Supreme Court backs SAT’s decision to quash SEBI penalty on Mukesh Ambani in 2007 RPL case

On Monday, the Supreme Court dismissed an appeal filed by the Securities and Exchange Board of India (SEBI) challenging the Securities Appellate Tribunal’s (SAT) decision to set aside a penalty against Reliance Industries Ltd. (RIL) Chairman Mukesh Ambani for alleged stock manipulation of Reliance Petroleum Ltd. (RPL) in 2007.

A bench comprising Justices JB Pardiwala and R Mahadevan stated, “There is no question of law raised in the case. Dismissed.” However, the Court agreed to hear SEBI’s appeal challenging the SAT’s decision granting relief to RIL itself, listing the matter for hearing on December 2, Bar and Bench reported.

During the proceedings, Senior Advocate Arvind Datar, representing SEBI, urged the Court to issue a notice on SEBI’s appeal, emphasising the matter involving the vicarious liability of the Managing Director. He noted that conflicting SAT rulings on this issue created a legal ambiguity. The Court, however, declined to consider SEBI’s plea concerning Ambani’s accountability.

Representing Ambani and RIL, Senior Advocates Harish Salve and Ritin Rai argued in support of the SAT’s decision.

In December 2023, SAT overturned SEBI’s order imposing penalties on Ambani and RIL regarding the 2007 RPL stock manipulation case. The case centred on the sale of a 5% stake in RPL—a listed subsidiary of RIL that was merged into RIL in 2009. In 2021, SEBI penalised Ambani and two other entities, alleging manipulation of RPL shares during the sale.

SEBI found Ambani and RIL culpable, levying a penalty of ₹25 crore on RIL, ₹15 crore on Ambani, ₹20 crore on Navi Mumbai SEZ, and ₹10 crore on Mumbai SEZ. A total of four appeals were filed with SAT against SEBI’s order.

Ultimately, SAT ruled Ambani could not be held accountable for all corporate breaches, citing board meeting records showing the trades were carried out by two other individuals without Ambani’s knowledge. Accordingly, SAT quashed the penalties levied against both Ambani and RIL.

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