In a significant development, the Supreme Court on Monday dismissed the Securities and Exchange Board of India’s (SEBI) appeal against a Securities Appellate Tribunal (SAT) order that had previously set aside penalties imposed on Reliance Industries Ltd (RIL) Chairman Mukesh Ambani and two other entities concerning alleged manipulative trading of Reliance Petroleum Ltd (RPL) shares in November 2007.
Justices J B Pardiwala and R Mahadevan of the Supreme Court concluded that no substantial question of law was presented by SEBI’s appeal that merited overturning the SAT’s decision. “No question of law involved in this appeal warranting our interference. Dismissed. You can’t chase a person like this for years,” the bench remarked, signaling an end to the legal pursuit initiated by SEBI against Ambani over alleged stock manipulation.
The controversy centered around the trading of RPL shares in the cash and futures segments following RIL’s strategic decision in March 2007 to sell a 5% stake in RPL. This subsidiary was later merged with RIL in 2009. SEBI had initially imposed hefty fines in January 2021, including Rs 25 crore on RIL, Rs 15 crore on Ambani, Rs 20 crore on Navi Mumbai SEZ Pvt Ltd, and Rs 10 crore on Mumbai SEZ Ltd, all of which were promoted by Anand Jain, a former executive at the Reliance Group.
SEBI’s allegations suggested that the implicated parties had engaged in fraudulent trading that manipulated the stock price of RPL during the last 10 minutes of trading on November 29, 2007, which adversely affected the price of RPL securities in both cash and Futures & Options (F&O) segments and purportedly harmed the interests of other investors.
However, the SAT in December 2023 refuted these charges, stating that the impugned trades were carried out by two senior RIL officials without Ambani’s knowledge, as demonstrated by minutes from two RIL board meetings. The tribunal further directed SEBI to refund any fines already collected from the entities involved.
