SAT admits Anil Ambani plea in RHFL case, directs 50% deposit of penalty

The Securities Appellate Tribunal (SAT) on Friday admitted a plea by Anil Ambani against an order by the Securities and Exchange Board of India (Sebi) in which the markets regulator had imposed a penalty of Rs 25 crore on Ambani and debarred him from the markets for five years in a matter related to Reliance Home Finance (RHFL).

The tribunal has directed Ambani to deposit 50 per cent of the penalty amount and asked Sebi to file a reply in the matter within four weeks.

 “There should be no recovery of the penalty amount subject to 50 per cent of deposit within four weeks,” said Justice P.S. Dinesh Kumar.

In an order dated August 22, Sebi had alleged siphoning off of funds from RHFL by doling out loans to borrowers linked with the promoters.

Sebi had imposed a total penalty of Rs 625 crore on 26 entities.

While representing Ambani, senior advocate Harish Salve argued that the market regulator was overstepping its jurisdiction. “Sebi is a markets regulator, not a corporate affairs regulator,” he argued to the tribunal.

He further added that “not a single rupee” came into the accounts of Ambani nor was Sebi able to establish that he got the benefits.

Seeking stay on the order, Salve said that Sebi issued the August 22 order when an interim order in the matter was already issued two years back.

The counsel for Sebi argued that “loans worth thousands of crores” were given without following the required credit process from a listed company where shareholders depend on the value of the company.

He added that Ambani signed and approved loans which were in violation of court orders.

Further, the Sebi counsel claimed that amounts in the range of Rs 4,000-8,000 crore had gone to related parties or connected entities.

The matter pertains to general purpose working capital loans disbursed by RHFL during 2018 and 2019. The regulator found several irregularities, violations and disclosure lapses at RHFL.

The loans extended by RHFL had increased significantly to Rs 8,670 crore in 2018-19 from Rs 3,742 crore in 2017-18.

According to the Sebi order, the total outstanding amount which was pending to be received by RHFL stood at Rs 6,931 crore.

Story so far
 

- In an order dated August 22, Sebi had imposed  Rs 25 crore penalty on Anil Ambani

- Had debarred him from the markets for five years, restricted from taking key roles

- Sebi had alleged that money was siphoned off from RHFL to borrowers linked with the promoters

- A total penalty of  Rs 625 crore was imposed on 26 entities, including Ambani

- A few other entities have also challenged the Sebi order separately