RIL asks Bombay High Court to defer proceedings

Files affidavit detailing history of RPL case

Reliance Industries Ltd (RIL) has requested the Bombay High Court to defer its proceedings on a writ petition filed by the Securities and Exchange Board of India (Sebi) against a November order by the Central Information Commission (CIC) till proceedings before the Delhi High Court in the matter are heard and disposed.

RIL also contended the investigation process of Sebi was still on and the regulator had not taken cognizance of any breach of law or regulations as held by the CIC.

The impugned order “holds” RIL “to be in breach of law and rules and regulations even without the investigating agency rendering any finding in respect thereof,” the company said last week in an affidavit, filed after the court directed the company be made party to the case.

The affidavit revealed in detail the long-drawn proceedings between RIL and Sebi, beginning with the decision to sell Reliance Petroleum Ltd (RPL) shares to raise finances for its projects. RIL sold 205 million RPL shares in November 2007.

Sebi first issued a showcause notice on April 29, 2009, alleging violation of the Sebi (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003. On October 8, 2009, the notice was amended by Sebi.

In February 2010, Sebi sent a letter saying investigations had been initiated in the sale of shares of RPL and sought details from RIL.

Sebi issued a fresh showcause in December 2010, superseding the earlier one.

Through several letters between September 2011 and September 2012, RIL had sought for inspection of certain file notings and other documents to “effectively deal with issues raised in the showcause notice”.

But according to RIL, “Inspite of numerous requests and constant follow-up, only partial information has been furnished by Sebi to RIL so far.”

Sebi vs RIL
November 2007: RIL sells 205 mn RPL shares
April 2009: Sebi issues showcause notice to RIL alleging violation of FUTP regulations
October 2009: A day before RIL's personal hearing, Sebi amends earlier showcause notice
February 2010: Sebi writes to RIL that investigation in sale of RPL shares initiated; seeks more info
April 2010: RIL asks Sebi for relevant file notings on the investigation
December 2010: Sebi supersedes earlier notice; RIL seeks fresh opportunity for inspection
Between Sep 2011 and Sep 2012: RIL writes to Sebi four times, asking material info to effectively deal with issues raised in notice
November 2, 2012: Sebi sends letter to RIL purporting to furnish certain information
November 12, 2012: RIL replies to Sebi; reiterates full info and material not provided
November 14, 2012: RIL challenges Nov 2 order and Sebi’s refusal to provide information

The affidavit further talks about an order by Sebi dated November 2, 2012, without revealing specific directions therein. “On November 14, 2012, RIL filed an appeal before Sebi under section 15 (T) of the Sebi Act, challenging the order dated November 2, 2012 and certain relief that Sebi be directed to furnish their requisite information asked for by RIL.”

RIL has appealed before the Securities Appellate Tribunal (SAT) against Sebi for not providing documents related to the case and also against its refusal to settle the case through the consent route. SAT will consider admission of RIL’s plea against Sebi on January 24.

Meanwhile, CIC had directed Sebi to reveal details of RIL’s proceedings with the regulator in the matter of selling RPL shares. While RIL had challenged this in the Delhi High Court, Sebi had moved the Bombay High Court.

“The writ petition filed by RIL was posted before the learned single judge and an order was passed on November 22, 2012, by which the impugned order dated November 6, 2012, has been stayed,” RIL said. It also supported Sebi’s contention that the impugned order was passed by the chief information commissioner “as an officer and the said order is not passed by the commissioner as contemplated by the Act”.

Citing a Delhi High Court decision on the powers of the commissioner to pass orders and hear appeals as an officer and not as a commission, the company argued “the order is liable to be quashed and set aside on that ground”.

Reliance also submitted that the commissioner “has virtually ruled on the showcause notice issued by Sebi to Respondent no 3 (RIL), which was clearly beyond the jurisdiction and authority”.

Similarly, comments made by him on the settlement proceedings between RIL and Sebi are also “without jurisdiction and without authority of law and are liable to be expunged,” the affidavit added.

The Bombay High Court will hear the matter next on Wednesday.