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Mukesh Ambani v/s SEBI - An interesting case law related to Manipulative Trading

CA Aman Rajput , Last updated: 06 December 2023  
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Securities Appellate Tribunal Quashes SEBI's Order Imposing Penalty on Mukesh Ambani and Two Others in Case Related to Manipulative Trading

Background of the case

In January 2021, the Securities and Exchange Board of India (SEBI) imposed a penalty of Rs 25 crore on Reliance Industries Ltd. (RIL), Rs 15 crore on Mukesh Ambani, who is the company's Chairman and Managing Director, Rs 20 crore on Navi Mumbai SEZ Pvt Ltd, and Rs 10 crore on Mumbai SEZ Ltd in the RPL case.

The penalty was imposed in connection with alleged manipulative trading in the shares of erstwhile Reliance Petroleum Ltd (RPL) back in November 2007. SEBI had alleged that RIL, acting through its 12 agents, had executed a series of trades that were designed to artificially inflate the price of RPL shares.

SAT's Ruling

The Securities Appellate Tribunal (SAT) has quashed SEBI's order, saying that the regulator had failed to establish that Mukesh Ambani or the two other entities were involved in the manipulative trading.

The SAT also said that there was an inordinate delay in the issuance of the show-cause notice by SEBI and that the principles of natural justice were violated by not supplying the documents to the appellants.

Mukesh Ambani v/s SEBI - An interesting case law related to Manipulative Trading

Key Points

The SAT's ruling is a significant setback for SEBI. The ruling could have implications for other cases involving alleged manipulative trading. The ruling highlights the importance of due process and the need for SEBI to provide adequate evidence to support its allegations.

Conclusion

The SAT's ruling is a welcome development for Mukesh Ambani and the two other entities. The ruling will likely have a positive impact on the sentiment of the corporate sector.

Analysis

The SAT's ruling is a complex one with far-reaching implications. The ruling is likely to be appealed by SEBI, and it is possible that the Supreme Court will eventually have to weigh in on the matter.

Legal Implications

The SAT's ruling has several important legal implications. First, the ruling establishes that SEBI must have strong evidence to support its allegations of manipulative trading. Second, the ruling highlights the importance of due process and the need for SEBI to provide fair notice and an opportunity to be heard to the parties involved. Third, the ruling could have implications for other cases involving alleged manipulative trading, both in India and abroad.

 

Business Implications

The SAT's ruling is likely to be welcomed by the corporate sector. The ruling could make it more difficult for SEBI to bring cases against companies for manipulative trading. This could have a positive impact on investor sentiment and could make India more attractive for foreign investment.

Economic Implications

The SAT's ruling could have a positive impact on the Indian economy. The ruling could make India a more attractive destination for investment, which could boost economic growth.

 

Conclusion

The SAT's ruling is a significant development with far-reaching implications. The ruling is likely to be appealed by SEBI, and it is possible that the Supreme Court will eventually have to weigh in on the matter. The ruling has important legal, business, and economic implications.

A copy of the detailed order is attached below

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Published by

CA Aman Rajput
(Chartered Accountant)
Category Shares & Stock   Report

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