SAT dismisses RIL appeal in insider trading case

RIL filed for a consent application with SEBI to settle the matter The Securities Appellate Tribunal (SAT), on Monday, dismissed an appeal filed by Reliance Industries Limited (RIL) against capital market regulator Securities and Exchange Board of India (SEBI), which rejected RIL’s consent application on an insider trading case. The case involved trading in shares of RIL’s group company, Reliance Petroleum, in November, 2007. “Since Section 15T(2) is deleted and Section 15JB (4) is inserted to the SEBI Act with retrospective effect from April 20, 2007, by Ordinance No 2 of 2014, which bars appeal against any order passed in consent proceedings, we have no option but to dismiss the appeal,” said Justice J. P. Devadhar, Presiding Officer of SAT, in his order. SEBI had issued a show-cause notice to RIL in April, 2009, pertaining to alleged violations of SEBI regulations in the transaction of shares of Reliance Petroleum. However, RIL filed for a consent application with the regulator to settle the matter. SEBI had rejected this application in January, 2013, as the revised consent guidelines do not allow consent settlement in insider trading cases. PTI reports The Securities Appellate Tribunal also came down heavily on SEBI over the way in which it handled the issue. “Since Section 15JB(4) bars appeal against any order passed in consent proceedings, we have no option but to dismiss the appeal,” a full bench of SAT, headed by Mr. Devadhar said, bringing the curtains down on the four-year proceedings. SAT termed SEBI’s decision to reject RIL’s consent application as “arbitrary and in excess of the powers” vested in it under the SEBI Act of 1992. Despite accepting RIL’s contention, questioning the way its application was rejected by SEBI, it said considering the manner in which amendments were made to the consent process through ordinances, it had no powers to accept the RIL petition as the changes were notified retrospectively. Meanwhile, RIL in a statement claimed partial victory, saying the tribunal has accepted its plea that the SEBI order rejecting its consent plea was maintainable under the SEBI Act, but it lost the case because of the retrospective amendments to the sections dealing with consent process. The company, however, did not say whether they will appeal in the Supreme Court. SAT orders can only be challenged in the apex court.