In an unusual but expected move, Indian conglomerate company, Reliance Industries, has filed a contempt petition against the Securities and Exchange Board of India (SEBI) alleging that the market regulator violated an order passed by Supreme Court in a 2011 case.
In the first week of August 2022, the apex court of the country asked Securities and Exchange Board of India to hand over three documents in its custody, to reliance industries. The documents are related to a share allotment case in 2011 which has been in play for more than a decade now.
According to a report by The Economics Times, Reliance Industries in its contempt petition stated that SEBI has wilfully disobeyed the orders of the Supreme Court of India. The Court had asked the market regulator to hand over copies of the first and second opinions given by Justice (retired) BN Srikrishna and the report of YH Malegam in relation to an alleged illegal share allotment which happened in 2002.
The incident related to the case happened in 2002 as a person named S Gurumurthy filed a complaint with SEBI stating that Reliance Industries fraudulently allotted nearly 120 million equity shares to various entities. The entities which got allotment of these shares were allegedly related to the promoters of the multinational conglomerate company.
The complaint which was filed against directors and promoters of Reliance Industries also alleged that the entire funding of share allotments was undertaken by Reliance Industries itself.
The complaint which was received by SEBI in 2002 stayed on its shelf for more than 9 years until the market regulator decided to send a show-cause notice to promoters of the company owned by Mukesh Ambani. In the show cause notice sent in February 2011, SEBI alleged that Reliance Industries had violated various rules and regulations regarding the takeover and allotment of shares in India.
Again after a long time period of 9 years, in 2020, SEBI moved to SEBI Special Court and asked its permission to prosecute Reliance Industries.
Taking into consideration the fact that there was a big delay between registering the complaint and beginning the proceedings, the special court rejected the petition of SEBI which asked for prosecution of the company.
As the special court did not heed to its request, SEBI moved to the Bombay High Court. Reliance Industries also moved a petition in the Bombay High Court in which it requested the court to give it access to three vital documents related to the case. According to it, these three documents are the main evidence on which the entire case was built.
Bombay High Court, after looking into all the petitions ordered against the company. The company challenged the order of the Bombay High Court in the supreme court of India, which ordered in favour of reliance.
Reliance Industries stated that the company requested SEBI to give access to those documents, at least two times in writing over the last few days.