SAT disposes of RIL plea in takeover norm violation case

Tribunal refused to interfere as RIL is in talks with Sebi to set the case through consent process

The Securities Appellate Tribunal (SAT) on Monday disposed of an appeal filed by Reliance Industries Ltd (RIL) in a 13-year-old case, where 38 entities were issued notices by the Securities and Exchange Board of India (Sebi) over alleged violation of takeover rules.

The tribunal refused to interfere in the case because RIL is in talks with Sebi to settle the case through the consent mechanism.

A SAT Bench comprising presiding officer P K Malhotra and member Jog Singh said, “We are given to understand that consent proceedings are still pending... We are of the view that this is not the right stage at which the tribunal should interfere. We are therefore not intervening at this stage. The appeals are disposed of...”

In 2000, the Mukesh Ambani-controlled RIL did not make a public announcement after promoters’ stake in the company rose by more than five per cent following conversion of warrants attached to non-convertible debenture issued in 1994.

According to reports 120 million shares were issued to these 38 entities in January 2000 at a price of Rs 75 each.

RIL counsel Janak Dwarkadas argued the case should be set aside due to “inordinate delay” in serving the notice to RIL.

“The show cause notice (SCN) ought to be set aside on this ground alone,” argued Dwarkadas, referring to the delay between conversion of warrants and issue of SCN.

According to reports, Sebi had issued a notice to RIL only in February 2011, asking the company to present itself in the adjudication proceedings.

Consent mechanism is a settlement of proceedings between the market regulator and the alleged violator without admission or denial of the guilt and may involve monetary penalty or a even a voluntary ban in some cases.
STORY SO FAR

• SAT refused to interfere in the case because RIL is in talks with Sebi to settle the case through the consent mechanism
• In 2000, RIL did not make a public announcement after promoters’ stake in the company rose following conversion of warrants attached to NCDs issued in 1994
• According to reports, 120 million shares were issued to 38 entities in January 2000 at Rs 75 each
• Sebi had issued a notice to RIL only in February 2011, asking the company to present itself in the adjudication proceedings