The Securities Appellate Tribunal (SAT) has ruled in favor of industrialists Mukesh Ambani, Nita Ambani, Anil Ambani, Tina Ambani, and seven others, overturning the penalty imposed by the capital market regulator SEBI. The penalty of ₹25 crore was levied for alleged non-compliance with takeover norms in a case related to Reliance Industries dating back to 2000. SAT also directed SEBI to refund the ₹25 crore paid under protest by the appellants within four weeks.
The dispute arose in 2005 when Mukesh and Anil Ambani decided to split the family's assets. SEBI had noted that RIL promoters, along with Persons Acting in Concert (PAC), had acquired a 6.83 percent stake due to the exercise of an option on warrants attached to non-convertible secured redeemable debentures. This acquisition exceeded the prescribed ceiling of five percent under the takeover regulations, triggering the obligation to make a public announcement about the share acquisition on January 7, 2000.
However, SEBI found that the promoters and PACs failed to make a public announcement regarding the share acquisition, which was deemed a violation of the takeover regulations. SAT, in its 124-page order, pointed out that the proceedings and the impugned order suffered from inordinate delay. It took 11 years from the date of the alleged violation in January 2000 for SEBI to issue a show cause notice. Furthermore, it took SEBI an additional nine years to decide on the consent application. The SAT concluded that the impugned order was issued 21 years after the alleged violation, citing excessive delay as a key factor in quashing the penalty.
