap & Leasing.
The court imposed a cumulative fine of ₹1.80 crore on the accused. Each director was directed to pay a total fine of ₹60 lakh, with the court warning of one month’s simple imprisonment in default of payment. The duo was also ordered to collectively pay an additional ₹60 lakh on behalf of the six companies.
Proceedings against two other directors, Vinod Shah and Dilip Shah, were abated following their deaths during the trial.
The court observed that the prosecution against the accused remained valid irrespective of the role allegedly played by Mr Mehta, known by the moniker Big Bull, in the transactions under investigation.
“The prosecution of the accused is proper irrespective of the fact that now deceased Harshad Mehta was the key person manipulating stocks,” the court noted.
Judge Jadhav held that the accused directors failed to establish that the non-compliance took place without their knowledge or that they had exercised due diligence to prevent the offence.
“It is evident, established and proved beyond all reasonable doubt that accused company and its directors have failed to comply with the summons issued by the investigating authority,” the court stated.
The case traces its origins to SEBI’s investigation launched in 1998 into alleged manipulation in the shares of BPL, Videocon International and Sterlite Industries after the regulator noticed abnormal price movements and unusually large trading volumes between April and June that year.
According to SEBI, investigations into broker records revealed that several brokers had traded in these shares primarily on behalf of a common set of clients, including companies allegedly forming part of Mr Mehta’s Damayanti group.
The regulator had issued multiple summons directing the accused companies and their directors to furnish transaction records, financial documents and related information. Although some directors eventually appeared before investigating officers and recorded statements, SEBI alleged that they consistently failed to provide crucial documentation necessary for the probe.
A show-cause notice (SCN) issued in August 1998 warned the accused of prosecution under Section 24 of the SEBI Act for non-compliance. The companies responded by stating that their books of account were 'under preparation', an explanation SEBI viewed as a delaying tactic.
Despite repeated reminders and fresh summons issued through late-1998 and early-1999, the required records were allegedly never furnished, prompting SEBI to initiate criminal prosecution in 2014.
During the trial, the defence argued that the Doshi brothers were not responsible for the transactions and claimed that Mr Mehta, the Big Bull, was the real figure controlling the Damayanti group entities.
The accused contended that the companies were effectively operated by Mr Mehta, who was related to the family through marriage, and alleged that the entities functioned as 'fictional companies' used by him without the directors’ knowledge or active consent.
The defence also argued that the prosecution was barred by the principle of double jeopardy as the directors had already faced convictions in similar matters involving other companies.
Rejecting the defence, the court clarified that the present prosecution is limited solely to the failure to comply with statutory summons and furnish information sought by SEBI.
“The present prosecution is limited to the fact that accused have failed to furnish the information and necessary documents as sought under summons,” the judge observed, adding that Mr Mehta’s death could not exonerate the accused from criminal liability arising out of non-compliance.
Last year in June 2025, special judge Jadhav had convicted Rijuta Finvest and the Doshi brothers for failing to provide information sought by SEBI during the probe into suspicious trading in BPL, Videocon and Sterlite shares. The company and its directors were then fined ₹2 lakh each.
That case, which also originated from SEBI’s 1998 investigation, involved allegations that Rijuta Finvest deliberately withheld records despite repeated summons and show-cause notices from the regulator.
While convicting the accused in the June 2025 matter, the court had taken note of the advanced age and medical conditions of the Doshi brothers. It observed that Anil Doshi was suffering from prostate cancer while Dinesh Doshi was battling liver cancer.
The convictions mark another chapter in the long legal aftermath of the securities market scandals associated with Harshad Mehta whose name became synonymous with one of India’s biggest stock market scams of the 1990s.
Although Mr Mehta died in 2001, investigations and prosecutions linked to entities allegedly associated with him have continued for decades through multiple regulatory and criminal proceedings.
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Such delay in arriving at a judicial decision?
The judicial system is a laughing stock. When will we see reform here?
Economic reform happened because both politicians and the rich expected to benefit from it.
Politicians don't want reform of the justice system because all of them hope to use the same delay of justice to help them in their careers/crimes somewhere down the line.
Will the middle class act or will kick the can down the road as they have done till now, after they reaped the benefits of independence and then liberalization?
In the US as well as in other western countries, it is the middle class which has pushed for reform as the poor are too weak and the rich too strong to want it.
Indian middle class just pontificates but except for outfits like the ML Foundation, no one organizes to bring about change.