The Bombay High Court on Tuesday directed that Mukesh Ambani-led Reliance Industries Limited (RIL) be made a party to a dispute between the capital market regulator Securities and Exchange Board of India (Sebi) and the Central Information Commission (CIC) over disclosure of information on allegations of insider trading by the company.
Sebi had approached the High Court challenging an order of the CIC directing it to disclose the information.
The CIC had passed the order in response to an RTI application filed by Bangalore-based lawyer Arun Agarwal seeking the names of entities alleged to have been involved in insider trading of Reliance Petroleum (RPL) shares on behalf of RIL.
The Sebi contends that such a disclosure would hamper investigations which are still going on in the matter. The counsel for Sebi, JP Cama, also contended before the court that the information is not of a nature which would be of public interest.
A division bench of Justices DY Chandrachud and AA Sayed asked Sebi to inform the court if it is possible for the body to disclose file notings pertaining to the case.
According to Sebi, while the merger process between RPL with RIL was on, RIL was involved in short selling of RPL shares through its entities.
Short selling is a process where an entity or trader sells shares in the market without owning them with expectations that prices will fall, to buy them at a later date and thereby earn a profit.
The company had hedged their sale position in the derivatives segment. It first sold the shares in derivatives segment and then covered the derivatives position, which resulted in a hefty profit.
The case is now slated to be heard on December 19.
RIL sought a consent order from the Sebi twice, but it didn’t work as investigation was not over.
As per Sebi norms, a firm or a person facing probe can submit an application for a consent order, without admission of guilt and without denial of liability. It also means the company will not have to carry the stigma of a regulatory rap.
Last year, Sebi had passed a consent order to settle