New Delhi:
The Securities Appellate Tribunal (SAT) on Monday quashed the fine imposed by Sebi on Reliance Industries Ltd Chairman Mukesh Ambani and two other entities in a case related to alleged manipulative trading in the shares of erstwhile Reliance Petroleum Ltd ( RPL) in November 2007. .
The ruling comes after all entities appealed to the tribunal against the order passed by the Securities and Exchange Board of India (SEBI) in January 2021.
In January 2021, SEBI imposed a fine of Rs 25 crore on Reliance Industries Ltd (RIL), Rs 15 crore on Mr Ambani, the company's chairman and managing director, Rs 20 crore on Navi Mumbai SEZ Pvt Ltd and Rs 10 crore to Mumbai. SEZ Ltd in RPL case.
Both – Navi Mumbai SEZ and Mumbai SEZ – are promoted by Anand Jain, who once served in the Reliance Group.
In its 87-page order on Monday, the tribunal quashed SEBI's order passed in 2021 against Mr Ambani, Navi Mumbai SEZ and Mumbai SEZ.
The tribunal has also directed SEBI to refund the penalty amount in case it was deposited by them with the regulator.
The case relates to the sale and purchase of RPL shares in the cash and futures segments in November 2007. This followed RIL's decision in March 2007 to sell about 5 percent stake in RPL, a listed subsidiary which was later merged with RIL in 2009.
The tribunal said RIL's board had specifically authorized two persons to decide the disinvestment.
Furthermore, the tribunal noted that it cannot be suggested that the Managing Director is ipso facto responsible for every alleged violation of the law by the corporate entities.
“In view of the compelling evidence in the form of minutes of the two board meetings of RIL, which conclusively shows that the impugned transactions were executed by two senior officers without the knowledge of the appellant, no liability can be attached to Notice No. 2. (Ambani),” the tribunal said.
SEBI failed to prove that Mr Ambani was involved in the execution of the transactions executed by two senior managers, it added.
Regarding RIL, a bench comprising Justice Tarun Agarwala and Presiding Officer Meera Swarup dismissed the company's appeal saying, “we do not find any reason to interfere with the impugned order insofar as it relates to RIL company “.
The impugned order refers to the order issued by SEBI in March 2017, in which it had directed RIL and certain other entities to spend over Rs 447 crore in the RPL case. In November 2020, the tribunal dismissed the company's appeal against the order.
Meanwhile, SEBI in its January 2021 order had stated that RIL had appointed 12 agents to execute trades in the November 2007 RPL Futures. These twelve agents took short positions in the Futures and Options (F&O) segment on behalf of the company, while the company undertook transactions in RPL shares in the cash segment.
Sebi in its order had also alleged that RIL had violated PFUTP (Prohibition of Fraudulent and Unfair Trade Practices) rules by entering into a well-planned operation with its appointed agents to earn unnecessary profits from sale of RPL shares in both cash and F&O segments.
Further, the regulator had alleged that the company had manipulated the settlement price of the November 2007 RPL Futures contract by dumping a large number of RPL shares into the cash segment during the last 10 minutes of trading on November 29, 2007.
The execution of the fraudulent transactions affected the price of the RPL securities in both the cash and F&O segments and affected the interests of other investors, SEBI said.
It was alleged that Navi Mumbai SEZ and Mumbai SEZ financed the entire manipulation scheme by funding the twelve entities.
(Except for the headline, this story has not been edited by DailyExpertNews staff and is published from a syndicated feed.)