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Sebi’s March 24, 2017, order was later upheld by the Securities Appellate Tribunal (SAT) on November 5, 2020.

A bench of Justices J B Pardiwala and R Mahadevan also set aside the direction to RIL to disgorge Rs 447.27 crore, along with simple interest at 12 per cent per annum.

“We have reached the conclusion that SAT, in its majority judgment, committed an egregious error in passing the impugned judgment insofar as the question of fraud under regulations 3 and 4 of PFUTP Regulations (Sebi Prohibition Of Fraudulent And Unfair Trade Practices Relating To Securities Market Regulations),” the bench said.

The top court also ordered that the Rs. 250 crore deposited by RIL during the pendency of the case, in accordance with its earlier direction, be returned. However, the court upheld the Rs 25 crore penalty on RIL “for alleged violation of the disclosure requirements under 2001 SEBI circular in respect of position limits”.

The case has its origins in RIL’s March 29, 2007, decision to raise funds for the completion of various projects to the extent of Rs 87,000 crore by selling shares of its listed subsidiary, RPL. It was decided to sell 5 per cent of its RPL shareholding, which roughly equated to 22.5 crore shares. The decision to sell the shares was based on the premise that RPL’s shares were overvalued.

From November 6, 2007, to November 29, 2007, RIL sold 20.29 crore shares out of the proposed 22.5 crore shares in the cash segment of NSE and BSE, out of which 2.25 crore shares were sold in the last 10 minutes, between 3.21.40 pm and 3.30 pm on November 29.

RIL realised Rs 4500 crore from the sale of the shares in the cash segment and Rs 513 crore from the futures segment through the 12 agents, totalling an aggregate amount of Rs 5013 crore.

Sebi later concluded that by employing 12 agents to take separate positions within their Open Interest limits on its behalf, by executing separate agreements with each of them, and cornering 93.63 per cent of the November Futures of RPL, RIL acted in a fraudulent manner while dealing in RPL scrip.

The market regulator said an analysis of the trading strategy/pattern adopted by RIL in the cash market during November 2007, and specifically on November 2, 2007, being the expiry day of the November Futures of RPL, revealed a manipulation of the last half an hour settlement price, which was a violation of the SEBI Act, 1992, read with the PFUTP Regulations.