Supreme Court Rejects SEBI’s Appeal Against Reliance And Mukesh Ambani

Supreme Court Rejects SEBI’s Appeal Against Reliance And Mukesh Ambani

The matter pertained to the alleged manipulative share trading of the erstwhile Reliance Petroleum

The Supreme Court has turned down the Securities and Exchange Board of India (SEBI) appeals against the Securities Appellate Tribunal’s ruling, quashing the markets regulator's 2021 order against Reliance Industries Ltd (RIL), managing director Mukesh Ambani, the Navi Mumbai Special Economic Zone (SEZ) and the Mumbai SEZ.

The case pertained to the alleged manipulative share trading of the erstwhile Reliance Petroleum Ltd (RPL).

The bench of Justice JB Paridiwala questioned, "What erroneous interpretation do you find with Section 15 (h)? Thirty years of litigation is a long time. No question of law is involved.”

However, on 02 December, the top court will hear RIL’s cross-appeal against the SAT order, which upheld SEBI's decision including the penalty imposed on the company.

In January 2021, SEBI penalized RIL Rs.25 crore and Ambani Rs.15 crore. The Navi Mumbai SEZ was directed to pay Rs.20 crore.

(RPL was absorbed into RIL in 2009).

The market regulator had observed that a resolution was passed on 29 March 2007, approving an operating plan for 2007-2008 and resource requirements for the subsequent two years (Rs.87,000 crore). In November 2007, RIL decided to sell about 5 percent of its shareholding.

The regulator maintained that RIL appointed 12 agents to undertake transactions in the 2007 RPL Futures. The settlement period was from 01 November 2007 to 29 November 2007.

The agents allegedly took short positions in the futures and options (F&O) segment on behalf of RIL, while it undertook transactions in RPL shares in the cash segment. Various transactions were undertaken by RIL in the cash segment and by the agents in the F&O segment.

Meanwhile, it was observed that trading in the cash segment in the last 10 minutes on 29 November 2007 resulted in a fall in the prices of RPL shares, which also lowered the settlement price in the RPL Futures in the F&O segment.

Ambani was deemed guilty of the offence committed by RIL, as he was the principal officer responsible for the day-to-day and overall operations.

SEBI accused Navi Mumbai and Mumbai SEZ of financing the alleged manipulation scheme by funding the 12 named entities, stating that they were complicit in manipulating and profiting illegally.

The regulator had held that RIL violated the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Regulations, 2003, by entering a well-planned operation with its appointed agents.