Supreme Court Dismisses SEBI Appeal In Reliance Petroleum Case

The Supreme Court on Monday rejected a SEBI appeal in a case involving manipulative trading in shares of the erstwhile Reliance Petroleum Ltd., back in 2007. The Securities and Appellate Tribunal had previously overruled a SEBI order, where the regulator levied a Rs 25-crore penalty on Reliance Industries Chairman Mukesh Ambani.

A division bench comprising Justices JB Pardiwala and R Mahadevan said that there was no question of law involved in the markets regulator’s appeal against the SAT order, saying that such a prolonged litigation must come to an end.

Referring to the SAT order, the top court flagged various decisions of the markets regulator, whereby it has been held that vicarious liability with respect to a company’s civil liabilities is not provided for.

The concept of vicarious liability holds an individual or entity accountable for the actions of another legal person.

The court said that the case must be closed with respect to Ambani, however, it agreed to hear SEBI’s appeal against Reliance Industries Ltd. on Dec. 2.

The penalties were related to alleged irregularities in the sale and purchase of Reliance Petroleum shares in both the cash and futures segments in November 2007.

In an appeal before the Securities Appellate Tribunal, the tribunal rejected the finding of the adjudicating officer that Ambani had prior knowledge of the alleged manipulative trades by RIL.

The assessing officer, according to the order of the Securities and Exchange Board of India, had concluded that both parties were fully aware that the funds provided to Vinamra, a third party, were intended for financing the alleged manipulative trades.