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The Supreme Court of India has dismissed an appeal filed by the Securities and Exchange Board of India (SEBI) against the Securities Appellate Tribunal's (SAT) decision to overturn a penalty imposed on Mukesh Ambani, Chairman of Reliance Industries Ltd. (RIL), in connection with alleged stock manipulation of Reliance Petroleum Ltd. (RPL) in 2007. This landmark decision signifies a major victory for Ambani and RIL, effectively absolving them from any wrongdoing in the controversial RPL case.
The case centered around the sale of a 5% stake in RPL, a listed subsidiary of RIL that was later merged into RIL in 2009. In 2021, SEBI levied penalties on Ambani and two other entities, alleging manipulation of RPL shares during the sale. Specifically, SEBI accused Ambani and RIL of engaging in activities that artificially inflated the share price of RPL, potentially benefiting from the subsequent sale of the stake. However, the SAT, after reviewing the evidence and arguments presented, reached a different conclusion. In December 2023, SAT determined that Ambani could not be held accountable for the alleged corporate breaches, citing board meeting records that indicated the trades were executed by two other individuals without Ambani's knowledge or involvement.
The Supreme Court's dismissal of SEBI's appeal upholds the SAT's findings and effectively ends the legal battle surrounding the RPL case. This decision has significant implications for the Indian corporate landscape and strengthens the principle of individual accountability in corporate governance. While the Court did agree to hear SEBI's appeal concerning the relief granted to RIL itself, the decision regarding Ambani's personal liability is final. This ruling highlights the importance of clear evidence and due process in corporate investigations and strengthens the position of individuals within corporate structures who may be accused of wrongdoing without direct involvement.
The RPL case has been a subject of much debate and scrutiny for over a decade. The Supreme Court's decision to uphold the SAT's findings is a major development in this long-running saga. It raises important questions about the balance between corporate responsibility and individual accountability, and its impact on the Indian financial markets will be closely watched.
Source: Supreme Court backs SAT’s decision to quash SEBI penalty on Mukesh Ambani in 2007 RPL case