SEBI hid expert reports for 2 years. SC says: hand them over.

SEBI spent 2 years refusing to show Reliance three documents. Then the Supreme Court asked: what are you hiding?

The question hung in the air of the courtroom. On one side stood India's market regulator, the Securities and Exchange Board of India, clutching three documents it insisted were secret. On the other side stood Reliance Industries Limited, arguing that those very documents might prove its innocence. The year was 2022, but the story began much earlier — in 1994, when Reliance allotted 12 crore equity shares to entities allegedly linked to its promoters.

When the complaint arrived — and the investigation went nowhere

In 2002, eight years after the share allotment, a complaint landed at SEBI's office. The allegation: fraud. SEBI launched an investigation. Three years later, in 2005, the regulator's own investigators submitted a report that was, by any measure, inconclusive. The file sat on a desk, its pages thin with age. They found nothing solid enough to act on. The Ministry of Corporate Affairs conducted its own probe and reached the same conclusion: no violation.

Most regulators would have closed the file. SEBI did not.

Instead, the regulator sought opinions from two heavyweights: Justice (Retd.) B.N. Srikrishna, a former Supreme Court judge, and Y.H. Malegam, a chartered accountant of formidable reputation. SEBI asked them: was there a case to answer? Both gave their views. Then, armed with these opinions, SEBI did something remarkable — it filed a criminal complaint in 2020, a full 26 years after the alleged acts took place.

The trial court's first blow

The Special Court in Mumbai that heard SEBI's complaint did not take kindly to the delay. It dismissed the complaint outright, ruling that the case was time-barred — meaning too many years had passed for the law to allow prosecution. SEBI, stung by the rejection, rushed to the Bombay High Court to challenge that dismissal.

But Reliance had a different fight in mind. It did not just want the complaint thrown out. It wanted to see the documents that SEBI had used to build its case — specifically, the two opinions of Justice Srikrishna and the report of CA Malegam. If SEBI was going to prosecute the company based on these documents, Reliance argued, then the company had a right to see them. Especially if they contained material that might help the defence — what lawyers call exculpatory evidence (evidence that points away from guilt).

SEBI refused. The regulator claimed that these documents were privileged communications under Section 129 of the Evidence Act (a legal protection for confidential communications with lawyers). SEBI also argued that the timing was wrong — that under Section 207 of the CrPC (the provision that governs what documents must be given to an accused person), disclosure was only required after the court took cognizance (formally accepted the case for trial). Since the trial court had dismissed the complaint before taking cognizance, SEBI said, there was no obligation to share anything.

The Bombay High Court heard both sides and then did something that satisfied neither: it deferred the disclosure application, effectively kicking the decision down the road. Reliance, unwilling to wait, appealed to the Supreme Court.

What the Supreme Court saw that others missed

The bench — Justice N.V. Ramana, Justice J.K. Maheshwari, and Justice Hima Kohli — looked at the case and saw a pattern that troubled them. SEBI's own investigation had been inconclusive. The Ministry of Corporate Affairs had found nothing. Yet SEBI had gone out and obtained expert opinions, and then used those opinions to file a criminal complaint. The question was not whether SEBI could do that. The question was whether SEBI could then hide the very documents that formed the basis of its case.

The Court rejected SEBI's claim of legal privilege under Section 129. The opinions of Justice Srikrishna and the report of CA Malegam, the Court held, were not confidential legal communications between a client and a lawyer. They were extensions of the investigation itself — fact-finding exercises commissioned by a regulator that had run out of leads. Legal privilege, the Court said, does not attach to documents obtained as part of an investigative exercise, even if the person giving the opinion happens to be a legal professional.

Then the Court dismantled SEBI's second argument — that Section 207 CrPC barred disclosure before cognizance. The Court held that Section 207 cannot be read as a rigid wall that prevents disclosure where non-disclosure would cause a serious violation of the accused's rights. Principles of natural justice (the basic fairness that every person is entitled to in legal proceedings) and the right to a fair trial under Article 21 of the Constitution (the right to life and liberty, which includes the right to a fair hearing) demanded that the documents be handed over.

The Court also noticed something else. SEBI had selectively disclosed portions of these documents — the parts that supported its case — while claiming privilege over the rest. That, the Court said, was cherry-picking. "A regulator that selectively discloses portions of privileged documents that support its case cannot claim privilege over the remaining portions; such cherry-picking amounts to waiver of privilege and the entire document must be disclosed," the Court held. By disclosing selectively, SEBI had waived its claim of privilege over the entire document.

The order that changed the game

On August 5, 2022, the Supreme Court allowed Reliance's appeal and directed SEBI to hand over all three documents: the first opinion of Justice Srikrishna, the report of CA Malegam, and the second opinion of Justice Srikrishna. The Court ordered that this be done "forthwith" — immediately, with no further delay. The registrar's stamp on the order sheet marked the moment the documents were no longer SEBI's secret.

The message was unmistakable. A regulator that initiates criminal prosecution must act fairly. It cannot build a case on documents it refuses to show the accused. It cannot hide behind technical arguments about timing or privilege when the fundamental fairness of the proceeding is at stake.

Why this matters for every company facing a regulator

For advocates and corporate counsel, this judgment is a reminder that the right to a fair trial begins long before the trial itself. The moment a regulator files a criminal complaint based on expert opinions or reports, those documents become part of the investigative record — and the accused has a right to see them. Legal privilege is not a blanket shield. And a regulator that cherry-picks what to disclose loses the right to hide the rest.

THE PLAY: If a regulator files a criminal complaint against your client based on expert opinions, demand those documents immediately — and cite this judgment if they refuse.

The Court ended where it began: with three documents that SEBI spent two years refusing to show, and a question that needed only one answer.