SEBI challenges CIC order to disclose probe in RIL share issue

SEBI has challenged in the Bombay high court an order of the Central Information Commission to make public action taken by it on a complaint against Reliance Industries Ltd in the year 2000 on the sale of 12 crore shares for the benefit of its promoters.

The transparency panel had directed the market regulator to provide details of action taken on the complaint of S Gurumurthy of Swadeshi Jagran Manch "regarding the allotment of shares to the promoters of RIL through preferential allotment to 34 Ambani companies" sought by RTI applicant Arun Kumar Agrawal.

"It is admitted by respondents that the investigations in the matter referred to by the appellant is decidedly over. In the face of it, the claim that its disclosure would impede the process of investigation becomes untenable," the commission had held.

The CIC had also directed the Securities and Exchange Board of India to make public opinions, findings and recommendations made by Justice Sri Krishna on the report of the market regulator and all the file notings on the issue.

The SEBI however filed a writ petition in the Bombay High Court this week, challenging the order of the transparency panel, which has listed the matter for hearing on January 10 next year.

The market regulator has said in its plea that views of Justice Sri Krishna were obtained in a "fiduciary relationship" and cannot be disclosed under the Right to Information Act.

It also argued that the decision was given only by the Chief Information Commissioner and not by the entire panel which is required under the RTI Act.

"Prosecution and adjudication proceedings to be implemented in the matter" have been obtained on September 15, 2009 and disclosure at this stage would affect the process adversely.

In his complaint, Gurumurthy had alleged that RIL and its investors lost at least Rs 2,700 crore in issuance of shares at a much lower price than what was allocated to the state-owned UTI. The Reliance empire was divided in 2005 as part of a settlement between the warring Ambani brothers.

Gurumurthy had alleged that the core of the fraud was the criminal misappropriation amounting to virtual smuggling out of RIL (through non convertible debentures) of 12 crore shares of the company in 2000 representing 11.38% of the equity capital.

After conducting probe in the matter for nearly nine years, SEBI has sought views of Justice Sri Krishna on it's own investigation report. It had also approached the corporate affairs ministry seeking further directions.