The Securities Appellate Tribunal (SAT) has asked market regulator Securities and Exchange Board of India to file a reply within one month asking why it rejected a consent application filed by Reliance Industries. The appellate will now hear the case on June 14.

It also asked Mukesh Ambani-led Reliance Industries to file a rejoinder on the same matter within that period. The appellate wanted written submissions from both the parties saying that “it was hearing a case of this nature for the very first time.”

The case came up for hearing at SAT after the oil and gas major filed a petition against SEBI on its refusal to settle a case of alleged insider trading through consent, a procedure through which listed companies can resolve cases (of wrongdoing) with the market regulator by paying a fine.

In this case, Reliance Industries has been allegedly engaged in insider trading in sale of shares during the merger of its erstwhile subsidiary Reliance Petroleum in 2007 wherein it made unlawful gains of over Rs 530 crore in the last ten minutes of trading.

Arguing on behalf of SEBI, senior counsel Darius Khambata said the market regulator is not compelled to settle a case through consent and hence the appeal by Reliance Industries was not maintainable.

However, Reliance Industries counsel Janak Dwarkadas said the 10 days time given to the company was not adequate to go through 1,300 pages of documents and that the manner in which the consent application was rejected was incorrect.

However, SEBI had in May last year tweaked certain norms of the consent framework due to which several cases, related to insider trading, are no longer eligible to be settled through this mechanism.

(This article was published on April 8, 2013)
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