The SAT concluded the hearing on the matter under which RIL challenged Sebi's decision to take the case out of the consent mechanism process saying the amount involved is too large.
Also read: Insider trading laws difficult, India no exception: Expert
Senior RIL counsel Janak Dwarkadas requested Securities Appellate Tribunal (SAT) to ask the Sebi to fix a time-table for hearing the consent application once again.
The consent mechanism allows companies and individuals to settle their disputes with the Sebi by paying a sum without admission or denial of the alleged wrongdoing, but disgorgement of any ill-gotten gains.
The matter dates back to 2007, when RIL, prior to the merger of Reliance Petroleum with itself, allegedly short-sold 4.1 per cent stake in RPL valued at Rs 4,023 crore to prevent a slump in the stock.
The RPL shares were sold first in the futures market and later in the spot market, covering the share sales in the futures market, it was alleged.
In 2008, Sebi initiated a probe into the matter and in 2010 initiated quasi-judicial proceedings and said it had found that RIL had booked a profit of Rs 513 crore in the futures segment through this deal worth Rs 4,023 crore.
The Sebi argued that the company was aware of the sale of shares and sold futures ahead of that, therefore amounting to insider-trading and sent a show-cause notice to the company.
RIL had challenged the Sebi show-cause notice in December 2010.
Following this, Sebi ordered a probe and found that RIL had violated insider-trading norms. Though RIL moved Sebi for consent settlement, the regulator did not entertain the application, forcing RIL to move the SAT.
Arguing RIL's case, Dwarkadas today asked, "What is the difficulty if Sebi now fixes a meeting of the internal committee and decides on the consent application, now that the inspection of documents is finally over."
"Sebi can reject our application, but at least they should hear us out," Dwarkadas argued. He also claimed that Sebi was wrong in saying that RIL's application could not be dealt with under the new consent mechanism, saying the company was clearly told on April 15, 2011 that it could apply for a settlement via consent.
In response to the RIL charges and demand, senior Sebi counsel Darius Khambata said, "Sebi cannot be compelled to settle a case through consent as the consent norms are administrative guidelines and cannot be challenged in court."
To substantiate his argument, Khambata cited a Bombay High Court order in favour of Sebi in a similar case involving Shilpa Stock Brokers. Khambata also said the consent norms do not give an entity the right to ask Sebi to take up its case for settlement.
"It's absolutely Sebi's discretion to take a call and it can refuse to settle a case under consent anytime in public interest," Khambata said.
In May 2012, Sebi tightened the norms for settlement through the consent framework. As a result, many cases, including those related to insider trading, are not being settled through this mechanism.
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