SC to hear RIL’s contempt petition against Sebi today

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The Supreme Court will hear on Friday a petition by Reliance Industries (RIL) seeking to initiate contempt proceedings against Sebi for failing to give certain documents, which the Mukesh Ambani company claims will exonerate it and its promoters from criminal prosecution initiated in a case related to the alleged irregularities in acquisition of its own shares between 1994 and 2000.

Sebi has not so far shared the three documents — the two legal opinions by former SC judge BN Srikrishna and a report by former ICAI president YH Malegam which examined the irregularities —that the SC had on August 5 directed it to share “forthwith”. As a result, RIL has filed a contempt plea against the market regulator and its authorised representative Vijayan A.

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In its contempt plea, RIL said there was no justification for Sebi to continue to resist the production of these documents, and that its continued withholding of the same constituted “willful disobedience, contumacious disregard and defiance” of the SC’s orders.

Sebi had obviously “misadvised itself” in assuming that its compliance with the judgment is a matter of discretion and on which it can seek advice, it said, adding that the market watchdog’s conduct is liable to be dealt with heavily and invites the maximum penalty prescribed under law.

According to the company, it had sent a notice to Sebi stating that if the documents were not received by it by August 18, it would assume that the market regulator has no intention of complying with the orders passed by SC and the company would take further consequential action as advised.

Sebi had, in January 2019, rejected RIL’s request for the “privileged” documents on the grounds that under the Sebi (settlement proceedings) regulations, the accused company had no right to seek information from it.

Chartered accountant S Gurumurthy had filed a complaint with Sebi in 2002 alleging fraud and irregularities by RIL, its associate companies and their directors/promoters, and 98 others in the issue of two preferential placement of non-convertible debentures in 1994. Sebi had alleged that RIL along with Reliance Petroleum had “circuitously funded the acquisition of its own shares” in violation of Sections 77 and 77A of the Companies Act, 1956 and the market regulator’s then takeover code, among various other regulations.