SC dismisses SEBI’s appeal against SAT relief for Reliance, promoters

The Supreme Court on Monday dismissed the Securities and Exchange Board of India’s appeal against the July order of the Securities Appellate Tribunal (SAT) setting aside the market regulator’s penalty of Rs 25 crore imposed on Reliance Industries (RIL), its promoters Mukesh Ambani and Anil Ambani. was and acquisition of RIL shares between 1994-2000 for violating takeover norms in another April 2021 related case.

The apex court also dismissed SEBI’s second appeal against the SAT’s December 4 order imposing a Rs. 25 crore fine, Mukesh Ambani Rs. 15 crore, at Navi Mumbai SEZ Rs. 20 crore and on Mumbai Rs. 10 crore fine was imposed. SEZ 2007 for their alleged role in manipulating the share price of Reliance Petroleum Limited (RPL) in November 2007. While the Appellate Tribunal set aside penalties against Mukesh Ambani, Navi Mumbai SEZ and Mumbai SEZ in the same case, it upheld SEBI’s penalty against Reliance Industries. RPL was absorbed into RIL in 2009.

Sebi, in its appeal, said that Mukesh Ambani being responsible for the affairs of the company could not absolve himself and could show ignorance about the entire scheme of fraudulent transactions carried out for the benefit of the company in the shares of RPL in the cash and F&O segments.

However, the apex court on December 2 agreed to hear separate cross-appeals by RIL against the December order of the SAT in the RPL share price manipulation case. In its appeal, RIL told the SC that the SAT had upheld the penalty despite SEBI’s complete timing. The member paid him in 2017 Rs. 447.27 crore was ordered to be released, besides prohibiting it from dealing. Equity derivatives in F&O segment for one year.

In this case, RIL allegedly sold a large chunk of RPL futures, before selling the shares in the cash market. The RPL shares were sold by RIL in the cash market in the last 30 minutes of trading on the day of expiry of the futures contract. Short positions in RPL futures were allowed to expire, and the entire operation yielded huge profits for RIL, amounting to price manipulation and fraud, Sebi ruled.

A bench headed by Justice JB Paridiwala dismissed SEBI’s appeal, saying there had been inordinate delay in the proceedings. “Thirty years of litigation… we see no question of law warranting our interference in this appeal… enough! You (Sebi) cannot pursue such a person for 20 years,” he said.

While senior advocates Arvind Datar and Pratap Venugopal appeared for SEBI, RIL was represented by senior counsel Harish Salve and counsel KR Sasiprabhu.

The SAT’s July order was in reference to a case where RIL had sold 38 units in January 2000 at Rs. 12 crore shares issued in conversion of warrants acquired in 1994, which SEBI termed as a violation of takeover rules. Sebi claimed that the 30 million warrants converted by promoter institutions and individuals increased their collective shareholding in RIL by 6.83%, exceeding the then 5% limit set in takeover rules for promoters. Then the regulatory ceiling required an open offer to public shareholders, but it was never done by the promoters and connected entities, in violation of SEBI takeover norms.

When a show-cause notice was issued to RIL’s promoters in February 2011, SEBI rejected their settlement applications and imposed on Reliance Industries Holdings, Mukesh and Anil Ambani Rs. A combined penalty of 25 crores was imposed. Tina, Nita, Isha Ambani, Kokilaben Ambani and Reliance Realty were also part of this along with several other entities.