Supreme Court sets aside findings on ‘fraud’, disgorgement of ₹447 crore in 2007 RPL Futures Trading case

The Bench said it had no option but to set aside the November 5, 2020 order passed by the SAT regarding the finding of fraud under the PFUTP regulations. File | Photo credit: The Hindu

The Supreme Court on Friday (May 29, 2026) granted relief to Reliance Industries Limited (RIL) by quashing the fraud findings made by the Securities and Exchange Board (SEBI) in connection with futures trading of Reliance Petroleum Ltd. dated November 2007. The court also set aside the market regulator’s direction to RIL₹crore47 to be emptied.

A bench headed by Justice JB Pardiwala concluded in the judgment that the Securities Appellate Tribunal (SAT) committed a “grave error” in finding fraud against RIL under the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Ordinance or the SEBI (PFUTP) Ordinance.

“In our considered opinion, the agreements entered into between the appellant no.1 (RIL) and the 12 entities were not a device used for fraud and manipulation… In our view, the PFUTP Regulations cannot be applied to the sole circumstance of the appellant no.1 using 12 agency agreements to take excessive position limits. It was necessary for the respondent (SEBI) to prove whether these agreements were used to defraud (SEBI),” said Pardiwala.

The court said that the threshold for “fraud” under the PFUTP was very high.

Justice Pardiwala said the market regulator had used a wrong method to calculate RIL’s market share. SEBI should have calculated the share of the entire derivatives market for this stock. The court said there was no evidence that Reliance had fraudulent intent or was trying to dominate the market just because it had 40.10% open stake.

“We direct that ₹250 crore deposited in the Investor Protection Fund be returned to the appellant no.1 (RIL) in accordance with the Supreme Court’s order dated 17 December 2020,” the court ordered.

In a 2:1 majority decision, the SAT dismissed RIL’s appeal against SEBI’s March 2017 order regarding the November 2007 sale of RPL shares.

Read more : Why SEBI asked Reliance to pay hefty fine

“However, we concur with the observations of the SAT in its majority judgment with regard to the penalty to be imposed on the appellant no.1 (RIL) for violating the disclosure requirements under SEBI circular 2001 relating to position limits… Consequently, the appeal succeeds in part and is hereby allowed in part. Accordingly, the order of disgorgement is also set aside in its judgment on RIL,” said Justice Benchade, Mah. 136 page verdict.

Published – 29 May 2026 16:21 IST