Amid the COVID -19 clouds we have an another SEBI judgement on the RIL that made headlines ‘SEBI IMPOSES PENALTY OF RS. 25 Cr on RIL Promoters‘ and that headline made us believe that we are headstrong in protecting every investor and every individual.

However it raised some basic questions of law and there retrospective effects such as period of limitation, the Power of SEBI to investigate and power to impose penalties thereof.

In the below write up we tried to summaries the order issued by SEBI in the matter of RIL dated 7th of April, 2021 in few lines to provide the basic understanding of the same.


SEBI in its order dated April 07, 2021 imposed a penalty of Rs. 25 Crores on Mukesh Ambani, Anil Ambani, other individuals and entities for non-compliance with takeover norms in a Reliance Industries case dating back to 2000, SEBI conducted an investigation into the alleged irregularities relating to the issue of 12 crore equity shares in January 2000 by Reliance Industries Ltd. (hereinafter referred to as “RIL”) at a price of Rs. 75 per share to 38 allottee entities. The allotment was made consequent to the exercise of the option on warrants

SEBI alleged that Reliance in the year 1994 issued share warrants worth Rs. 6 Crore to its promoters and Person’s acting in concert to be converted into Equity shares of the company. It was further held that in January 2000 the share warrants were subsequently converted into equity shares thereby amounting to in crease of shares by 6.83% to its promoters and person acting in concert which resulted in giving of a public announcement under the SEBI Takeover Regulations, 1997 as increase was more than 5% and as no public announcement was provided by the promoters and person acting in concert, SEBI initiated adjudication proceedings against the said persons for alleged violation of Regulation 11 of SEBI Takeover Code, 1997.

It was seen that on a complaint of Mr. S. Gurumurthy on 21/1/2002 SEBI issued SCN to RIL in the year 2011 held that the shareholding of RIL promoters together with PACs had increased from 22.71% as on March 31, 1999 to 38.33% as on March 31, 2000. Out of these, 7.76% shares were acquired consequent upon a merger and thus were exempt under Regulation 3(1) (j) (ii) of Takeover Regulations.


The Promoters and person acting in concert in their reply submitted that these were the facts on which no order shall be passed against them.

  • The fundamental and preliminary issue involved in it is the power of SEBI to issue notices  further after on the merit of SCN that the company   had issued share warrants in year 1994 and conversion happened in year 2000, however and presented that limitation period is expired and  if the Limitation period was not provided in the Act as in this case, Regulatory Authority had to adhere to general limitation.
  • The company again argued that the SEBI takeover Code 1997 provided for exemptions to shares issued pursuant to Preferential Allotment under the Companies Act, 1956 and are thereby exempted from giving Public Announcement under SEBI Takeover Code.
  • The company also Contented that as per Section 15H of SEBI Act, penalty up to Rs. 5 Lakh can be issued against any company in contravention of such offence in the Year 2000 under the Regulation and thus imposing such erroneous amount of an offense   of a penalty is a contravention of section  15H  dating back to the year 2000 shall not be more than Rs. 5 Lakh which would then be against the Constitutional rights of the company.

The Adjudicating Officer in its order stated that “the arguments of the Notices that Takeover Regulations are not applicable in the present proceedings are devoid of any merits” as the Conversion of Shares was done in year 2000 which and before which the SEBI takeover Regulation 1997 came into existence. It also held that it received a Complaint from one Mr. S. Gurumurthy on 21/1/2002 and thus acted in accordance to the complaint and thereby took various enforcement actions including the present adjudication proceedings for alleged violation(s) of the Takeover Regulations was approved on September 15, 2010.

Further an appeal in the Securities Appellate Tribunal is going to be filed by the Reliance Industries Limited against the order on the account that it has not committed any violation under the SEBI Takeover Regulations as alleged by the Adjudicating Officer.


The article is written by Team Anupama Tripathi & Associates and solely for the purpose of education and comment, for more you can connect us # 8800839633 or [email protected]


Author Bio

Qualification: CS
Company: Anupama Tripathi & Associates
Location: New Delhi, Delhi, India
Member Since: 07 Apr 2021 | Total Posts: 5
Anupama Tripathi, the co-founder of Alliance Professional, she is a Company Secretary in Practice and pursuing Law from University of Delhi and did her graduation from Jisus & Mary Collage, University of Delhi. She has an experience of more than 5+ years. She did her internships from PSU listed View Full Profile

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May 2021