The Securities and Appellate Tribunal (SAT) will on Wednesday hear an appeal filed by Reliance Industries Ltd (RIL) against market regulator SEBI, in a matter involving a ban on the company from trading in the derivatives segment, imposed in relation to violations during a deal involving Reliance Petroleum.

SEBI had also ordered disgorgement of ₹2,000 crore on RIL, meaning the company was suppose to deposit that amount with the regulator for distribution to investors who suffered losses in market due to RIL.

Harish Salve, senior Supreme Court lawyer, had argued in the SAT that SEBI cannot cannot initiate penal proceedings against RIL when the company had challenged the original order of the regulator passed in March 2017. The SAT, however, had said that it would not entertain a miscellaneous plea by RIL but would hear the company’s appeal against SEBI’s order of March 2017.

SEBI had found that RIL and 12 of its promoter group entities violated provisions of Section 12A of the SEBI Act, 1992, and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to the securities market) Regulations, 2003.

The markets regulator had on March 24, 2017, prohibited RIL and 12 of its promoter group entities from dealing in equity derivatives. Following this, RIL was directed to disgorge ₹447 crore plus interest, the total of which comes to ₹1,952 crore.

In the case, which dates back to March 2007, RIL sold a 5 per cent stake in Reliance Petroleum, which was merged with RIL later, in 2009. SEBI observed that RIL via a few alleged front entities, executed trades in the cash market below the last traded price and triggered a sharp fall in the price of shares of Reliance Petroleum.

This fall in the share price allowed RIL and the entities linked to it to profit from their own short positions in the derivatives. RIL allegedly made illegal gains of ₹60.28 per share on 7.42 crore shares, SEBI had observed.

RIL has challenged these SEBI observations in the Securities Appellate Tribunal.

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