SAT seeks clarity from SEBI, RIL on new ‘consent’ norms

The Securities Appellate Tribunal has sought clarifications from the Securities & Exchange Board of India and Reliance Industries Ltd on how new consent settlement norms would affect the ongoing case between market regulator SEBI and the company.

The tribunal, which had concluded its hearings on two petitions from RIL on 6 January and reserved its order, on Wednesday set 24 February as the next date of hearing.

Since SEBI notified the new consent norms on 9 January, SAT today sought clarifications from the regulator and RIL on the effects of the guidelines on the ongoing case involving the two.

"Before we pronounce the order, we would like to know whether the RIL appeal will hold since the new SEBI regulations are retrospective in nature," SAT presiding officer J P Devdhar said.

The tribunal has been hearing a seven-year-old case of alleged insider trading arising from the merger of Reliance Petroleum Ltd with RIL in 2007.

SEBI has notified a stricter set of consent norms that exclude settlement of serious offences such as insider trading, front-running, violations of listing disclosure norms and illegal pooling of money, among others.

The new norms are retrospective and apply to all cases from 20 April 2007.

SEBI also excluded all pending cases from the consent settlement process and made it mandatory for an affected party to file for consent within 60 days of receiving a SEBI show-cause notice.

Earlier, senior RIL counsel Janak Dwarkadas requested SAT to fix a timetable for hearing RIL's consent application by SEBI once again, which the regulator rejected.

According to Dwarkadas, SEBI was wrong in saying RIL's application could not be dealt with under the consent mechanism as the company had been clearly told on 15 April 2011, that it could apply for a settlement through consent.

SEBI senior lawyer Darius Khambata maintained the regulator could not be compelled to settle a case through consent.

Reliance is fighting two cases with the regulator -- one challenging the new consent mechanism norms that SEBI had issued in May 2012 under which RIL's case was taken out of the settlement process, and the other seeking adjudication proceedings on the alleged insider-trading case dating back to the 2007 sale of Reliance Petroleum shares.

The consent mechanism allows companies and individuals to settle their disputes with SEBI by paying a sum without admission or denial of the alleged wrongdoing, but with disgorgement of any ill-gotten gains. RIL is also contesting the SEBI decision of May 2012 to keep the case out of the consent mechanism, suggesting the amount involved is too high.