The Central Vigilance Commissioner's office, has however, shot down the CBI's recommendation under the PCA (which is applicable only to public servants). The only prosecution that may now be launched, perhaps will be against Sachdeva under the Companies Act.

The fate of the case was steeped in suspense ever since the FIR was filed in April 1995. Sources in Mumbai however reveal that the (accused) officers of SEBI and SBI Caps had been making their representations to their respective boards on their defence. An high ranking official of the Ministry of Finance also gave his views to the CVC on the matter, it is learnt. The CVC seems to have accepted the viewthat the officers' conduct was purely an administrative action based on their judgement of the proposals put forth by Sachdeva.

The sanction was required under the single directive principle, which has been incorporated once again in the ordinance granting statutory status to the CVC recently.

The case relates to December 94-January 95 in the matter of the Rs 699.51 crore public cum rights issue of fully convertible debentures of MS Shoes. The company wanted to collect Rs 428 crore by way of the public issue before the 1995 budget. The FCDs would be converted into shares only on April 1, 1995 and the FCD holders included the promoters. But the SEBI norms required the issue to close in 30 days' time. To keep the issue open for FCD holders also, Sachdeva sought a waiver from SEBI on the 30-day stipulation. SEBI granted that application.

Also, the price mentioned in TV advertisements issued by the company compared the price of FCDs with the peak market price of the shares of Rs 505. This was misleading asthe prices compared should have been those of ex-rights. Though some of the ads were withdrawn following the SEBI order, the DD ads could not be pulled out.

The confusion on the ads continued till February 18 when the issue closed. SEBI and the BSE and DSE issued show-cause notices to the company for having misled the investor. Then followed a flurry of withdrawals of applications. On March 23, SBI Caps, the lead manager to the issue, also decided to sue the company. Sachdeva was arrested by the CBI on April 7, 1995. The FIR filed by the CBI named P S Mehrotra, GM, SBI Caps; Neethika Juneja, manager, SBI Caps; and M D Patel, then executive director of SEBI, as also one of his assistants. Joint director of the CBI, Mahendra Kumawat was not available for comment. DIG K P Raghuvanshi, when contacted, refused to comment.