RPL case: Sebi fines Reliance Industries, Mukesh Ambani, two other entities
New Delhi: Regulator Sebi on Friday imposed penalties on Reliance Industries Ltd, its Chairman and Managing Director Mukesh Ambani as well as two other entities for alleged manipulative trading in the shares of erstwhile Reliance Petroleum Ltd (RPL) back in November 2007.
Fines of Rs 25 crore and Rs 15 crore have been imposed on Reliance Industries Ltd (RIL) and Ambani, respectively. Besides, Navi Mumbai SEZ Pvt Ltd has been asked to pay a penalty of Rs 20 crore and Mumbai SEZ Ltd has been directed to pay Rs 10 crore.
The case pertains to sale and purchase of RPL shares in the cash and the futures segments in November 2007. This followed RIL's decision in March 2007 to sell 4.1 per cent stake in RPL, a listed subsidiary that was later merged with RIL in 2009.
In a 95-page order, Sebi's Adjudicating Officer B J Dilip said any manipulation in the volume or price of securities always erodes investor confidence in the market when investors find themselves at the receiving end of market manipulators.
"In the instant case, the general investors were not aware that the entity behind the above F&O segment transactions was RIL. The execution of the... fraudulent trades affected the price of the RPL securities in both cash and F&O segments and harmed the interests of other investors," he said in the order.
While noting that execution of manipulative trades affects the price discovery system itself, the adjudicating officer said, "I am of the view that such acts of manipulation have to be dealt sternly so as to dissuade manipulative activities in the capital markets."
There was no immediate comment from RIL on the matter.
On March 24, 2017, Sebi had ordered RIL and certain other entities to disgorge over Rs 447 crore in the RPL case. In November 2020, the Securities Appellate Tribunal (SAT) dismissed the company's appeal against the order.
At that time, RIL had said it would challenge the tribunal's order in the Supreme Court.
Apart from ordering disgorgement of money, Sebi had in March 2017 also prohibited RIL from dealing in equity derivatives in the F&O segment of stock exchanges, directly or indirectly, for one year.
As per the order passed on Friday, Sebi said RIL had entered into a scheme of manipulative trades in respect of the sale of its stake in RPL.
However, before undertaking sale transactions in the cash segment, RIL fraudulently booked large short positions in the RPL November futures through 12 agents with whom it had entered into an agreement to circumvent position limits for a commission payment, it added.
"As a result, RIL fraudulently cornered nearly 93 per cent of open interest in RPL November Futures, when the said 12 agents took short positions in F&O Segment on its behalf," the order said.
The funding for the margin payments by the agents was provided by Navi Mumbai SEZ Pvt Ltd and Mumbai SEZ Ltd, it added.
"A common person connected with RIL had placed orders in the cash segment on behalf of RIL and in the F&O segment on behalf of the agents.
"On the date of settlement of RPL November Futures, i.e., on November 29, 2007, RIL sold 1.95 crore RPL shares on NSE cash segment in the last 10 minutes of trading resulting in fall in the prices on the cash segment, which artificially depressed the settlement price of RPL November Futures.
"This resulted in profits on the huge short positions held by the agents in RPL November Futures and the said profits were transferred back to RIL by the agents as per prior agreement. The above strategy undertaken by RIL has resulted in manipulation of settlement price of RPL November Futures and prices of RPL shares in the cash segment," the order said.
Regarding Ambani, the order said that being the RIL managing director, he was "responsible for the manipulative activities of RIL".
"I am of the view that listed companies should exhibit highest standards of professionalism, transparency and good practices of corporate governance, which inspires confidence of the investors dealing in the capital markets.
"Any attempt to deviate from such standards will not only erode the confidence of the investors but also affect the integrity of the markets... the transactions executed by noticees were structured and executed in such manner so as to escape the notice of regulatory authorities, investors as they were not in public domain.
"Therefore, I conclude that the said scheme of manipulation was deceptive and against the interest of the securities markets," the adjudicating officer said.
The noticees are RIL, Ambani, Navi Mumbai SEZ Pvt Ltd and Mumbai SEZ Ltd.
Let the Truth be known. If you read VB and like VB, please be a VB Supporter and Help us deliver the Truth to one and all.
