The Bombay High Court today adjourned the Securities and Exchange Board of India (Sebi)-Central Information Commission (CIC) case to December 19, while directing that Reliance Industries (RIL) should be made party to this case.
Sebi is appealing against an the order passed by information commissioner Satyananda Mishra last month asking it to disclose information in the 2007 RIL insider trading case. The CIC had passed this directive based on an appeal filed by Bangalore-based lawyer and RTI activist Arun Agrawal, who had asked Sebi to disclose details of the consent order proceedings in the case and also the identity of the entities involved alleged insider trading.
The Bench comprising Justice DY Chandrachud and AA Sayed today observed that RIL should be given a chance to present its version as the disclosures are pertaining to the company.
"We may accept their case or reject it. Everybody has to be given a chance," said Justice Chandrachud said on Tuesday while posting the matter to December 19.
Arun Agrawal, who was appearing in person, argued that was no need to hear RIL as it has no fiduciary relationship with the regulator. “If it is a bank, income tax department or lawyer, there is a fiduciary relationship. But there cannot be a fiduciary relationship between a regulator and a violator,” he said.
The court today questioned the Sebi counsel that why should the regulator have any problem in disclosing the information on the basis of which it has come out with a consent circular. RIL and Sebi were trying to settle this case through consent process.
“He [Arun Agrawal] wants disclosure on the underlying process of the consent circular. What is the harm in disclosing the file notings. Ultimately, you have issued that circular. It is not something that is confidential. You have a file relating to that circular. Give him that file,” said Justice Chandrachud.
The court has also directed the Sebi counsel to take instructions from the regulator if it can disclose the file notings and the underlying process of the consent route circular to the RTI applicant.
The Sebi counsel, Jamshed Cama argued that information regarding commercial confidence or trade secrets cannot be given unless CIC proves it is in public interest.
“Prima facie, CIC could be satisfied that this is in public interest. But the question is, is it merely enough to say that. He can't simply say that this is in public interest, he should demonstrate in his order as to how it is in public interest,” said Cama.
In reply to this argument, Agrawal highlighted that such disclosures will keep the general public informed and educated about the risk they may confront while investing in the market. “Even with the most hardened criminal, his face is covered but his name is made public,” he said.
Agrawal questioned Sebi's rationale behind settling a Rs 500 crore insider tradng case with consent order of just Rs 10 crore.
“Please understand the gravity of the matter. There is a consent order through a circular. It says nothing but to enter with a illegal settlement with corporate. Today if a Rs 500 crore case is settled for Rs 10 crore, then every party, who violates rules, will ask why should I not be given the privilege of giving 10% of the loot and get exonerated,” Agrawal argued.
When Justice Chandrachud asked the status of the case, the Sebi counsel told the court that investigation report in the RIL insider trading case is complete and it has to be considered by a Sebi whole time member. “The next step would be prosecution or penalty,” said Cama.