The Supreme Court on Monday issued a contempt notice to the Securities and Exchange Board of India (Sebi) on Reliance Industries’ (RIL) plea alleging non-compliance of its August 5 order that directed the market regulator to provide the company access to certain documents. While the regulator cited pendency of its review petition for not acting upon the court’s order, the latter said it cannot be a ground to stay the order.
The company had sought three documents from Sebi that it had claimed would exonerate it and its promoters from criminal prosecution initiated in a case related to the alleged irregularities in acquisition of its own shares between 1994 and 2000.
While the SC had in August directed Sebi to share the documents “forthwith,” the market regulator had not so far shared the three documents — two legal opinions by former SC judge BN Srikrishna and a report by former ICAI president YH Malegam which examined the irregularities. Sebi claimed that they are awaiting the outcome of Sebi’s review petition.
A Bench led by Justice MR Shah, asking Sebi to explain as to why it should not initiate contempt proceedings against it and its authorised representative for non-compliance of its order, posted the matter for further hearing on December 2.
RIL, in its contempt petition against Sebi and its authorised representative, Vijayan A, alleged that there is no justification for Sebi to continue to resist the production of these documents, and that its continued withholding of the same constituted “wilful disobedience, contumacious disregard and defiance” of the SC’s orders.
RIL was represented by senior counsel Harish Salve and former attorney general and senior lawyer KK Venugopal appeared for Sebi.
Sebi told the court that its review petition was to be heard in chambers on October 19, but there is no information about its outcome so far and had sought two weeks. However, the Bench didn’t agree, saying there is no stay on the August 5 judgment as of now.
Sebi’s conduct is liable to be dealt with heavily at the hands of the SC in the interest of justice and invites the maximum penalty prescribed under law, the company stated, urging the top court to initiate contempt proceedings against Sebi.
RIL also told the SC that since it is not aware of the persons responsible for the ‘contumacious’ conduct, the directions should be given to the “alleged contemner to disclose on affidavit the identities of all the individuals involved in and/or responsible for the conduct/omissions”.
Sebi had, in January 2019, rejected RIL’s request for the “privileged” documents on the grounds that under the Sebi (settlement proceedings) regulations, the accused company had no right to seek information from it.
Chartered accountant S Gurumurthy had filed a complaint with Sebi in 2002 alleging fraud and irregularities by RIL, its associate companies and their directors/promoters, including Mukesh Ambani and his wife, Nita; Anil Ambani and his wife, Tina; and 98 others in the issue of two preferential placement of non-convertible debentures in 1994. Sebi had alleged that RIL, along with Reliance Petroleum, had “circuitously funded the acquisition of its own shares” in violation of Sections 77 and 77A of the Companies Act, 1956, and the market regulator’s then takeover code, among various other regulations.