SAT quashes Sebi’s order against Mukesh Ambani, 2 others in RPL case

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The Securities Appellate Tribunal (SAT) on Monday quashed an order against Reliance Industries (RIL), its chairman Mukesh Ambani, and two others issued by the Securities and Exchange Board of India (Sebi). The court also directed Sebi to return any fine deposited by them.


The matter pertains to alleged manipulative trading in November 2007 through 12 agents in the shares of erstwhile Reliance Petroleum (RPL).


In an order issued in January 2021, Sebi had imposed a penalty of Rs 25 crore on RIL, Rs 15 crore on Mukesh Ambani, Rs 20 crore on Navi Mumbai SEZ, and Rs 10 crore on Mumbai SEZ.


Sebi in its investigation alleged that RIL appointed 12 agents to undertake short positions in RPL contracts traded in the derivatives segment at a time when the company undertook sale transactions in the cash segment. As per Sebi’s findings, trading in the cash segment in the last 10 minutes of trade led to a sharp fall in the prices of RPL shares, which lowered the settlement price for RPL futures contracts.


Sebi had alleged that Anand Jain, Chairman of Navi Mumbai SEZ and Mumbai SEZ, was a close associate with RIL, and had some of the agents used by RIL shared the same address. Sebi had alleged that they financed the whole manipulation scheme by funding the front entries of RIL.


Giving relief to Ambani, SAT said that Sebi had failed to establish his direct involvement or knowledge in the trades undertaken by the company and therefore, the finding that he was ‘complicit’ to the violations committed by the company through its two officers is ‘based on surmises and conjectures and on the basis of the figment of imagination’.


For Navi Mumbai SEZ and Mumbai SEZ, the tribunal noted that it was not possible for them to have knowledge that RIL would sell shares in the cash segment and take positions in the futures through its agents. Further, it pointed out that there was no evidence to show prior knowledge of RIL’s decision to sell shares of RPL.


SAT said that Sebi’s allegation that these firms were promoted by RIL was false.


The tribunal also pointed harshly over the delay in investigations by the market regulator and for not supplying certain documents relied upon in the show-cause notice.


“Non-supply of the documents was violative of the principles of natural justice. We are also of the opinion that prejudice caused because of non-disclosure of the relevant material was writ large,” said SAT.