Mukesh Ambani: Securities Appellate Tribunal Nullifies Sebi’s Charges in Reliance Petroleum Trading Case
NEW DELHI (India CSR): In a landmark decision, the Securities Appellate Tribunal (SAT) overturned the Securities and Exchange Board of India’s (Sebi) penalties against Mukesh Ambani, Chairman of Reliance Industries Limited (RIL), and two other entities. The case, dating back to 2007, involved allegations of manipulative trading in Reliance Petroleum shares. The tribunal’s decision followed an appeal against Sebi’s 2021 ruling.
Sebi’s 2021 Penalties
In early 2021, Sebi levied substantial fines related to the Reliance Petroleum (RPL) case: Rs 25 crore on RIL, Rs 15 crore on Ambani, and additional fines on Navi Mumbai SEZ and Mumbai SEZ. Both SEZs, promoted by Anand Jain, a former associate in the Reliance Group, joined Ambani in contesting Sebi’s decision.
The tribunal’s comprehensive 87-page order not only annulled Sebi’s verdict against Ambani and the SEZs but also instructed Sebi to reimburse any collected fines. The judgment centered on the absence of concrete evidence implicating Ambani in the alleged illicit trades.
The 2007 RPL Share Trade Context
The case originated from the trading of RPL shares in 2007, following RIL’s decision to divest approximately 5% of its stake in RPL. This decision, preceding RPL’s eventual merger with RIL in 2009, was reportedly authorized by RIL’s board to specific individuals, excluding Ambani from direct involvement.
Tribunal’s Observations on Corporate Responsibility
The SAT emphasized that holding a managing director automatically accountable for every legal breach by a corporation is not tenable. The evidence, including minutes from RIL board meetings, indicated that the questioned trades were executed by senior officials without Ambani’s knowledge, absolving him of direct liability.
Sebi’s Failure to Establish Ambani’s Involvement
The tribunal observed that Sebi couldn’t substantiate Ambani’s involvement in the trades executed by the senior executives. However, the appeal concerning RIL itself was dismissed by the SAT bench, comprising Justice Tarun Agarwala and Presiding Officer Meera Swarup, leaving the company’s penalties intact.
Reference to the 2017 Sebi Order
The tribunal also referenced a 2017 Sebi order, which demanded over Rs 447 crore in disgorgements from RIL and other entities in the RPL case. In 2020, the tribunal had dismissed an appeal by the company against this particular order.
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