The apex court also dismissed another Sebi appeal against SAT’s December 4 order that set aside the Rs 25-crore penalty imposed by the market regulator on RIL, Rs 15 crore on Mukesh Ambani, Rs 20 crore on Navi Mumbai SEZ and Rs 10 crore on Mumbai SEZ for their alleged role in the manipulation of prices of Reliance Petroleum Ltd (RPL)s shares in November 2007. While the appellate tribunal had quashed the 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 cannot absolve himself and plead ignorance about the entire scheme of manipulative transactions undertaken for the benefit of the company in the shares of RPL in the Cash and F&O Segment.
However, the apex court agreed to hear a separate cross-appeal by RIL against SAT’s December order in the case of price manipulation of RPL shares on December 2. RIL in its appeal told the SC that SAT had upheld the penalty despite Sebi’s whole-time member having ordered it to disgorge an amount of Rs 447.27 crore in 2017, besides prohibiting it from dealing in equity derivatives in the F&O segment for one year.
In this case, RIL had allegedly sold a large chunk of RPL futures, ahead of selling the shares in the cash market. RIL’s sale of RPL shares in the cash market took place in the last 30 minutes of trading on the expiry day of the futures contract. The short positions in RPL futures were allowed to expire, and the whole operation earned a large profit for RIL, amounting to price manipulation and fraud, SEBI had ruled.
A bench led by Justice JB Paridiwala while rejecting Sebi’s appeals said that there has been an inordinate delay in these proceedings. “Thirty years of litigation… We find no question of law in this appeal warranting our Interference… Enough is enough! You (Sebi) cannot chase a person like this for 20 years,” it said.While senior counsel Arvind Datar and Pratap Venugopal appeared for Sebi, RIL was represented by senior counsel Harish Salve and counsel KR Sasiprabhu.SAT’s July order was with regard to a case where RIL had issued shares worth Rs 12 crore to 38 entities in January 2000 as a conversion of warrants acquired in 1994, which Sebi deemed a breach of takeover regulations. Sebi claimed that the 30 million warrants converted by the promoter entities and persons acting in concert led to a 6.83% rise in their collective shareholding in RIL, exceeding the then-prevailing 5% limit prescribed in the takeover regulations for promoters. The regulatory ceiling then required an open offer to public shareholders, but that was never made by the promoters and connected entities, which SEBI held was a breach of the takeover norms.
While the show-cause notices to RIL’s promoters was issued in February 2011, Sebi had rejected their settlement applications and imposed a joint penalty of Rs 25 crore on Reliance Industries Holdings, Mukesh and Anil Ambani. Tina, Nita, Isha Ambani, Kokilaben Ambani, and Reliance Realty were also part of the matter, along with some other entities.
