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In a major setback for Mukesh Ambani’s Reliance Industries, the Securities Appellate Tribunal (SAT) has dismissed the conglomerate’s appeal against SEBI in an insider-trading case.
RIL’s appeal had questioned the Securities and Exchange Board of India’s consent order process, through which the market regulator allows companies to settle disputes by paying a sum of money without admission or denial of wrongdoing.
Sources and some legal experts said the company would move the Supreme Court, challenging the judgment through a writ petition.
The seven-year-old case relates to an alleged breach of SEBI’s Fraudulent and Unfair Trade Practices (FUTP) regulations during the merger of RIL and its sister concern Reliance Petroleum Ltd (RPL), in 2007.
Pronouncing the judgment in the four-year-old matter (RIL moved the tribunal in 2010), SAT presiding officer JP Devadhar said the dispute was rejected as it was not “consentable and maintainable”.
“Ordinarily, we would have considered maintainability of the appeal first and, thereafter, considered the merits of the appeal … But in this case, after the appeal was heard on merits, questions regarding maintainability of the appeal arose in view of SEBI framing the 2014 regulations retrospectively, in exercise of powers conferred by Section 15JB, inserted in the SEBI Act retrospectively,” Devadhar said in his 26-page order.
“ …there is no dispute that as on date Section 15JB (4) is in operation. Since Section 15JB(4) bars appeal against any order passed in consent proceedings, we have no option but to dismiss the appeal,” he added.
The SAT order said that SEBI investigations have proved that RIL, in connivance with other entities related/connected to it, took short positions in the futures and options (F&O) segments of the National Stock Exchange in the RPL scrip and sold around 20 crore shares, thereby making an illegal gain of ₹513.12 crore.
The market regulator had tweaked its consent norms in 2012 and made them stricter. However, it excluded serious offences, such as insider trading, from the settlement process.
According to SEBI, under the new norms, the case, which involves insider trading, cannot be settled.
RIL’s share price dipped almost one per cent to ₹1,000 on the NSE soon after the judgment was pronounced, but recovered to close at ₹1,013.60.
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