The Securities Appellate Tribunal (SAT) today adjourned the admission of a plea made by Reliance Industries (RIL) against market regulator Securities and Exchange Board of India (Sebi) to January 24 in a case related to alleged insider trading.
The Mukesh Ambani-led company in his appeal before SAT has challenged Sebi's rejection of consent request and refusal to give documents related to the case.
SAT presiding officer PK Malhotra asked whether the appeal was maintainable before the tribunal as the consent process is “without any prejudice to the legal proceedings. “Can an ADR (alternative dispute resolution) be a subject matter of appeal before the tribunal? I am very much doubtful in the absence of a statutory backing,” said Malhotra.
“This appeal is a complete non-starter. It is in breach of their own undertaking that under this procedure you do not have an appeal. A party when it files an application undertakes it will not agrue on it. Secondly appeals are not contemplated under this procedure at all. It is outside the adjudication process, it will set an extremely grave preceding,” said Rustomjee.
While senior counsel Janak Dwarkadas, who appeared for RIL said the appeal is primarily about the procedures adopted by Sebi where it first said that the case is consentable and back tracked on it.
“In April 2011, Sebi said I (RIL) am entitled to consent. They say now you are not entitled. No authority under the constitution can act in this manner,” said Dwarkadas.
This case dates backs to 2007, when RIL had allegedly made unlawful gains by trading in the shares of erstwhile Reliance Petroleum (RPL) during the merger between the two. Sebi, which investigated the matter in 2008, had issued a show-cause notice to RIL in the case in 2010.
According to Dwarkadas, Sebi, in a written letter to RIL in 2011, had said this case can be settled through the consent process. In the same letter Sebi had also stated that they will not proceed with the hearing on the show-cause till the consent proceedings are going on, said Dwarkadas. Following which to have a “meaningful dialogue” RIL asked certain documents.
“You first don't give the documents. When I file an appeal you give not all but some of the documents. Before the ink on the paper has become dry you write to me and say this is not consentable,” said Dwarkadas.
RIL counsel said it is challenging Sebi's application of the consent circular in a “discriminatory manner where one party can take advantage and one cannot.”
Sebi counsel Rustomjee also sought more time from SAT to study RIL's appeal stating it received the copy of the petition just a day earlier.
The consent mechanism, similar to out-of-court settlements, is an agreement between the regulator and violator to drop the charges of wrongdoings without admission or denying of guilt. The settlement terms could involve monetary penalty and voluntary debarment from the capital market.
