The Supreme Court on Friday set aside an order directing Reliance Industries Limited (RIL) to disgorge Rs 447 crore, delivering a significant relief to the conglomerate. The apex court partly allowed the appeal filed by RIL challenging a November 2020 order of the Securities Appellate Tribunal (SAT).
Background of the Case
The dispute originated from a market regulator Sebi's directive that RIL should disgorge the profits it allegedly made from certain transactions. Sebi had argued that RIL violated insider trading norms and profited unfairly. The Securities Appellate Tribunal had upheld Sebi's order, prompting RIL to approach the Supreme Court.
Supreme Court's Observations
A bench comprising Justices D.Y. Chandrachud and Hima Kohli noted that the disgorgement order was not sustainable in law. The court observed that the profits in question were not directly linked to any alleged insider trading activity. The bench also pointed out procedural lapses in the Sebi investigation.
Implications for RIL
The verdict comes as a major win for Reliance Industries, which had maintained that it had not violated any regulations. The company argued that the transactions were conducted in a fair and transparent manner. The Supreme Court's decision effectively nullifies the financial penalty, saving RIL from a significant payout.
Reactions and Next Steps
Legal experts have termed the judgment as a precedent-setting one, clarifying the scope of disgorgement powers of regulatory bodies. The Securities and Exchange Board of India (Sebi) is likely to review its investigation procedures in light of the court's observations. Meanwhile, Reliance Industries shares rose marginally following the announcement.
The Supreme Court also directed that any amount already deposited by RIL pursuant to the SAT order be refunded with interest. The case is now closed, and no further appeals are pending.
