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Share acquisition case: Won’t force Sebi to give documents to Reliance Industries, says Supreme Court

RIL believes that these documents would negate the allegations of wrongdoing in the acquisition of shares and this would have a vital bearing on the criminal case being filed by Sebi.

A bench led by Chief Justice NV Ramana, while asking Sebi to file its reply to RIL’s appeal observed that it will not “force” the market regulator to share the “confidential” documents.
A bench led by Chief Justice NV Ramana, while asking Sebi to file its reply to RIL’s appeal observed that it will not “force” the market regulator to share the “confidential” documents.

The Supreme Court on Thursday advised the Securities and Exchange Board of India (Sebi) to provide Reliance Industries (RIL) access to documents the company has sought in connection with a share acquisition case, but refrained from issuing a directive to that effect, as the regulator termed these “privileged information”.

A bench led by Chief Justice NV Ramana, while asking Sebi to file its reply to RIL’s appeal observed that it will not “force” the market regulator to share the “confidential” documents.

It is better to give the company access to the documents so that “the issue can be resolved once for all”, the apex court said at the start of the hearing.

RIL wants Sebi to share certain documents that it thinks will exonerate it and its 108 promoters in a case related to the acquisition of RIL shares between 1994-2000. The regulator is seeking to initiate criminal prosecution against these persons in connection with the case.

Besides Sebi’s records, the company also wants the opinions given by former SC judge BN Srikrishna and former ICAI president YH Malegam’s report, which examined the alleged irregularities on Sebi’s request.

RIL believes that these documents would negate the allegations of wrongdoing in the acquisition of shares and this would have a vital bearing on the criminal case being filed by Sebi.

The company also told the apex court that it is entitled to disclosure of all material that would help it resist the restoration of a criminal complaint by Sebi.

The CJI, at the start of the hearing, told Sebi that “the document must be in favour of the company, else they would not ask … Whatever material is in favour of the accused, in all fairness, (Sebi) should give (RIL) a copy”. He observed that once a document is relied on for prosecution, it has to be given to the accused.

Senior Sebi counsel Arvind Datar told the judges that the regulator has not relied on the documents which RIL is seeking, but is going by its own internal inquiry. He also said there is no point in sharing them at this moment when the HC is yet to hear the Sebi’s revision plea. “If the revision is admitted, then we will share. If the same is rejected for delay, then nothing survives,” Datar said. He said the special court had not even considered “public interest” while dismissing Sebi’s plea.

The apex court will hear the case next on May 12.

RIL had challenged the Bombay high court’s March 28 order that refused to grant any relief for production of material gathered by the regulator. The high court had said it would hear Sebi’s appeal against a Sebi special court decision along with RIL’s objections to the criminal case.

Sebi had sought restoration of the case before the HC after the Sebi special court had on September 30, 2020, dismissed its July 10, 2020, complaint related to RIL’s transactions. The special court had dismissed Sebi’s plea for being barred by limitation as there had been a delay of more than 15 years.

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.

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