MP HC sets up judicial commission to probe water contamination in Indore
Indore (PTI): The Indore bench of Madhya Pradesh High Court on Tuesday set up a commission of inquiry comprising a former HC judge to probe the issue of water contamination in city's Bhagirathpura, saying the matter requires probe by an independent, credible authority and "urgent judicial scrutiny".
It also directed the commission to submit an interim report after four weeks from the date of commencement of proceedings.
A division bench of Justices Vijay Kumar Shukla and Alok Awasthi constituted the commission while hearing several public interest litigations (PILs) filed simultaneously regarding the deaths of several people in Bhagirathpura due to the consumption of contaminated water.
The HC reserved the order after hearing all the parties during the day, and released it late at night.
The state government on Tuesday told the HC that the deaths of 16 people in Indore's Bhagirathpura area was possibly linked to a month-long outbreak of vomiting and diarrhoea caused by contaminated drinking water.
The government presented an audit report of 23 deaths from the current gastroenteritis epidemic in Bhagirathpura before the bench, suggesting that 16 of these fatalities may have been linked to the outbreak of vomiting and diarrhoea caused by contaminated drinking water.
The report, prepared by a committee of five experts from the city's Government Mahatma Gandhi Memorial Medical College, stated that the deaths of four people in Bhagirathpura were unrelated to the outbreak, while no conclusion could be reached regarding the cause of death of three other people in the area.
During the hearing, the high court sought to know from the state government the scientific basis behind its report.
The division bench also expressed surprise at the state government's use of the term "verbal autopsy" in relation to the report, sarcastically stating that it had heard the term for the first time.
The HC expressed concern over the Bhagirathpura case, stating that the situation was "alarming," and noted that cases of people falling ill due to contaminated drinking water have also been reported in Mhow, near Indore.
In its order, the HC said the serious issue concerning contamination of the drinking water supply in Bhagirathpura area allegedly resulted in widespread health hazards to residents, including children and elderly persons.
According to the petitioners and media reports, death toll is about 30 till today, but the report depicts only 16 without any basis or record, it said.
It is averred that sewage mixing, leakage in the pipeline, and failure of civic authorities to maintain potable water standards have led to the outbreak of water-borne diseases. Photographs, medical reports, and complaints submitted to the authorities prima facie indicate a matter requiring urgent judicial scrutiny, the HC said.
"Considering the gravity of the allegation and affecting the right to life under Article 21 of the Constitution of India and the need for an independent fact-finding exercise, the Court is of the opinion that the matter requires investigation by an independent, credible authority," it said.
"Accordingly, we appoint Justice Sushil Kumar Gupta, former judge of the Madhya Pradesh High Court, a one-man commission of inquiry into the issues relating to water contamination in Bhagirathpura, Indore, and its impact on other areas of the city," the HC added.
As per the order, the commission shall inquire into and submit a report on the cause of contamination -- whether the drinking water supplied to Bhagirathpura was contaminated; and the source and nature of contamination (sewage ingress, industrial discharge, pipeline damage etc).
The panel will also probe the number of actual deaths of affected residents on account of contaminated water; find out the nature of disease reported and adequacy of medical response and preventive measures; suggest immediate steps required to ensure safe drinking water as well as long-term infrastructural and monitoring reforms.
It will also identify and fix responsibility upon the officers and officials found prima facie responsible for the Bhagirathpura water contamination incident, and suggest guidelines for compensation to affected residents, particularly vulnerable sections.
The commission shall have powers of a civil court for the purpose of summoning officials and witnesses; calling up records from the government department, hospitals, laboratories and civic bodies; ordering water quality testing through accredited laboratories; conducting spot inspections.
All state authorities involving district administration, Indore Municipal Corporation, public health engineering department and Madhya Pradesh Pollution Control Board shall extend full co-operation and provide records as sought by the commission, it said.
The state government shall provide office space, staff, and logistical support to the commission, it said.
During the hearing in the day, the state government also presented a status report to the court in this matter.
According to reports, a total of 454 patients were admitted to local hospitals during the vomiting and diarrhea outbreak, of whom 441 have been discharged after treatment, and 11 are currently hospitalised.
According to officials, due to a leak in the municipal drinking water pipeline in Bhagirathpura, sewage from a toilet was also mixed in the water.
