The Securities Appellate Tribunal (SAT) has disposed of an appeal filed by Reliance Industries (RIL), refusing to interfere at a time when the company is trying to get the case settled by way of a consent order. The case relates to a regulatory probe in which promoters increased their stake by more than 5% in RIL without making the mandatory public announcement.
We are given to understand that consent proceedings are still pending... We are of the view that this is not the right stage at which the tribunal should interfere... We are, therefore, not intervening at this stage. The appeals are disposed (of), said the SAT bench, comprising presiding officer PK Malhotra and member Jog Singh. This comes as a setback to the Mukesh Ambani-controlled company that issued warrants to around 38 entities way back in 1994.
These entities converted the warrants into shares in 2000 due to which the promoter stake in the company increased by 5%. While it is more than 13 years since the warrants were converted into shares, the regulator initiated a probe against the company as late as 2011 for not making the mandatory public announcement and, thereby, violating the creeping acquisition norms.
Appearing on behalf of RIL, senior counsel Janak Dwarkadas said that the inordinate delay in serving the notice should be enough for the tribunal to decide on the matter. The showcause notice ought to be set aside on this ground alone, he argued, referring to the 11-year delay since the warrants were converted into shares.
According to reports, Sebi issued a notice to RIL in February 2011, asking the company to present itself in the adjudication proceedings. While it could not be ascertained what the current stage of the adjudication proceedings is, arguments presented by the counsels appearing before SAT reveal that RIL is trying to get the matter settled through the consent mechanism.
In the consent process, the entity accused of irregularities can settle the charges by paying a fee without admitting or denying guilt.