In a major relief for billionaire Mukesh Ambani, the Securities Appellate Tribunal (SAT) on Monday quashed the order issued by Sebi to fine the businessman and his firm Reliance Industries Ltd in relation to the 2007 RPL case.
The Securities and Exchange Board of India (Sebi) passed an order in 2021, imposing a heavy penalty on RIL Chairman Mukesh Ambani and two other entities linked to the alleged manipulation of shares of erstwhile Reliance Petroleum Ltd (RPL) back in November 2007.
However, all the entities of the case appealed before the tribunal regarding the 2021 order, and the penalty imposed on Ambani and his company was quashed. The other two entities in the case, apart from RIL, are Navi Mumbai SEZ and Mumbai SEZ.
In January 2021, Sebi imposed a ₹25 crore fine on Reliance Industries Ltd(RIL), ₹15 crore on Ambani, who is the company's chairman and managing director, ₹20 crore on Navi Mumbai SEZ Pvt Ltd and ₹10 crore on Mumbai SEZ Ltd in RPL case.
Why did Sebi impose a penalty on Mukesh Ambani?
The case dates back to 2007 and pertains to the sale and purchase of Reliance Petroleum Limited (RPL). RIL decided in March 2007 to sell 5 percent shares in RPL, which was a listed subsidiary of Reliance and was later merged with RIL in 2009.
{{/usCountry}}The case dates back to 2007 and pertains to the sale and purchase of Reliance Petroleum Limited (RPL). RIL decided in March 2007 to sell 5 percent shares in RPL, which was a listed subsidiary of Reliance and was later merged with RIL in 2009.
{{/usCountry}}Sebi cited a takeover regulation breach in the sale of the shares worth ₹12 crore. The entity alleged that the promoters of the firm had taken over 6.83 percent stake in the company, exceeding the regulated limit of 5 percent.
In 2021, Sebi found Mukesh Ambani and his firm guilty of manipulating the takeover of shares, imposing a penalty of ₹25 crore on the businessman and his brother Anil Ambani, their mother, spouses, children and other entities linked to the deal.
Why did SAT quash the Sebi order against Ambani?
The Securities Appellate Tribunal (SAT) decided to quash the order against Mukesh Ambani and told Sebi that the RIL Chairman and Managing Director cannot be deemed responsible for every alleged contravention of the law by the corporate entities.
"In view of the stark evidence in the form of minutes of the two board meetings of RIL which conclusively proves that the impugned trades were carried out by two senior officials without the knowledge of the appellant, no liability can be fastened upon noticee no. 2 (Ambani)," the tribunal said.
The tribunal also noted that Sebi failed to prove that Ambani was involved in the execution of the trades carried out by two senior executives. Thus, the fine against him and RIL has been quashed.
(With inputs from PTI)