Recently, the Supreme Court dismissed an appeal by the Securities and Exchange Board of India (SEBI) challenging the Securities Appellant Tribunal (SAT) decision to set aside a penalty against Reliance Industries Limited (RIL) Chairman Mukesh Ambani. The penalty related to allegations of stock manipulation of Reliance Petroleum Limited (RPL) shares in 2007. However, the Supreme Court has agreed to hear SEBI’s appeal concerning SAT’s relief to RIL.
The Case revolves around SEBI’s accusations of stock manipulation during a 2007 sale of a 5% stake in RPL, a subsidiary that later merged with RIL in 2009. In 2021, SEBI imposed a penalty for allegedly manipulating Reliance Petroleum Limited's (RPL) shares during the sale of a 5% stake. The total fines imposed amounted to ₹70 crore, broken down as follows: ₹25 crore on Reliance Industries Limited (RIL), ₹15 crore on Mukesh Ambani, ₹20 crore on Navi Mumbai SEZ, and ₹10 crore on Mumbai SEZ. These penalties were levied in connection with the 2007 RPL stock manipulation case, which was later contested in multiple appeals.
The Supreme Court bench, led by Justice JB Pardiwala and Justice R. Mahadevan, noted in its observation that SEBI’s appeal against Mukesh Ambani’s personal liability did not raise any substantial legal question warranting further consideration. The bench remarked, “There is no question of law raised in the case”, and thus dismissed this part of SEBI’s appeal.
Despite Senior Advocate Arvind Datar’s argument emphasizing that the issue pertained to the concept of vicarious liability of a Managing Director in corporate governance matters, the Court maintained its stance. Datar also highlighted the existence of conflicting decisions by the Securities Appellant Tribunal (SAT) on similar liability issues, but the Bench was not persuaded to reconsider the penalty in relation to Ambani specifically. However, the Court agreed to review SEBI’s challenge against Securities Appellant Tribunal (SAT) relief to RIL, setting a hearing date for December 2, thereby signalling openness to examine broader questions about RIL’s liability in the case.
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