SC upholds penalty on Reliance over delayed disclosure in Jio-Facebook deal
The Supreme Court on Tuesday dismissed Reliance Industries Ltd’s (RIL) appeal against an order of the Securities Appellate Tribunal (SAT) upholding an order. ₹30 lakh fine on two compliance officers for delay in disclosure ₹43,574 crore Facebook-Jio investment deal in 2020.
A bench led by Chief Justice of India Surya Kant and Justice Joymalya Bagchi refused to intervene, stating that the verdict was based entirely on factual findings and did not raise any significant question of law.
case file
On June 20, 2022, the Securities and Exchange Board of India (Sebi) imposed penalties on RIL’s compliance officers Savithri Parekh and K. Sethuraman for allegedly violating the SEBI (Prohibition of Insider Trading) Regulations, 2015.
The regulator found that RIL did not promptly disclose unpublished price sensitive information (UPSI) regarding its investment negotiations with Facebook’s Jio Platforms, especially after details were reported in international media in March 2020.
Senior advocate Ritin Rai, appearing on behalf of RIL, argued that the case does not involve any allegation of insider trading or any allegation of unfair advantage being taken by anyone. The transaction involves a counterparty bound by a strict confidentiality agreement and RIL cannot unilaterally violate these terms, it said. He questioned whether he could reasonably be expected to confirm or deny speculative media reports when he was legally obliged to maintain confidentiality.
However, Chief Justice Surya Kant stated that once information regarding such a significant investment is made public, RIL has a responsibility to disclose its veracity. “You know how the speculative market will react when huge investment news like this comes out. If it was wrong, you should have said so immediately. You are the only one in the best position to tell the public whether the information is true or false; you could have made a statement,” he said.
agreement
Negotiations between Facebook and RIL had progressed significantly towards the end of 2019, with a non-binding term sheet signed on March 4, 2020, followed by due diligence, followed by a binding agreement on April 21, 2020, as per Sebi’s order. RIL officially announced ₹43,574 crore investment on April 22.
Sebi said: Reuters, Financial Times, and other international outlets reported on March 24, 2020 that Facebook was close to acquiring a 10% stake. RIL’s share price rose sharply. Sebi maintained that when such price-sensitive details surfaced in the media during the UPSI period, RIL was obliged to issue an explanatory statement to ensure equal access to information.
RIL argued that under Regulation 30(11) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations at the time, responding to market rumors was optional unless the exchanges specifically sought clarification and the information was yet to reach a definitive stage that would warrant disclosure.
LODR regulations require publicly traded companies to disclose material information, such as major financial transactions, leadership changes or mergers, in a timely manner to ensure that investors are not disadvantaged by asymmetric access to information.
RIL challenged the Sebi decision before the SAT, but on May 2, 2025, the court dismissed the appeal, holding that the deal had reached a concrete and credible stage by February 2020 and the significant stock price movement indicated the price sensitivity of the information.
SAT held that media leaks do not make information “publicly available” unless verified by the company, and RIL was obliged to make a statement when the leak occurred and hence upheld the penalty.
mint An emailed query to RIL remained unanswered till publication.
