The PIL has pointed to ``The failure and neglect of securities market regulator the Securities and Exchange Board of India (Sebi) to prevent the capital market crisis,'' and has sought the court's intervention to stop stock lending and borrowing activity with immediate effect.

The PIL also requested the court to ask Sebi to direct all the stock exchanges (SEs) to retain in an escrow account the amounts that may accrue to market manipulators.

A two-judge bench comprising Justice AP Shah and Justice S Vajifdar is scheduled to hearing the PIL today. The PIL was mentioned on Monday in the court of Justice AP Shah which directed the further hearing on Tuesday.

The PIL has listed the Union of India, the Sebi chairman, the BSE president and the NSE as respondents.

The petitioner has submitted to the court that Sebi has failed and neglected to issue urgent directives that are absolutely necessary to protect the capital market in the present crisis.

The stock markets on Monday continued to reel under sustained selling pressure and the Sensex tumbled by another 114 points to close at 3767.89 on Monday. The benchmark index has lost 499.13 points in just seven trading sessions from February 28, the day the Budget was presented. The sensex jumped by 177 points after the presentation of the Budget and closed at 4267.04.

The PIL also says that Sebi should be directed to immediately prevent stock borrowing and lending transactions from custodians/depositories. This is its public duty, the petitioner has urged. The PIL has also prayed to direct Sebi to direct all the stock exchanges to retain in escrow, the differential ammounts that would otherwise enure to the benefit of market manipulators.

The petition talks about an active bear cartel in the market which hammered down the prices of technology and momentum stocks as a result of which the capital market saw massive erosion in market capitalisation of 13 leading stocks. The petition says the most affected stocks during the present capital market crisis includes HFCL, Pentamedia, Digital, Satyam, Silverline, Tata Steel, Tata Engineering, Infosys, Global Tele, SSI, Aptech and DSQ.