The Securities Appellate Tribunal (SAT) set aside the Securities and Exchange Board of India’s April 2021 order that had imposed a penalty of ₹25 crore on Mukesh Ambani, Anil Ambani, Reliance Industries Holdings and eight other entities for alleged violation of takeover regulations.
A detailed order is awaited in the matter.
A bench led by Justice Tarun Agarwala said, “We find that appellants have not violated Regulation 11 (1) of SAST (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. The imposition of penalty upon the appellants is without any authority of law. Consequently, in view of this, the Sebi order cannot be sustained and therefore quashed and the appeal is allowed.”
The tribunal was informed that the penalty amount was deposited with the regulator. Since the bench set aside the Sebi order, Sebi has been directed to refund the amount of ₹25 crore within four weeks.
The order comes after an appeal was filed by Ambani’s and Reliance Holding challenging the Sebi order of 7 April 2021.
The market regulator had imposed a joint penalty of ₹25 crore on Reliance Industries Holding and the Ambani family, including Mukesh and Anil Ambani, Tina Ambani, Nita Ambani, Isha Ambani, Kokilaben Ambani. Reliance Realty was also a part of the matter along with some other entities.
Based on Sebi’s order, it was stated that RIL’s promoters and persons acting in concert failed to disclose the acquisition of more than 5 % stake in the company back in 2000, which under Sebi rules would have immediately triggered an open offer to existing public shareholders.
Pertinently, it was then alleged that RIL’s promoters acquired 6.83 % stake in the company between March 1999 to March 2000 through conversion of 3 crore warrants issued to them back in 1994.
“Since the promoters and PACs have not made any public announcement for acquiring shares, it is alleged that they have violated the provisions of regulation 11(1) of Takeover Regulations,” the regulator’s order held.
Sebi added that it had no quantifiable figures or data available on record to assess the disproportionate gain or unfair advantage and amount of loss caused to an investor or group of investors as a result of the default committed by the noticee. However, the fact remains that the notices by their failure to make public announcement, deprived the shareholders of their statutory rights/ opportunity to exit from the company.