Supreme Court Clears Reliance Industries of Fraud in 2007 RPL Futures Case, Quashes SEBI’s ₹447.27 Crore Disgorgement Order

May 29, 2026 : In a significant ruling, the Supreme Court has granted major relief to Reliance Industries Limited (RIL) by setting aside findings of fraud and market manipulation recorded by the Securities and Exchange Board of India (SEBI) in connection with the 2007 Reliance Petroleum Limited (RPL) futures trading case. The Court also quashed SEBI’s direction requiring the company to disgorge ₹447.27 crore along with interest.

A Bench comprising Justice JB Pardiwala and Justice R Mahadevan partly allowed the appeals filed by Reliance Industries, holding that the conclusions reached by SEBI and later affirmed by the Securities Appellate Tribunal (SAT) under the SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003, were not legally sustainable.

The dispute stemmed from trading activities involving shares and derivatives of Reliance Petroleum Limited, then a listed subsidiary of Reliance Industries in which the parent company held nearly 75 percent stake. In 2007, Reliance Industries decided to dilute around 5 percent of its shareholding in RPL, amounting to approximately 22.5 crore shares.

Following an investigation into trading activity between November 1 and November 29, 2007, SEBI alleged that Reliance Industries had engaged 12 entities to build substantial short positions in RPL futures contracts while simultaneously selling shares in the cash market. According to the regulator, the arrangement was designed to bypass position limits applicable in derivatives trading and artificially depress the settlement price of RPL futures contracts through large-scale share sales during the final minutes of trading on the expiry date.

SEBI further claimed that the strategy enabled Reliance Industries to earn unlawful gains exceeding ₹500 crore from its futures and options positions. In March 2017, a SEBI Whole Time Member found the company guilty of fraudulent and manipulative trade practices, ordered disgorgement of ₹447.27 crore with interest, and imposed market-related restrictions. The Securities Appellate Tribunal, through a majority decision delivered in November 2020, upheld SEBI’s findings and the disgorgement order.

However, the Supreme Court found that the evidence on record was insufficient to sustain allegations of fraud and market manipulation under Regulations 3 and 4 of the PFUTP Regulations. The Court observed that the SAT majority had committed a serious error in affirming the charges against Reliance Industries and held that the findings of fraudulent and unfair trade practices could not be legally maintained.

Consequently, the Court set aside the disgorgement order and directed the refund of ₹250 crore that Reliance Industries had deposited in the Investor Protection Fund pursuant to interim directions issued during the pendency of the proceedings.

At the same time, the Supreme Court upheld a separate finding that Reliance Industries had violated disclosure requirements and position limit norms prescribed under SEBI’s 2001 circulars governing derivatives trading. The Court clarified that these violations constituted technical and regulatory breaches rather than instances of fraudulent market manipulation.

Accordingly, the Bench upheld the ₹25 crore penalty imposed on Reliance Industries in separate adjudication proceedings conducted by SEBI’s Adjudicating Officer.

The Court also noted that, in earlier proceedings before the Securities Appellate Tribunal, penalties imposed on Mukesh Ambani, Navi Mumbai SEZ Private Limited and Mumbai SEZ Limited had already been set aside after SEBI failed to establish their direct involvement in the alleged manipulative trades.