The Securities and Exchange Board of India (Sebi) is likely to seek the opinion of the Attorney General on whether it should seek a review of the Supreme Court’s August 5 order, directing it to provide Reliance Industries (RIL) access to certain documents. The company has sought the documents claiming it would exonerate it and its 107 promoters from criminal prosecution initiated in a case related to the alleged irregularities in acquisition of its own shares between 1994 and 2000.
Sebi has so far not 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 — that the SC had directed it to share “forthwith”. RIL has now filed a contempt petition against the market regulator and its authorised representative, Vijayan A.
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Sebi’s response to RIL has been that it is awaiting legal advice from its senior counsel for appropriate action.
Sources told FE that Arvind Datar, Sebi’s senior counsel in the SC, has advised it that this is a fit case for review. However, he has also advised it to seek the top law officer’s opinion. When contacted, Datar refused to comment.
In its contempt petition, RIL has told the SC that there was 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 August 5 orders.
RIL has said that Sebi had obviously “misadvised itself” in assuming that its compliance with the judgment is a matter of discretion and on which it can seek advice.
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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 said, urging the apex 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 contemnor to disclose on affidavit the identities of all the individuals involved in and/or responsible for the conduct/omissions”.
Asking Sebi to furnish “forthwith” the documents to RIL, the apex court had in its judgment said “the duty to act fairly by Sebi, is inextricably tied with the principles of natural justice, wherein a party cannot be condemned without having been given an adequate opportunity to defend itself”.
According to the company, it had sent a notice to Sebi stating that if the documents were not received by it by August 18, it would assume that the market regulator has no intention of complying with the orders passed by the SC and the company would take further consequential action as advised.
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.
Earlier, on March 28, the Bombay High Court had refused to grant any relief for production of material gathered by the regulator, saying it would hear Sebi’s appeal against a Sebi special court’s decision along with RIL’s objections to the criminal case. Sebi had sought restoration of the case before the HC after the special court had on September 30, 2020, dismissed its July 10, 2020 complaint related to RIL transactions. The special court had dismissed Sebi’s plea for being barred by limitation as there was a delay of more than 15 years.
