Mishra, an appellate authority in Central Information Commission(CIC), had on November 6 passed an order directing capital market regulator Securities and Exchange Board of India (Sebi) to disclose all details about the case on an appeal filed by RTI activist A K Agarwal.
The case relates to the merger of Reliance Petroleum with Reliance Industries and the short sale of shares in the former by entities related to the latter. The merger between the two companies took place in 2009 and the company has been charged of indulging in insider trading.
The CIC, acting on a petition filed by Agarwal, ordered SEBI on November 6 to disclose the details of investigation in the case or consent order proceedings. However, Sebi approached the high court challenging the CIC order.
A division bench of D Y Chandrachud and Amjad Sayed today, while directing Reliance Industries to file its reply affidavit to the petition by January 21, said,"Wasn't Reliance bound to be heard by CIC before disclosure order was passed?"
"If the disclosure pertains to a third party, in this case Reliance, then the third party should be heard before order is passed. They (Reliance) are entitled to it," Justice Chandrachud said.
Agarwal, however, told the court that as per section 8(2) of the RTI Act, if the information sought is in public interest, then it outweighs protection of the third party. "This is a case of insider trading worth Rs 500 crore. Penalty is up to Rs 1500 crore," Agarwal argued.
In its petition, Sebi said the order was passed by Mishra and not the CIC as a whole, makes it "bad in law" and therefore "null and void and of no effect". Apart from Mishra, the CIC has seven other members.
Reliance Ind has approached Sebi to settle the case through mechanism of consent process where an entity being investigated pays a fine without admitting fault and the regulator drops the case.
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