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December 7, 2022

SEBI issues apology to SC for non compliance order to provide documents to Reliance

by CA Shivam Jaiswal in Income Tax

SEBI issues apology to SC for non compliance order to provide documents to Reliance

An apology has been issued by SEBI to the Supreme Court (SC) as it did not provide access to certain documents to Reliance Industries (RIL).As the market regulator violated the court’s orders to provide RIL with vital case documents, the SC had issued a contempt notice to SEBI. However, SEBI continued to operate evasively despite the court’s order, which prompted the SC to issue a notice of contempt. The Supreme Court on Friday dismissed a petition by Securities and Exchange Board of India (Sebi), seeking review of a 5 August order, directing the market regulator to share certain documents with Reliance Industries Ltd (RIL).

The approach of SEBI, in failing to disclose the documents also   raises   concerns   of   transparency   and   fair   trial. Opaqueness   only   propagates   prejudice   and   partiality. Opaqueness is antithetical to transparency. It is of utmost importance that in a country grounded in the Rule of Law, institutions   ought   to   adopt   procedures   that   further   the democratic   principles   of   transparency   and   accountability. Principles   of   fairness   and   transparency   of   adjudicatory proceedings   are   the   cornerstone   of   the   principles   of   open justice.

In a dispute involving the alleged irregularities in buying its own shares between 1994 and 2000, RIL asserts that three documents will exonerate it and its promoters from prosecution Sebi refused to entertain RIL’s plea to share the documents on the grounds that under the Sebi (Settlement Proceedings) Regulations, the accused company has no right to seek information from it. In 2002, Chartered Accountant S Gurumurthy filed a complaint with SEBI alleging irregularities by RIL, its associate companies and their directors/promoters, including Mukesh Ambani and his wife Nita, Anil Ambani and his wife Tina, and 98 others.

 The apex court, in its earlier judgment, rejected Sebi’s plea.

Supreme Court bench, led by the former Chief Justice U.U. Lalit and comprising Justices J.K. Maheshwari and Hima Kohli, dismissed the regulator’s plea by a 2:1 majority opinion.“In view of a majority opinion, the review petition stands dismissed.Sebi had filed a review petition before the Supreme court, and the court agreed to hear it in an open court, before listed the matter for hearing on 12 October.

Having carefully examined the grounds of the review petition, there is no justifiable reason to reconsider the judgement of 5 August,” Justice Kohli ruled in her order of September 30. The grounds urged do not fall under the restricted scope of the review petition, hence, the review petition ought not to be  entertained. This prompted the court to postpone hearing the case in open. RIL subsequently informed the court that despite numerous requests, the regulator did not provide the documents to the company. Last week, the apex court had also issued a contempt notice to SEBI for not following its order

Full Case Given Below :

Criminal Appeal No. 1167 of 2022

Special Leave Petition (CRL) NO. 3417/2022

Reliance Industries Ltd V.s Securities and Exchange Board of India

10692_2022_1_1501_36837_Judgement_05-Aug-2022

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