SC tells Sebi to share papers sought by Reliance

The Supreme Court directed the Securities and Exchange Board of India (Sebi) to share with Reliance Industries Ltd (RIL) select investigation documents that the company had sought from the regulator.

Sebi relied on these documents in its investigation against India's most valuable company, which had moved the Supreme Court against a Bombay High Court order rejecting RIL's bid to gain access to the records.

In a 42-page order, a three-judge bench led by Chief Justice NV Ramana on Friday said Sebi was selectively disclosing documents pertaining to the case. Of the three documents sought by Reliance, the first and second are opinions by retired Supreme Court judge BN Srikrishna, while the third is a report by chartered accountant YH Malegam.


Reliance had argued that Sebi was only disclosing excerpts of the opinions by Srikrishna that "vaguely point to the culpability" of the company. Sebi was refusing to divulge the other parts of these reports that "exonerate" the company, it had said.

"Another disconcerting aspect of this case that comes to the fore is Sebi's attempt to cherry-pick the documents it proposes to disclose," the bench observed. "Such cherry-picking by Sebi only derogates the commitment to a fair trial..."

Controversial Issue
"Such selective disclosure cannot be countenanced in law as it clearly amounts to cherry-picking," the apex court bench said.

Sebi and RIL didn't respond to queries.

The regulator said the documents in question contain "privileged" information that didn't need to be disclosed at this "premature" stage. The apex court didn't agree with Sebi's argument.

"The approach of Sebi in failing to disclose the documents also raises concerns of transparency and fair trial. Opaqueness only propagates prejudice and partiality. Opaqueness is antithetical to transparency," the bench observed. "Principles of fairness and transparency of adjudicatory proceedings are the cornerstone of the principles of open justice."

The case centres around whether Sebi should share all relevant investigation documents with accused parties. Legal experts say this has been a controversial issue for a long time since the regulator adopts a conservative approach.

ET reported on April 21 that RIL had moved the Supreme Court seeking sharing of documents. The case pertains to a complaint filed by S Gurumurthy with Sebi in 2002, alleging irregularities in certain capital market issues made by the company between 1994 and 2000.

The regulator had moved the Sebi special judge and city civil and sessions court, Greater Bombay, in 2020 to initiate prosecution against RIL based on the 2002 complaint. However, the court rejected Sebi's application, saying the regulator hadn't moved the court within the stipulated time frame for such cases - three years from the date of receipt of the complaint.

Sebi challenged this in the Bombay High Court in 2021 and this case is ongoing. RIL filed an additional interim appeal, asking the high court to instruct Sebi to provide three specific documents. The single-judge bench turned this down. Now the Supreme Court has overturned this order.

The first opinion report by Justice Srikrishna was submitted to Sebi on June 11, 2009, while the second was given on July 26, 2017. ET could not ascertain the date of the Malegam report's submission.

While the probe was ongoing, RIL filed a consent application with Sebi in 2011 to pay fees and settle the case without accepting or denying guilt. However, on May 18, 2020, Sebi dismissed the consent application filed by RIL, and on July 10 that year, filed the complaint with the Sebi special judge.