The Securities Appellate Tribunal (SAT) has conditionally stayed a Rs. 25 crore fine on businessman Anil Ambani, linked to alleged fraudulent activities involving Reliance Home Finance. The SAT ordered Ambani to pay 50 percent of the penalty within four weeks, while SEBI must file a reply to the appeal within the same timeframe.
New Delhi: The Securities Appellate Tribunal (SAT) has conditionally stayed a Rs. 25 crore fine imposed on businessman Anil Ambani by the Securities and Exchange Board of India (SEBI). This fine is linked to Ambani’s alleged involvement in a fraudulent scheme that resulted in the diversion of funds from Reliance Home Finance (RHFL). The SAT’s bench, which includes judicial member Justice PS Dinesh Kumar and technical members Meera Swarup and Dheeraj Bhatnagar, directed Ambani to pay 50 percent of the Rs. 25 crore penalty within four weeks as a condition for the stay.
The order came in response to an appeal filed by Anil Ambani against SEBI’s ruling from August 22. The regulatory body accused him of being part of a complex scheme that siphoned off funds from Reliance Home Finance. According to SEBI’s investigation, RHFL disbursed Rs. 9,295.25 crore in loans to 45 General Purpose Working Capital Loans (GPCL) entities. Of that amount,Rs. ₹4,944.34 crore was funneled to 13 specified GPCL borrowers, who then lent Rs. 4,013.43 crore to nine promoter-related entities.
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SEBI’s findings indicated that these transactions formed a coordinated effort to transfer funds from RHFL to financially vulnerable companies associated with the Reliance ADA Group. This led to a staggering non-performing assets (NPAs) figure of Rs. 6,931.31 crore as of September 30, 2021. The regulatory body noted that while loan defaults are not inherently unusual, the circumstances surrounding these defaults pointed to an “elaborate and coordinated design” to misappropriate funds.
The SEBI order highlighted the significant financial damage caused to RHFL and its shareholders. The company’s stock price plummeted from Rs. 59.60 in March 2018 to just Rs. 0.75 by March 2020, resulting in substantial losses for over nine lakh shareholders. Consequently, SEBI barred Anil Ambani and 24 other individuals and entities from accessing the securities market for five years, in addition to the imposed fine.
During the recent hearing, Senior Advocate Harish Salve, representing Ambani, argued that SEBI had exceeded its jurisdiction by penalizing him. Salve pointed out that Section 12A of the SEBI Act specifically addresses manipulative practices, insider trading, and substantial acquisitions of securities, which he argued do not encompass broader actions that might generally be seen as harmful to investors.
He stated, “SEBI is a market regulator, not a corporate affairs regulator.” Salve further claimed that the order pertains solely to loans disbursed by Ambani’s company, emphasizing that many actions can affect a company’s financial health and not all should be classified as fraudulent.
Salve urged the tribunal to suspend the penalty, referencing an existing SEBI interim order from February 2022 that restricts Ambani from trading in any securities until further notice. He argued that there was no evidence that Ambani personally profited from the alleged fraudulent actions, asserting, “There is no evidence that even a single rupee has entered his pocket.”
In contrast, SEBI’s counsel opposed any interim relief, arguing that Ambani’s claims—that the funds were primarily used to repay banks and financial institutions—did not warrant any leniency. The counsel highlighted the scale and impact of the loan amounts, which range from Rs. 4,000 to Rs. 8,000 crores, justifying the need for action.
After hearing both sides, the SAT granted a conditional stay on the SEBI order. While the monetary penalty has been stayed, the tribunal did not grant a stay on SEBI’s temporary ban against Anil Ambani and others from accessing the securities market. SEBI has been asked to file its reply to the appeal within four weeks, ensuring that the case continues to develop within the legal framework. This ruling marks a significant moment in the ongoing scrutiny of corporate practices in India, particularly in the context of financial regulations and governance.
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