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Court wants RIL to be made party in insider-trading case

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The Bombay High Court has directed that Reliance Industries should be made a party in a case relating to the Securities and Exchange Board of India and Central Information Commission (CIC).

Adjourning the case to December 19, a bench comprising Justice D.Y. Chandrachud and A.A. Sayed observed that as the matter involved RIL, the company should be given a chance to present their case and directed the SEBI lawyers to do so.

Application under RTI

On November 22, the market regulator had filed a petition against CIC, the country’s apex body monitoring the enforcement of the Right to Information (RTI) Act, after its Chief Information Commissioner Satyananda Mishra asked SEBI to disclose all details related to an insider-trading case involving Reliance Industries Ltd in 2007.

CIC directed SEBI to disclose all the details following an RTI application filed by a Bangalore-based lawyer Arun Kumar Agarwal, to which the latter refused.

The court directed the lawyers of SEBI to take instructions from the regulator if it could disclose the file notings and the underlying process of the consent route circular to the RTI applicant.

The court's observations came after Agrawal alleged that Mukesh Ambani-owned RIL and SEBI have been trying to resolve the case through a so-called consent process by paying Rs 10 crore, in which the individual or entity being investigated pays a fine and the regulator drops the case and also all charges of wrongdoing.

Rs 500 cr gain

The alleged case relates to the merger of Reliance Petroleum with Reliance Industries and the short sale of shares in the former by entities related to the latter, ahead of the amalgamation, that led RIL to unlawfully gain around Rs 500 crore in 2007.

The court further questioned SEBI’s intentions behind not disclosing the file notings, on the basis of which it released a circular. It observed that as the notings are not confidential, the regulator should not have any problem revealing them.

However, SEBI is against disclosing the identities of the entities under the scanner, as it feels that the probe is not yet completed and any such disclosure could impact ongoing investigation.

Priyanka.pani@thehindu.co.in

(This article was published on December 4, 2012)
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