The Securities Appellate Tribunal today upheld a Sebi decision rejecting Mukesh Ambani-led Reliance Industries Ltd's application to settle alleged violations of norms to check fraudulent and unfair trade practices in the RIL and Reliance Petroleum merger case through a consent mechanism.
The tribunal said Reliance Industries' application is not maintainable because the new consent mechanism norms are applicable with retrospective effect.
A full bench of the SAT, headed by presiding officer JP Devdhar, said the consent mechanism norms in the Sebi Act were amended with retrospective effect from April 2010.
Reliance has been contesting a show-cause notice from the Securities & Exchange Board of India (Sebi) in the case since December 2010 and from last year, the regulator's exclusion of the company from the new consent mechanism.
The case dates back to 2008, when Sebi alleged violation of norms against RIL when it merges unit Reliance Petroleum (RPL) with itself in 2007. The Mukesh Ambani-led company challenged the Sebi charges at the SAT in December 2010.
It also involves RIL challenging the maintainability of Sebi's decision to exclude the company from the consent mechanism under new norms issued in January 2013.
Under the mechanism, a company can settle an issue with the regulator after paying a penalty, without accepting or rejecting the charges against it.
On Friday, when the SAT concluded the hearings, senior Sebi counsel Darius Khambatta had argued for maintaining the regulator's rejection of the Reliance Industries application, citing the January 2013 consent provisions. He also said the SAT cannot maintain the RIL appeal as the revised consent mechanism norms apply to the RIL case.
He said Sebi rejected the RIL appeal for consent because the case involved serious violations of norms, apart from conducting fraudulent and unfair trading practices.
RIL senior counsel Janakdwaraka Das had argued the settlement proceedings should be conducted as per regulations made under the Sebi Ordinance and that it cannot arbitrarily exclude someone from a redressal mechanism.
Sebi notified the new consent norms on January 9, 2013, after issuing the draft regulations in May 2012.
Under the new norms, Sebi excluded cases involving larger amounts or fines from the settlement process. It said the provisions would apply with retrospective effect from April 2010.
RIL, prior to the merger of RPL with itself, allegedly short-sold a 4.1 per cent stake in RPL valued at Rs 4,023 crore to prevent a slump in the